The shopping journey is centred around the shopper and their experience. Merchants must ensure that they have designed a shopping flow that minimises friction and therefore maximises ‘conversion’. There is no ‘one-size fits all’ payment option today that meets merchant and consumer needs across all of Europe. Working with a payment partner in this market who has depth in their offering is key to be able to be trusted by customers.
Payments have evolved in each of the European markets due to local factors around culture and history. Swedish consumers expect to be able to pay with Swish, Swiss customers with Twint, and Polish customers with P24. People shopping online expect to see payment options that they prefer – with the level of friction they are used to – with the level of guarantees they demand.
As mentioned above, it’s key to be able to offer consumers the options to pay in the way they want. That can be in the form of payment (local wallets versus cards) or the type of funding that payment has (credit versus debit). Consumers also need to be able to pay in the currency they want. Merchants need to simultaneously meet all these requirements for their customers and consider the requirements for how they want to manage their own businesses.
Merchants often run into issues around reconciliation from multiple different local payment schemes. And the reason is that they all have their own settlement and reconciliation data and timings, currency exchange concerns to ensure profitability for the goods/services being offered, and risks when shipping outside of the EU for cross-border transactions. Fraud is the fastest growing industry for ecommerce – especially fraud against merchants –, so it is critical to be able to manage growth with security.
One of our key focuses is to be able to meet all these minimum requirements across every market we operate in so that there is no burden (compliance or otherwise) on a merchant to figure it out.
One element of localisation that is often hidden from both consumers and merchants is taking local laws and customs into account. PSPs are required to follow these laws in local geographies to ensure that the product meets the local customs in place. A great example of this is the law passed in Sweden to require PSPs to provide a direct debit option as the default option on a checkout page.
From the merchant angle, PSPs have to follow different local laws and requirements (e.g., AML, KYC, KYB), and these requirements differ from pure merchants to marketplaces. This is what ‘we’ as a PSP do today. We have teams of colleagues who make sure we comply with merchant onboarding and ongoing compliance requirements. This protects both us and the merchant and their business. Generally, as a PSP, we also have many requirements to comply with, local regulations across consumer law, commerce law, payments law, and financial law. This is our licence to operate.
Verticals are another lens to consider when understanding the elements a PSP must address. Ecommerce is a collection of local and global ecosystems. Let’s take the example of hotels: there are both global and local booking systems and value chains. It’s important for PSPs to be embedded into both to ensure that all links that merchants may have and want are available and ready to use. Rather than being a blocker for merchants’ access to new and more customers, we would see ourselves as an enabler of a seamless experience.
This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2022–2023, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.
Ted Bowman has expertise in product design and development, with an emphasis on paytech, ecommerce, and marketplaces. He was director of product management at Klarna and together with his international team, he built and managed multiple products, including Klarna’s first payment gateway and marketplace offering. Post Klarna, Ted has been responsible for many pan-European initiatives working with Nets and Nexi to develop their offering, including the creation of Nexi Relay. Ted is currently the Chief Product Officer at Nexi Relay.
Nexi is a European paytech, listed at Euronext Milan, present in high-growth, attractive European markets and in technologically advanced countries. Nexi’s technology platform and best-in-class professional expertise enable the company to operate in three market segments: merchant services and solutions, cards and digital payments, and digital banking and corporate solutions.
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