From the merchant’s perspective, proposing only main global schemes at checkout may seem like the fastest way to expand globally. Unfortunately, it’s not that easy and even if ecommerce is more and more global, we have to keep in mind that payments are still very often local for several reasons (acquiring rails, currency convertibility constraints, or local culture and habits).
From a customer perspective, local culture and habits are the most important aspects that a merchant should consider. According to several studies, the major reason for cart abandonment at checkout is due to the lack of preferred payment methods.
As a merchant, you can easily be seduced by the alternative payment methods narrative, which promises seamless experiences. However, before offering tens of APMs, you should ask yourself if it is the best strategy to make customers happy.
To answer this tricky question, several parameters should be considered:
business model: one-off, subscription model, a mix of both;
product: physical goods, services, digital products, and experiences;
industry: travel, luxury, fast fashion, high-tech, car renting, cosmetics;
industry fraud exposure: resellers, reshippers, complex fraudsters behavior;
buyer personae: financial inclusion, socio-professional category, age, tech-friendly, early adopters, conservative;
target customer/geography preferred means of payment: cards (global versus local schemes, wallets, bank transfers, instalments, cash on delivery;
applicable regulations: PSD2, GDPR, PIPL.
To face the regulations and standards challenging the pace of evolution and impacting their customers’ experience, global merchants should first consider the pros and cons of each of the possible strategies:
1. Rely on their PSPs’ checkout:
Pros: reduced compliance scope, fast go to market, easily add/remove a payment method;
Cons: strong dependency towards PSP, could require integration of several PSPs to address all the targeted markets, different CX from one PSP to another, could lead to complex monitoring and reconciliation.
2. Rely on a payment orchestrator:
Pros: one single integration to connect with a very large PSPs and payment methods catalogue, unified CX, seamless switching from one provider to another, fees optimisation, simplified monitoring, and reconciliation;
Cons: very strong dependency on the payment orchestrator and its own resiliency, loss of functional coverage in case the payment orchestrator is not following the upgrade pace of the payment providers behind.
3. Build your own checkout and integrate directly the different payment methods:
Pros: full control of the CX regardless of the payment providers behind the scene and their resiliency;
Cons: each payment method leads to a new project, the time to market could be long, direct contracting is required, and may lead to heavy investments each time a standard or a regulation evolves.
In fact, as a merchant, you have to consider alternative payment methods in order to gain your customer’s trust and maximise conversion rates. However, adding diversity at the checkout also brings more complexity not only from the technical side (Does my global PSP propose this LPM or not? Should I go with a local acquirer? Should I consider going with an orchestrator or an LPM aggregator?), but also regarding the financial and operational sides (accounting and reconciliation, acceptance currencies versus settlement currencies, fees, chargeback policies, authorisation versus capture) and in some cases, a local entity is even required.
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