Global retail e-commerce sales are on track to reach $7.4 trillion by 2025, with consumer payments driving sales at checkout. Moreover, the COVID-19 pandemic has only accelerated online shopping habits, with 51% of global consumers saying they plan to make more cross-border purchases. To allow customers to buy what they want, how they want, merchants are increasingly onboarding cross-border payment methods such as Buy Now, Pay Later (BNPL) services, digital wallets, online cash applications, QR codes, money transfers, and cryptocurrencies.
While it’s an advantage to give customers choice and flexibility in how they pay for a product or service, cross-border payment methods are notoriously difficult to onboard, integrate, scale, and manage. So, what is an ambitious merchant with finite resources to do, and what do they need to consider for e-commerce success?
Understand the technical aspects of implementing payments
It can be hard work for a merchant to negotiate with multiple payment service providers (PSPs) and costly to accommodate their different APIs and functionalities. Often, months of painstaking integration work are required to add a single payment type to an existing payment stack and related checkout, fulfillment, and accounting systems.
Then there’s the front-end and back-end work needed to support updates and enhancements to a payment type across its lifecycle. For example, merchants need the ability to prioritize payment methods offered at checkout, decline transactions early, and intelligently route transactions, so payments settle faster. They also need to consider ways to reduce fraud and chargebacks, restrict the sale of prohibited goods, optimize processing fees and lessen the overall cost of transactions.
Don’t forget geographic, regulatory and generational complexities
There’s also geographic complexity to contend with. With e-commerce knowing no bounds and open banking initiatives providing favorable trading terms, many merchants want to expand to new markets. However, this requires deep knowledge of a market’s unique payment landscape and technical and linguistic skills many do not have.
Regulation presents still more complexity. 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 data sources.
If these factors weren’t enough, there’s also payment fragmentation based on generational preferences. Baby Boomer and Generation X consumers, for instance, like credit and debit cards. In contrast, mobile-centric Generation Z shoppers, who have witnessed the negative impact of debt on wider society, prefer digital wallets, pre-paid vouchers, and BNPL solutions. Millennials sit in the middle. To capture the largest potential market share, merchants must have the financial and technical wherewithal to accommodate these different options.
Put payment orchestration to work
One solution for all the above is to use a cloud-native payment orchestration platform (POP), which facilitates payment routing and processing between multiple payment providers and unifies all transaction components under a single control layer, enabling the end-to-end management and automation of payments processing. A POP allows merchants to streamline and manage all their payment methods, services, and transactions in one place while dispensing with the time-consuming and costly coding and integration work involved in onboarding and supporting different payment methods.
A POP also helps to keep merchants in compliance with local regulations governing the use and storage of citizen data by processing and storing data at the Edge. A local edge keeps merchant and customer data in the region or country deployed, helping merchants meet data privacy protection laws while offering varying localized payment options to a specific region – making cross-border payment optionality easy.
Another advantage of a POP is that it allows merchants to work with various payment providers and thus avoid being locked into proprietary APIs or a single ecosystem. The result? More payment options at checkout, which helps optimize customer conversion and increase sales. And at a macro level, a POP acts as the foundation for all current and future cross-border payments, making it easier for merchants to enter new, regional markets and scale for international e-commerce success.
While accommodating cross-border payment methods can significantly enhance the growth prospects for a merchant, they also bring the burden of integration and long-term management. However, with the right payment orchestration platform and partner, a merchant can support cross-border payment methods quickly and enjoy all of its advantages without the burden of managing multiple payment methods.
John Lunn is Founder and CEO of cloud payment orchestration platform Gr4vy. He is a technology and fintech entrepreneur with 21 years of experience working and investing in financial services, commerce enablement, e-payments, data, security and infrastructure. Lunn worked as the Director of Technology for six years at CyberSource, the world’s first payment service provider, sold to Visa for $2 billion in 2010. He helped found Passmark Security which was sold to RSA Security in 2006. In 2006, Lunn joined PayPal as its fourth employee in the UK as Global Director of Developer and Startup Relations. In 2015, he was instrumental in the purchase of Braintree by PayPal and joined the team. In 2016, Lunn helped launch PayPal Ventures, the venture capital arm of PayPal, a $350 million fund with backing from the Board. Lunn was a Board Observer for Dosh, Arkose, Raise, Acorns, Toss and many others.
