Digital acceleration of payments in Europe – what merchants need to know

Arik Shtilman, CEO of Rapyd: Businesses will need to embrace a ‘cards plus’ payments strategy that includes local and alternative payment methods

With the COVID-19 pandemic greatly influencing the acceleration of ecommerce globally, what is the impact on the growth and usage of digital payments by both businesses and consumers?

Digital sales are no longer just about expansion or innovation, they are part of a business continuity plan. Even goods and services that were once the exclusive domain of brick and mortar, like health and fitness services, are going digital with online reservations and classes and digital payment systems. Since the pandemic started, record numbers of people have been engaging in digital commerce for the first time. According to recent Forrester data, in Italy, 14% of consumers have signed up for video streaming for the first time; in China, 24% tried ordering their groceries; in the US. 12% of consumers started taking online exercise classes for the first time.

To stay competitive in this new normal, merchants must provide better customer experiences and find new sources of growth globally. Additionally, alternative payment methods (APMs), such as bank transfers and e-wallets are gaining market share. Businesses will need to embrace a cards plus payments strategy that includes local and alternative payment methods, if they want to successfully adapt to the current market reality. Cross-border expansion has typically created new challenges for merchants, having to work with multiple vendors for cards and then additional vendors for alternative payment methods creating complexity and slowing expansion plans. Rapyd provides an all-in-one solution that addresses these growth opportunities for European merchants.

Moreover, the payments industry had to adapt swiftly to the shifts towards online shopping. If we look at Europe, how well is the payment infrastructure equipped to support this move towards digital commerce?

Up until 2020, I would say customers are the market-makers and payments technology followed. In 2020, COVID-19 was the market-maker: shoppers who hadn’t adopted digital habits had no other choice, but to go digital.

In this respect, the payments infrastructure has not failed merchants – it has been available and able to serve merchants for some time. Initiatives like RTP, open banking and PSD2 have created an unbelievable foundation for real transformation across Europe. Unfortunately, many merchants in the region have been slow to adopt the payment technology that enables cross-border, omnichannel and better digital experiences for consumers. 

We think the COVID-19 pandemic will accelerate digital payment strategies and plans for merchants and we are betting big on real payments transformation across Europe in the next 5 years.   

Rapyd has recently acquired the payment card service provider Korta. Could you please elaborate on the strategy behind this acquisition, and the integration’s status?

The Korta acquisition helps us accelerate our expansion across Europe. Moreover, our clients were asking us to add card acceptance to our portfolio, so we realized that acquiring a payment card service provider would be a great opportunity to meet our customers’ demands. It also ties back to this unprecedented move towards digital payments – COVID-19 has accelerated this roadmap item for us. Also, companies that were already focused on global expansion and cross-border payments are trying to reduce the number of vendors they need to manage to simplify their payments stack. Rapyd provides a fully integrated “cards plus” payment stack that enables any payment method, in any market you want to work in, through a single vendor relationship.

We have also learned that some businesses mistakenly think of offering APMs as an afterthought to their card acceptance strategy. This needs to change especially when looking at global expansion where an alternative payment method may be the primary way consumers pay in other markets. Cards and APMs need a holistic acceptance strategy. Now that Rapyd offers credit and debit card acceptance across Europe, we are better positioned to help companies shape their entire payments strategy across all types of cards, bank, digital wallets and cash methods. This APM shift has occurred on a much more expansive level than most businesses have been able to keep up with, so Rapyd is bridging that gap.

Besides the new opportunities to innovate digital payments, fraud prevention remains a top challenge to address. How is Rapyd helping merchants with card acceptance risks such as online fraud, chargebacks, and compliance?

Transacting cross-border requires more due diligence. From the beginning, Rapyd built a compliance framework and identity service directly into our onboarding systems and platforms. And just recently, we significantly expanded our fraud protection capabilities with the addition of Rapyd Protect.

Rapyd Protect provides our clients with real-time fraud scoring, transaction reviews and a rules engine – all of which can be used without any additional coding. Rapyd’s unique visibility into a variety of payment methods on a global scale makes it possible to identify new fraud trends and make connections earlier. This unique insight translates into a big advantage for merchants using our platform because now the product provides card fraud management, and it will be expanded to deal with fraud and risk across other payment methods in the future.

What services can Rapyd offer to European merchants and other acquirers/processors can’t?

Rapyd’s platforms have much more reach than traditional acquirers and processors. With a single integration, Rapyd enables European merchants to securely accept a wide range of alternative payment methods and currencies from customers all over the world. Our disbursement product makes it very easy to send payments to workers abroad in the currency or payment method of their choice. We can issue cards for our clients, and our digital wallet architecture ties all of these technologies together giving our clients flexibility when it comes FX and reconciliation so they have a cash flow system that can support a growing globally minded business.

What's next on Rapyd's roadmap to enable omnichannel experiences?

With the acquisition of Korta came a significant amount of POS card-present transaction volume. Our European acquiring license allows us to acquire card-present transactions across Europe.

Bringing our online business together with our card-present business for a truly all-in-one cross-border omnichannel experience will be a major initiative going into 2021. Imagine a cross-border shopper buying an item online using their preferred alternative payment method in their preferred currency that is different from the merchant’s. We can help with that use case today. Let’s say a month later that shopper wants to return the item at a store in his home country and wants funds credited to his original online payment method and currency at the store’s POS. This presents a whole host of issues for the merchant including fraud risk, and integrations of APMs and FX to the POS. This type of use case is becoming more and more common across Europe as cross-border and omnichannel shopping experiences expand. Typically, the consumer is left with a sub-par return experience. We think we are well-positioned with our network to better solve this for merchants who are doing business with customers across Europe. Additionally, merchants will have one provider for online and in-store sales which is still a rarity in today’s payment environment.