The drivers of payment performance on the European market in 2023

Wednesday 11 January 2023 09:15 CET | Editor: Raluca Constantinescu | Interview

Antoine Grimaud, CEO of Payplug, elaborates on the main drivers of payment performance on the European market in 2023.

What are the latest market developments and trends in Europe that have added complexity to payments, with a direct impact on merchants’ performances? 

In recent years, we have seen a diversification in modes of payment, pushed by the consumers’ demand to access even more options and flexibility in their purchasing. According to the Baymard Institute, in 2022, 9% of Internet users abandoned their baskets because they couldn’t find their preferred mode of payment. 

In fact, many fintech companies have positioned themselves in this field by offering more efficient or quicker means of payment. Buy Now, Pay Later (BNPL), one-click, pay-by-link, mobile payment: now you have to think in terms of fluidity in toolpaths, from shops to ecommerce. Although the rhythm by which these innovations are adopted varies from one market to another, each one represents a fundamental change in consumer habits and an opportunity for merchants. 

To this can be added the difficulty for merchants to adapt to the needs of each country, while optimising their costs. One of the answers is to have a multi-acquirer setup and be connected to multiple PSPs to offer relevant payment methods depending on the buyers’ expectations, as well as benefit from lower processing fees. 

In the end, you have to contend with regulatory development, such as the Payment Services Directive 2 (PSD2) which has reshaped the landscape of online payments in Europe. Since 15 October 2022, 3DSv1 is no longer supported by card schemes. Now, merchants’ priority must be to fully understand the workings of this regulation and take advantage of exemptions such as recurring payments, small amounts, and Transaction Risk Analysis (TRA), in order to offer a frictionless buying experience. 

All these factors are transforming payment into a complex subject, with a direct impact on merchants’ turnover. However, it’s not for them to absorb this complexity, but the PSPs who dominate this multi-layer technology. Optimising your payment strategy involves selecting the right partners in order to offer the most appropriate service for your client base. 

One in two French consumers has already abandoned an online purchase at the payment stage1. What are the specific pain points related to online payments nowadays? 

Among the main reasons for French purchasers abandoning payment, we note: doubts regarding the security of the payment page (88%), the slowness of the website (81%), a too-constricting level of security (61%), and a payment page which is not adapted to mobile phone use (58%). Merchants must therefore pay attention to optimising their payment page, beyond the payment facilities offered. 

However, not everything is up to them. Some transactions can fail: 10.6% of these failures are due to insufficient funds in the account, 6.73% to failed 3DS authentication, and 3.46% to a refusal of the transaction by the bank2

As PSPs, our role is to supply merchants with the keys to overcoming these obstacles and to improve their conversion, while maintaining a high level of security. 

How can a payment partner, such as Payplug, help merchants turn these complexities into opportunities and ensure the success of a transaction, from start to finish? 

As both a payment service provider and acquirer, Payplug covers the entire payment value chain, from acquisition to acceptance. 

Our 360° control of the payment data allows us to transform failure risks into opportunities for conversion, throughout the process: 

  • Payment page: we offer optimised integration models for all devices and means of payment adapted to market expectations, as well as card tokenization for one-click payments or subscriptions. 

  • Authentication: we make a customised rule engine available to our customers to fight fraud and manage TRA exemptions in such a way as to maximise frictionless authentication requests. 

  • Acceptance: as part of the BPCE Group, the number two banking group in France, we have unique access to cardholders’ transaction data. We have therefore been able to develop a solution, called FastPass, with which 98% of our frictionless requests for the BPCE traffic (20% of consumer transactions in France) are accepted. In the case of a decline or failure of authentication related to 3DS servers, our Smart Retry tool is able to replay the transaction almost instantaneously and in complete transparency for the purchaser. 

  • Post-transaction: sometimes, customers challenge their payment too. In this case, the merchant cites a chargeback and his turnover is affected. We help them monitor these chargebacks closely, identify and deal with their cause, and win their disputes (74% of our contests were won in 2021). 

All these accumulated bricks allow us to maximise the conversion rate at each stage and to obtain acceptance rates which are among the highest in the market – 94% on average for our Fraud Premium clients during the fourth quarter of 2021. 

What does the future of payments look like for Payplug? Are there any particular trends and use cases that are expected to impact the European market in 2023 and beyond?

Between inflation, diminished purchasing power, the energy crisis, and logistic difficulties, merchants are having to contend with an insatiable macro-economic environment. This context is putting them under pressure and compelling them to rethink their business models and undertake some optimisation in order to recoup costs and become more resilient.

In 2023, they’ll have every interest in multiplying their customers’ contact points (website, shop, resellers, social networks, marketplaces) in order to dilute their risk and ensure an income, even if one of their channels were suspended.

Merchants will also have to optimise what already exists, particularly their payment performance: they will be able to take advantage of the boom in payment orchestration platforms, allowing them to set up routing rules based on risk factors, location, and platform-specific data to route each transaction to the most relevant PSP (the one which maximises acceptance and conversion rates while minimising costs).

In parallel, Smart Routing technology is improving, and it allows transactions to be directed towards the most appropriate acquisition route in a domestic market in order to maximise acceptance. At Payplug, for example, our payment gateway allows us to dynamically route transactions to the best acquisition channel in France.

Finally, merchants will be able to count on the skill of payment stakeholders who control the whole value chain, have a 360° view of the payment data, and therefore offer shrewd advice for boosting the performance of merchant websites.

1. "Les Français et le e-commerce”, OpinionWay x Dalenys, September 2021

2. Payplug study on return codes for payment failures, 2022

About Antoine Grimaud

Antoine co-founded PayPlug in 2012. He holds an engineering degree from the École Polytechnique and an MBA from Harvard Business School. In 2022, PayPlug joined forces with Dalenys under a new brand name: Payplug.

About Payplug

Payplug is the French payment solution designed for merchants, e-merchants of all sizes, and fintechs. Our mission is to redefine payment performance in order to help the most demanding players in the market realise their business ambitions faster in France and Europe.

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Keywords: online payments, merchants, payment methods, BNPL, mobile payments, PSP
Categories: Payments & Commerce
Companies: Payplug
Countries: Europe
This article is part of category

Payments & Commerce


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