4 October 2021
How to grow and thrive by supporting new payment methods
As the world emerges from the COVID-19 pandemic, retailers are looking for ways to rebound and capitalize on pent-up demand for products and services.
With more people opting to shop online than ever before, an obvious place to start is to make it easier for customers to buy. Unfortunately for retailers, the complexity involved in onboarding and managing multiple, emerging forms of payment is daunting at best, prohibitive at worst.
Supporting preferred payment methods during checkout, however, is critical for retailers to deliver the personalized, frictionless and expedient e-commerce experiences customers crave. Let’s explore what retailers need to know.
The Practical Challenges of Payments
At a macro level, the market is evolving fast. The growth of e-commerce has decreased reliance on cash, and there’s increased penetration of mobile devices and government encouragement of digital economies. Plus, COVID-19 has driven a sea change in consumer behavior.
These developments have given rise to a host of new payment types. Among them are digital wallets, online cash applications, buy now pay later (BNPL) solutions, QR code payments, money transfers, instalment payments, and cryptocurrencies.
For retailers, these new payment types present both an opportunity and a challenge. While it’s an advantage to give customers a choice in how they pay for a product or service, it can be laborious to negotiate with multiple payment service providers (PSPs) as well as time consuming and costly to accommodate their different APIs and functionalities.
Consider the Geographic Complexity
With e-commerce knowing no boundaries and open banking initiatives providing favorable trading terms, many retailers want to expand to new markets. However, that requires deep, localized knowledge and technical and linguistic skills that many don't have. That’s because every country worldwide has a unique payment landscape shaped by history, socioeconomics, culture and government regulation.
In India, Indonesia, and Mexico, for example, many citizens are underbanked. They have to rely on alternative financial services such as money orders, check-cashing services and payday loans to manage finances and fund purchases.
Similarly, underdeveloped countries whose financial systems lack basic payment processing capabilities have developed their own mobile payment solutions to compensate. Countries such as China, Germany, the United States and more have also pioneered a raft of mobile payment options. Simply put, payment methods today are often country-specific and won’t necessarily work everywhere.
Don’t Forget Compliance and Regulation
In Europe, the EU General Data Protection Regulation mandates the local storage and management of citizens’ payment data. India and Brazil boast similar regulations. Meeting these diverse requirements is a significant challenge and requires cloud-driven Edge computing capabilities that bring computation and storage closer to the sources of data.
Adding a new local payment type isn't as simple as just turning it on. Retailers entering a new market need to ensure they comply with local regulations governing the use and storage of citizen data. The risk of noncompliance, as some unwitting payment companies and networks have found, is sizeable fines.
Cloud Technology is the Future
Amidst all these challenges, there’s good news. There is now a way for retailers to quickly and efficiently onboard and scale new payment types without lengthy lead times, localized knowledge, or costly development resources. Cloud-native payment orchestration platforms (POPs) have emerged that replace legacy payment infrastructures and systems and streamline and manage payment methods, services and transactions in one place.
Cloud POPs enable businesses to seamlessly and compliantly introduce local payment methods as soon as they enter the region or country. With a cloud-based POP, retailers get their own Instances, which become a retailer’s individualized infrastructure and payment platform in the Cloud. They can then take these Instances, and thanks to cloud computing, spin up an Edge to their Instance in any region. These Edges provide significant benefits, ensuring retailers can offer local payment methods that meet regulation, keep customers' data secure within the country while still offering the payment methods consumers demand. As a result, retailers can build satisfaction and loyalty by supporting customers’ preferred payment methods at the outset.
Yes, retailers face multiple challenges when setting themselves up to accommodate today’s payment methods. What they need is a cloud-native POP solution that can integrate and manage all payment forms in one place and facilitate entry into new markets virtually at the click of a button.
If you're growing globally and want to test new payment methods in local markets without hiring a team of engineers, check out the Gr4vy platform.
This article first appeared on TotalRetail