We’re seeing a step change in how customers pay. Modern consumers are using multiple channels and devices to discover, initiate and fulfil their purchase journey. Industry developments such as the launch of cashier less stores, Amazon Go, and automatic payment services, like those deployed by “born digital” companies, have set a high service bar and considerably changed consumer expectations around digital interactions and transactions

Instances where customers explore a product on a social media channel, go to a nearby store to experience the product, decide to purchase the product, make a partial payment by scanning a QR code using a mobile wallet and convert the rest of the payment to an equated monthly instalment mode are now an established norm. In this case the payment acceptance strategy of merchants should allow seamless and smooth transition between multiple payment channels and modes and vice versa. Regardless of webrooming or showrooming, it’s clear that merchants should provide a continuous seamless experience to their customers.

Payments management consequently is no longer a back-office activity but are a crucial part of the overall frictionless customer experience. Customers today want their payment preferences to be valued, and it is increasingly important for merchants and acquiring organisations to adopt a cohesive strategy that seamlessly integrates online and offline payments, empowering shoppers to shop when, where, and how they want.

To address consumer demands, merchants are demanding more from their payment providers.  Merchants are looking for a streamlined solution, that manages and consolidates new payments innovations onto a single platform, provides best-in-class functionality for fraud management, reconciliation and settlement and innovative added value services to differentiate their services.

This is easier said than done. Over the years, payment acquirers have deployed vertically aligned channel-centric payment systems and are weighed down by an architecture consisting of a collection of point solutions that are not designed for continuous change and interoperability. Merchants, as a result, contend with different payment suppliers and distinct systems for payment acceptance through their website and in-store, that don’t connect with each other. This hampers the merchant’s ability to recognise consumers across channels and makes it harder to deliver the unified experience customers naturally expect. What is more, the siloed systems introduce operating complexities, such as additional maintenance overheads, complexities related to multiple daily reconciliation, and settlement cycles, and in some cases multiple reporting formats and portals.

Omni-Channel Payments Approach

Forward leaning acquires are embracing an omni-channel payment approach that can interconnect multiple systems. An omni-commerce payment platform consolidates discrete channels, merchant lifecycle management, clearing and settlement systems into a unified acquiring hub, enabling payment processors to futureproof their capabilities. The benefits of deploying a unified commerce platform include:

• Single integration to bake payments seamlessly into the customer experience across channels
• Optimise revenues by enabling digital and alternative payment methods to shoppers across channels.
• Provides consolidated cross-channel view of transaction data for improving business and operating performance
• Offer adjacent added value services to optimise revenues
• Improve authorization rates by reducing false positives that are flagged as potentially fraudulent transactions.
• Consolidate data across channels, analyse to derive insights into customer behaviour, offer meaningful promotions/discounts and to prevent true fraud

Broaden Payments Coverage

The more shopping behaviours change—from social media to in-store to the Internet of Things and a mix of anything in between—the bigger the implications for the ways we pay.  The Internet of Things and voice-activated technologies, for instance, bring opportunities to connect with consumers via everything from cars to refrigerators. With growth in social networks, buyers likewise can discover a product on Instagram or Facebook, tap the Pay Button, and be immediately directed to a checkout page. Livestreaming commerce sites is gaining in popularity.

In addition to multiple channels from which customers can initiate a transaction, new payment methods are continually entering the market. There’s a plethora of instruments — cash, card, account rails, alternative payments and a wide variety of options for using that tender (mobile wallets, Buy Now Pay Later, QR code, Pay by link, Contactless, Tap and go and so forth).  Recent research indicates BNPL players will earn nearly 3% of global ecommerce spend by 2023. Another study by Juniper Research indicates by 2024, 50% of world’s population will use e-wallets.

Acquirers need to ensure wide payments coverage in line with merchants and shoppers’ preferences. Be it online, mobile or in-store, prospective customers want to make purchases using a payment mode of their choice.  Generally, onboarding an individual payment method can take between one and six months, depending on complexity. The extensibility of the platform to add new payment mechanisms will be a defining factor for businesses wanting to sharpen their competitive edge with payment options that suit the “connected life.”

Simplify Payments for Small and Micro-Merchants

Many consumers migrated to at-home consumption and have started to do more online shopping after so many retail premises were shuttered over the last 18 months. Accommodating those changes inevitably creates challenges for smaller retailers, many of which have had to build virtual storefronts to cope (from scratch in some cases). With an omni-commerce payments platform, acquirers can extend asset-light payment acceptance models to enable smaller pure brick and mortar merchants stay relevant. Innovative acquirers and PSPs that develop new solutions to support simple, cost-efficient, and easy to deploy payment acceptance models such as Pay by Link, Pay Buttons, Branded Hosted Checkout, Soft POS can profitably tap into the long tail represented by the small merchant segment.

Curate Added Value Services

Acquirers are beginning to recognize that the most strategic and expedient way to prepare for the future needs is to build an extended ecosystem through partnerships with diverse providers to fast-track digital innovation, create new sources of revenue to combat margin erosion.  This means that when a merchant onboards, they can integrate a readily available set of adjacent applications to drive revenue growth.  Major players are investing in and partnering with third-party apps to deliver an innovative services catalogue to improve frequency of customer transactions and engagement. Examples include loyalty program management, voice commerce, recurring payments, subscription management, reporting and analytics, lending at POS, card offering and POS terminal monitoring.  The underlying platform needs to support open payment APIs that merchants or app developers can embed in their platform.

Tap Transaction Data

With Unified Commerce, all payment data feeds into the same system, enabling acquirers capture rich transaction insights to optimise business performance across multiple levels:

• Improve Portfolio Performance — Analyse  records of merchants to spot top performing merchants, identify future markets and the best areas for new investments to create a more profitable merchant portfolio
• Boost Revenues — Boost revenue by gauging the preferences and behaviours of individual customers – leveraging transaction history, location, preferred channels, payment methods and currency to deliver connected experiences, and better targeted service offerings including discounted offers or instant lending at check-out or nudges to use low fee payment methods thereby improving transaction volumes conversions
• Lower Transaction Declines — Continuous real-time transaction and terminal monitoring and logging across channels to improve success rates
• Improving Operating Efficiencies — Operational insights enable better decisions for a range of back-office activities — for example minimise chargebacks, and dispute volumes, maximize terminal uptime through continuous real-time transaction monitoring
• Create New Monetization Opportunities — Insights into customer transacting patterns will enable acquirers develop new business and income sources by sharing aggregate transacting patterns with partners in the ecosystem

Deliver Optimum Level of Défense

Fraud is a growing problem, with Juniper Research estimating that total e-commerce fraud losses alone will exceed $20 billion in 2021, an 18% increase on 2020.  As the number of devices, interfaces, payment means, and channels continues to proliferate, payment fraud threats are growing in complexity and sophistication.  Against this backdrop, data security is a top priority for retail CIOs who must work harder to insulate their existing systems and processes from the ever-present threat of security breaches. Practical steps acquirers can take to address the problem include establishing and maintaining payment card industry (PCI) compliance and conducting regular vulnerability and security audits to check whether e-commerce software, plug-ins and SSL certificates are up to date.

These can be supplemented by authentication processes that analyse the characteristics of a payment including merchant profile, IP address, device type, customer transaction profile, order value, time and transaction velocity, type of card and location enabling acquirers to dynamically risk-score transactions and then determine whether to accept or reject the transaction in real time. Only transactions that are truly suspect are stopped, avoiding any undue customer friction and dissatisfaction or investigation labour overheads. Other critical security elements include cross-platform tokenization and point-to-point encryption (P2PE), which ensure transaction security.

Strengthen Compliance Maturity

Digital payments is a highly regulated business and service providers face an increasingly complex regulatory environment. Simply keeping up with the ongoing mandates is a mammoth undertaking in addition to platform capabilities, the strength of the payments service provider to meet constantly evolving regulatory requirements is critical.

• Data Privacy and Regulation: Across geographies, governments are implementing data privacy laws to safeguard customer data.
• Security and Fraud: In Europe, 3DSecure 3.2 is a mandate with introduction of Open Banking PSD2’s Strong Customer Authentication (SCA) standards across the continent.  Similar regulation is in place in other regions or in the process of being adopted and acquires need to gear-up.
• Ongoing Mandates from Interchanges:  In addition to regulation by international Card Schemes, PSPs need to comply with region-specific mandates and local interchanges resulting in high compliance overheads.
• In-Country Regulation: With growth in digital payments regulators across countries are monitoring the emerging landscape to safeguard all stakeholders. Changes in interchange fees, consumer payment rights, new regulations around security are being constantly updated and acquirers need to maintain compliance at all times

Achieve Architectural Agility

Changes in payments are likely to go into an overdrive.  To drive long-term value, payments leaders look to adopt more flexible, modern platforms that allows them to respond and adapt to future changes with agility.  In many instances, the end goal is to transform a monolithic core system into a service-based platform with distinct capabilities organized around customer needs. The key is establishing an enhanced model of service delivery built on three main pillars: open architecture, which can provide unprecedented flexibility through a modular approach; a cloud-based platform, which can increase resiliency as well as enable scalability and faster delivery of new products and enhancements; data-driven insights, to make smarter, quicker business decisions.

How FSS can Help

FSS platform is acquirer agnostic and enables service providers to bring in-store and online payments onto the same universe to provide an optimal omni-commerce experience. Leveraging the FSS white-labelled payment processing capabilities, acquirers can provide seamless payment services to their merchants without having to incur upfront CAPEX.  FSS offer access to this platform as a service and is 100% responsible for the platform’s development, maintenance, upgrades, compliance with security standards.

• Support large and small merchants with or without complex hierarchy.
• Faster merchant onboarding leveraging a single connection with flexibility to activate channels and instruments basis merchant preference
• Wide coverage for international and local payment mechanisms
• Powerful engine that gives flexibility to propose attractive and transparent pricing options to merchants.
• Complete control over the merchant billing, clearing, and settlement processes
• Support counter-fraud measures such as Secure3D 2.2 and tokenization
• Multi-institution, and multilanguage capabilities allow clients to manage international acquiring operations with relative ease significantly reducing cost of expansion
• Compliant with International and local data privacy laws to safeguard customer data
• Manage merchant portfolios in different countries and for different acceptance institutions to meets the needs of global and multinational merchants.
• Analytics console which will allow acquirers to identify hotspots in merchant performance and to get a handle on customer behaviour
• On-demand scalability and high availability/uptime, performance benchmarks and resilience

In Conclusion

A winning payments strategy converts shoppers into customers, keeps them happy, and provides them a seamless, superior experience, they’ll want to return to. Acquirers need to invest in omni-channel payment acceptance capabilities to keep pace with merchant expectations. The right fintech service delivery partner is one of the most important decisions an acquiring institution can make. The ability of the technology provider to consistently deliver comes from deep experience in implementing similar solutions across a variety of customer sgements in different geographies, with varying execution paths. The fintech provider should be able to leverage this knowledge and expertise to innovate and future-proof key functions whilst create a smoother, more predictable outcome for both implementation and ongoing service.