While working at CERN in March 1989, the British scientist Tim Berners-Lee envisaged organising information as an interconnected web rather than a hierarchy. Originally known as The Project, the idea became the World Wide Web. Thirty years on, it’s difficult to overstate the impact this has had on how we interact, react, and transact.
Could you summarise the main impacts of the Web on commerce?
That’s a big question, but in short the Web created a massive power shift from the merchant to the consumer. Previously, information was held by the suppliers of goods. Retail was driven by availability, proximity, and opening hours, while consumers had to find, access, and shop for goods.
Nowadays, precisely because they are included on a global, interconnected network, consumers are the know-it-all type. They can research purchases, compare prices, and be better informed than the retailers who serve them.
Consumers have become more demanding and services more on-demand. Consumers expect to browse and buy 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.
The process of adding new sales channels whilst also linking old, disconnected ones for a single customer overview has been called multichannel, cross-channel, or omnichannel. However, channel distinctions are falling away. Commerce is moving from being channel- to customer-centric, enabled by intelligent systems and insights.
What have been the ripple or spill-over effects of this on everyday purchases?
Firstly, commerce is becoming increasingly cross-border. Customers are looking internationally for a wider selection of goods and lower prices. Online retail spend 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, estimates research firm Forrester.
However, while commerce is becoming more global, payment is becoming more local. Global payments brands such as Visa and Mastercard account for only 23% of global ecommerce payments. This will fall to 15% by 2021, Worldpay research suggests.
Far from consolidating, the payments landscape is getting fragmented. There are more local payment methods than ever before, which follow customers wherever and however they shop, at home or abroad, online or in-store. Acquirers, payment service providers (PSPs), and merchants must accept that unless they can localise payments, they will miss out on sales.
Secondly, payments are becoming invisible. Uber with its non-payment payment experience is the poster-child for this. At the end of an Uber journey, the passenger gets out of the cab. Payment just happens in the background. It’s not only seamless and frictionless, it’s also invisible. The passenger’s last memory of Uber is the ease and convenience of the experience.
With all these shifts – merchant- to consumer-omniscience, channel- to customer-centricity, global to local, and visible to invisible payment types – what are the implications for those who accept payments?
There are a couple more important shifts to consider: simple to complex, and generalist to specialist.
Payment sits on the intersection between commerce and finance. It’s critical for driving simpler, smarter, more customised experiences. However, payments are becoming more complex. Personalised, simplified customer-centric systems on the front-end create complexity on the back-end.
Merchants, acquirers, and PSPs will have to keep pace with more payment integrations, more card scheme mandates, and more regulatory changes, not less. It then becomes a strategic decision of where to play in the commerce ecosystem.
Where do firms want to put time, effort, and budget to create and sustain competitive advantage?
I’d advise focusing on the front-end systems of engagement, where they can differentiate and add value, and outsourcing the back-end systems of operation. This means developing smart partnerships for local payment expertise and a centralised, value-adding hub for payments.
PPRO aims to be the operating system for local payments. When it comes to local payment methods across 175 countries, we are the payment professionals. We process, collect, reconcile, consolidate, and pay out all on one contract and with one integration and platform.
This interview was first published in our The Payment Methods Report 2019 – Innovations in the Way We Pay. The report presents the key trends and developments in global and regional payment methods by highlighting the innovation, challenges, and developments in the use of the most important payment methods across geographies and verticals.
About Stefan Merz
Stefan Merz, Chief Operating Officer (COO), PPRO, is responsible for PPRO’s strategic operational and organisational expansion, and also directs implementation of the corporate strategy. Stefan has previously worked for Siemens and HP Enterprises in the US and as COO for Diebold Nixdorf.
About PPRO
Cross-border e-payment specialist, PPRO removes the complexity of international ecommerce payments by acquiring, collecting and processing an extensive range of local payments methods for Payment Service Providers (PSPs) under one contract, through one platform and one single integration. PPRO supports international payment methods across more than 100 countries, allowing PSPs to expand their merchants’ ecommerce reach, arrange hassle-free collection and achieve higher conversion rates.
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