Exclusive interview with PPRO - Get ready for customer-centric commerce

What are the key shopping trends of tomorrow that you’re seeing?

Firstly, we’re seeing that commerce is moving from being channel-centric to being increasingly customer-centric. Customers expect to able to browse and buy from anyone, anytime, anyhow from any device or funding source. This is driving the service model for merchants, who have to be open for business however and wherever their customers want to shop.

This is a tomorrow’s world trend that’s already here to today. It’s the idea that enabled by intelligent systems and insight, customer-centric commerce personalises and customises the experience depending on – you’ve guessed it – the customer. However, our language to describe this is still lagging behind.

Customers don’t refer to themselves as ‘ecommerce shoppers’ or ‘face-to-face shoppers’. To them it’s just shopping. Similarly, terms such as ‘crosschannel’, ‘multichannel’ and omnichannel’ on the merchant side are starting to sound somewhat outdated. It’s always been this way, when you’re trying to describe tomorrow using only the language of today. Cars were originally known as horse-less carriages. As driver-less cars today, they were defined by the removal of a characteristic. ‘Omnichannel’ still draws attention to the characteristic that has been removed, namely a channel.

Secondly, I’d say that commerce is becoming increasingly cross-border. Customers are looking outside their home countries for a wider selection of goods and lower prices. The amount spent on retail online in 2017 was around USD 2 trillion. With 60% of the world’s population expected to be online by 2022, 20% of B2C ecommerce will be cross-border by 2022, according to Forrester estimates.

What are the implications of these two main trends for acquirers, PSPs and merchants?

When it comes to turning browsers into buyers, our research shows that while commerce is becoming more global, payment is going the other way. It’s becoming more local. Global payment brands such as Visa and Mastercard account for only 23% of global ecommerce payments. This will fall to 15% by 2021, a Worldpay study says.

Far from consolidating, the payments landscape is fragmenting. There are more local payment methods than ever before – more than 350 of relevance alone worldwide. These follow customers wherever and however they shop, at home or abroad, online or in-store. Acquirers, PSPs and merchants must accept that unless they can localise payment, they will miss out on sales.

For example, if you’re selling online in the Netherlands or trying to appeal to Dutch e-shoppers, then accepting iDEAL is a must. 57% of online purchases are made via this bank transfer method. Web shops in more than 60 countries worldwide now also offer iDEAL as a payment method to Dutch customers. Merchants report substantially higher conversion rates – up to 90% – as soon as they add iDEAL as a payment option, claims iDEAL.

The second big payment trend is the continuing importance of cash. Ecommerce merchants diversifying into different countries or regions often conflate digital commerce with digital payment. However, one is not always a reliable proxy for the other. In Brazil, for example, the popular local cash-based payment method Boleto Bancário accounts for nearly 25% of online payment transactions. This offline way to pay for online purchases is not unique to Brazil.

Cash-based or cash-on-delivery type payments are prevalent worldwide. For example in Japan with Konbini convenience store payments, OXXO in Mexico, PayPoint in the UK and many more. Payment habits are strongly national. They have developed over time are formed by various cultural, political, economic and technological factors. Businesses wishing to expand internationally need to consider national payment differences.

But beyond payments, what else do acquirers, PSPs and merchants need to consider in the customer-centric commerce era?

It could well be that in the future, the commercial opportunity in payments goes beyond the payment part. It happens around the transaction. Switching packets of data from one place to another became commoditised long ago. As processing fees continue to decline, revenue will come from new ways to monetise data and value-added services. This may be loyalty, funds collection, speedier settlement, reconciliation or FX.

Greater personalisation and simplification on the front-end – allowing customers to pay anyone, anytime, anyhow from any device or funding source – creates greater complexity on the back-end.

Acquirers, PSPs and merchants differentiate their offering by focusing on the front-end customer experience. So, they need the right partners at the back-end to take care of payment complexity. The need for local payment expertise, as well as a centralised, value-adding hub for payments, has never been greater.

This is where smart partnerships and new collaborative models come in. The payments industry has a long tradition of outsourcing, partnering, and collaborating across a fairly wide set of organisations. If anything, outsourcing and specialisation within the industry are only set to intensify.

For example, people talk about APIs and setting up API calls to different systems. But it’s still a job of work to keep these API libraries up-to-date. Then there’s real-time settlement to merchants. But it’s a job of work to collect, reconcile, consolidate and pay out via bank accounts in different countries. It may be better, faster and cheaper to outsource such back-end tasks to a specialist partner.

In summary

As commerce moves from a channel-centric to a more customer-centric model, personalisation and customisation will be key. This will be enabled by intelligent systems and insights. Payments will play a central, enabling role in driving simpler, smarter and more customised experiences.

Acquirers and PSPs must help their merchants to increase reach and make customer journeys smoother. However, back-end complexity is growing, particularly with the globalisation of digital commerce and localisation of payment. PPRO enables local payment on a global scale across 175 countries. We process, collect, reconcile, consolidate, and pay out to merchants – all on one contract, one integration and one platform.

About Stefan Merz

Stefan Merz joined PPRO in November 2018 as Chief Operating Officer (COO). He is responsible for PPRO’s strategic operational and organisational expansion and also directs the implementation of the corporate strategy.

Before joining PPRO Stefan worked for Siemens and HP Enterprises in the US and gained wide-ranging experience in implementing business transformations, both in the US and internationally. Until recently, he served as Chief Strategy Officer for Diebold Nixdorf, where he managed significant acquisitions and divestitures.

About PPRO

PPRO enables integrated electronic payment processing on a global scale spanning the entire payments value chain from acquiring through processing, collection and settlement. PPRO acts as a B2B payments hub, connecting PSPs and other merchant aggregators, such as acquirers and processors, with local payment schemes.