Voice of the Industry

How SMBs are rising to new challenges through their payments strategy

Monday 19 July 2021 08:20 CET | Editor: Alex Guzu | Voice of the industry

Daniel Nordholm, Head of Regional Businesses in Worldline’s Merchant Services business line, summarises the main setbacks that SMBs are facing and how they are proactively responding to them by leveraging digital solutions

The transition towards digital was different for each industry and, as a result, merchants have had to adapt quickly to different challenges. During the pandemic, we have certainly seen an uplift in the retail and hospitality segments. Whether it was by opening an online shop or offering restaurant takeaways, they found ways to keep their business afloat. Payment solutions such as pay by link or click & collect were successfully implemented, helping merchants significantly as it allowed them to keep their activity going despite forced store closures and to receive payment from consumers before providing the product or service.

In the retail industry, we saw the shift to contactless payments as another big change that was inevitable. Since most retail experiences take place in physical environments, it was great to see how quickly the regulators increased the limit of contactless cards to support this transition. The massive shift accelerated by consumer behaviours has pushed the cash dominated markets to electronic payments. As an example, countries in the DACH region, previously characterised by cash payments, have adopted electronic payments. Moreover, consumers from these markets have responded positively to the change, making the transition even smoother.

Financial implications

Arguably, providing goods and services online isn't as costly as it used to be. Nowadays, many ecommerce platforms are also embedding payment solutions – the ‘Plug’n Pay’ solutions give the merchants plenty of flexibility around customising the content, the price and the entire customer experience.

Handling logistics can be tricky on the other hand when setting up an online store. Building up the infrastructure that includes distribution models to ship and return management systems put a dent in online retailers’ wallets. To help address consumers’ expectations for free refunds, a good strategy is to embed this into the business model and pricing from the beginning. Adding Brexit to the mix and the implications from cross-border transactions with delivery delays and increased transaction fees, it can be challenging to say the least. 

Another aspect worth addressing is the liquidity that became a concerning issue for smaller merchants in the early stages of the pandemic. SMBs were resilient in the first months, but shortly after they began to struggle. The extended lockdown from the beginning of the year came as a surprise for many, including SMBs. They navigated this uncertain period with confidence, considering that they needed a cash flow to pay staff and manage inventory without having too many savings to rely on.

Although there were many governmental programs in most European markets to help merchants, it wasn’t easy to access them. For example, businesses in Denmark needed to completely shut down in order to get funding which was essentially going against keeping the industry alive. Moreover, the massive delays in getting governmental funding represented another issue for merchants that needed quick access to cash. This is also why we've seen an uptake in small business lending, the kind of proposition that we offer and that other competitors are also offering in the market. By doing so, we have been able to support retailers in managing their cash flow that can be amortised further down the line on the transaction flow.

The demand for new payment methods

Two key factors influenced the shift towards digital payments. Tighter governmental guidelines and the desire for a more seamless experience have forced merchants to accommodate the increasing demand for new payment methods. Consequently, more operational tasks had to be completed on the back of incorporating the new payment options.

Even before the pandemic, people were already reluctant to manage cash on a daily basis. The sudden rush in using contactless payments was amplified by some businesses being cautious around cash handling and shoppers being hesitant to touch the terminals to input their PIN. As a result, the spend limits on contactless transactions increased across different markets.

Moving forward, the need for a more seamless experience accelerated the use of e-wallets. Rather than paying with cards, people were keen to use their phones especially when the spending limit was higher. It’s safe to say that digital wallets have simplified the checkout process both online and in-store.

Compliance readiness

Going back to the beginning of the year when 3DS v2 became mandatory, all players in the payment chain had to be ready and, unfortunately, this wasn’t the case. Major issuing banks didn’t have 3DS v2 implemented and card schemes were requiring the multi-factor authentication protocol. This resulted in many declined transactions for online merchants across Europe due to the redirect pages confusing customers and making them to abandon transactions.

But merchants found solutions to optimise the online payment journey and one of them was through frictionless flows. This was done by sending additional parameters to the payment platform so that issuers can use them to assess the risk of the transaction. Overall, sharing more data led to faster checkout times, increased security, and a much better customer experience that met SCA standards.

Nevertheless, recurring payments such as subscription-based transactions were the most affected because customers needed to re-authenticate. Apart from implementing the new Credential-on-File framework, merchants had to flag whether the subsequent recurring transaction was initiated by the cardholder or the merchant. Now, these types of transaction scenarios are categorised as merchant-initiated transactions (MIT) and customer-initiated transactions (CIT).


At Worldline, we have noticed that currently, SMBs are mostly dealing with chargebacks which were essentially set in place to resolve legitimate disputes between customers and merchants. In addition, both criminal and accidental frauds have led to an increased number of chargebacks.

The travel industry suffered the most during the pandemic, but we are pleased to see that many online travel operators successfully fought the wave of chargebacks from cancelled trips due to COVID-19. A strong chargeback defence program can be easily implemented with clear wording of the terms and conditions and the steps in the sign-up process, and a comprehensible explanation of the chargeback policy submitted to the card issuer. Travel operators should not leave any room for interpretation when it comes to payments being non-refundable.


Given the current context, we are expecting to see more hybrid shopping experiences that combine elements of both ecommerce and traditional retail. As now is the ideal time to enhance your online offering, investing in the right infrastructure can expand your customer reach and provide you with a competitive advantage.

About Daniel Nordholm

Daniel Nordholm is a payment professional at Worldline, leading the Regional Businesses division in Merchant Services. Focusing on small, medium sized and domestic businesses mainly in Europe, his mission is to enable payments in all channels.

Prior to his role at Worldline, he held executive positions at Ingenico, Bambora, Verifone and Point.

About Worldline

Worldline [Euronext: WLN] is the European leader in the payments and transactional services industry and the #4 player worldwide. With its global reach and its commitment to innovation, Worldline is the technology partner of choice for merchants, banks and third-party acquirers as well as public transport operators, government agencies and industrial companies in all sectors. Powered by over 20,000 employees in more than 50 countries, Worldline provides its clients with sustainable, trusted and secure solutions across the payment value chain, fostering their business growth wherever they are. Services offered by Worldline in the areas of Merchant Services; Terminals, Solutions & Services; Financial Services and Mobility & e-Transactional Services include domestic and cross-border commercial acquiring, both in-store and online, highly-secure payment transaction processing, a broad portfolio of payment terminals as well as e-ticketing and digital services in the industrial environment. In 2020, Worldline generated a proforma revenue of EUR 4.8 billion.

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Keywords: Worldline, ecommerce, payment methods, chargebacks, online payments
Categories: Payments & Commerce | Online Payments
Countries: World
This article is part of category

Payments & Commerce