Markus Rinderer, CEO, PAY.ON: "International expansion has never been as easy as today"

In your opinion, how do alternative payments contribute to the development of the cross-border sector?

In today’s cross-border environment, alternative payment methods are a guarantee of growth and success in ecommerce. 55-60% of global ecommerce transactions are completed using alternative payment methods, and this figure continues to rise.

There are basically two areas of consideration for merchants. Firstly, the target countries where expansion is to take place, and secondly, how to best serve foreign cross-border customers.

Take the USA as an example. For merchants expanding into North America, the payment landscape, with its credit and debit cards, and e-wallets like PayPal, is largely uniform. But for US merchants with customers from a country like China, the integration of popular Chinese payment methods and the inclusion of suitable acquiring partners forms the basis for increased turnover, and failure to account for this leads to a higher bounce rate.

Central and Eastern Europe offers a further example. Few continents are as challenging as Europe when it comes to payments. Created in August 2014, SEPA is the first cross-border standard for bank transfers. But basically, each and every country has different preferred payment methods. The challenge of optimizing payment processes to meet this situation applies equally to European and non-European merchants.

PAY.ON has tackled this problem with COPYandPAY, which enables easy and comprehensive integration of payment methods into the payment process. More than 380 connected providers and their payment methods are available worldwide. Active Payment Method Selection also makes it possible to combine payment methods with risk groups, further reducing fraud and chargebacks.

The key advice merchants usually get when they expand internationally is “go global, think local”. What is the importance of a suitable payments set-up per country/region in this context? How can this set-up boost conversion rates?

The key to success, as mentioned, is taking account of local situations. Simply by including the three most important local payment methods, conversion rates can be increased by around 14%. For globally-oriented merchants, choosing the right payment technology partner is therefore paramount when it comes to installing connection and integration processes on demand in a technically simple and cost-effective way. As a global white-label infrastructure provider for PSPs, ISOs and Acquirers, PAY.ON has proven it can fulfill these requirements.

A tremendous growth in cross-border shopping is currently registered in countries like Russia, China, UK etc. Do you think the explosion of cross-border ecommerce is a threat for local merchants? What should a foreign retailer do to conquer such markets?

To answer the first question, no – as long local merchants see cross-border ecommerce as an opportunity on their side. Firstly, it offers them the chance to generate foreign customers themselves, meaning higher turnover. To achieve this, the payment process has to be adapted accordingly, which nowadays is quick and easy to do. Secondly, it can be beneficial for local merchants to remember their strengths – such as customer service and proximity to customers – and continue to build upon them.

For foreign merchants, international expansion has never been as easy as it is today, because of the fast technical availability of local alternative payment methods and their easy integration into the payment process. In fact, the only obstacles that do exist, if there are any, are of an emotional nature on the consumer side, and in the set-up of efficient logistical processes.

Could the technological development be perceived as one of the stimulating factors for customers’ preference for mobile payments in countries like China?

Mobile payment is asserting itself because of the benefits for everyone involved, and we’re sure it will soon play a major role in payment. The advantage of mobile payment is that it is suitable and very easy to use for POS retailers of any size, the technology required for it already exists, and is cheap and quickly available. Because simplicity and cost-effectiveness will continue to be important, the foundation for mobile payment is there. These facts apply to basically every market regardless of its geographical location. The continuous advance of mobile phone and broadband networks will also accelerate the availability of mobile payment.

Is there any difference in the way EU and US consumers select specific alternative methods to pay for online products? How would you characterize these two markets, from this perspective (the use of alternative payment methods, trends per region)?

As we know, card-based payment, especially credit card – which is also used to assess creditworthiness in the US – is widespread in North America. Because of this uniformity, and because of the benefits of credit cards, alternative payment methods face stiff competition. However, alternative payment methods, especially e-wallets, continue to become more attractive.

Europe on the other hand is a continent of many countries, each with its own technological and payment specifics. Unlike the USA, each country generally has a number of different preferred payment methods. In August 2014, the first ever trans-European standard for bank transfers was created (SEPA) and this now meets the requirements of modern cross-border ecommerce. Instruments such as PAY.ON’s Global Coverage Tool make it possible to find out which major alternative payment methods exist in each country. PAY.ON’s COPYandPAY further facilitates quick and easy integration of these alternative payment methods into the payment process.

Which is the best approach to tackle the cultural barriers when it comes to the adoption of alternative payment methods?

The best, simplest, and quickest way is to choose a technology partner who already has partnerships with local payment partners, and is therefore familiar with local specifics, and has fully integrated them into their payment infrastructure. The second decision-making criterion is the simplicity and flexibility of the technical interface. PAY.ON is known to fulfill both of these requirements perfectly with its global payment network, API and associated services.

In a more general context, Bitcoin can be considered an alternative payment option (non-credit card based). Do you agree with the idea that cross-border ecommerce capabilities and Bitcoin implementation are going to be the secret ingredients to a successful strategy for companies?

In our view, it’s too early to predict whether Bitcoin will succeed as an alternative payment method for mass use. It is conceivable that Bitcoin may only really be interesting as a payment option in certain industries. At PAY.ON we will continue to observe the development of Bitcoin, in order to determine whether we will make Bitcoin available to our customers through our services and infrastructure.

How do companies address the fraud issues related to alternative payments in order to protect customers?

Due to regional and therefore limited geographical scope, and specific security features such as PINs and TANs, alternative payment methods offer a smaller target for fraud than global ones. There is, as we know, no such thing as total security, which is why the right fraud and chargeback set-up is essential. With OneClickSafe, PAY.ON offers an efficient, maintenance-free shield which can be activated at the click of a mouse. The principle is that OneClickSafe utilizes the risk-checks integrated into the PAY.ON platform and offered by all leading payment providers, incorporating more than 25,000 monitoring rules, which PAY.ON has condensed into seven of its own highly efficient risk checks.

Will biometrical features add any value to the security level of paying via alternative methods?

The latest biometric applications for consumers, such as smartphones, are clearly user-oriented – offering simplicity and reliability. But some are viewed critically by privacy groups, media, and users, in the context of the general debate about data privacy. Conversely, in India biometrics have been the key to making bank accounts available to millions of consumers. We cannot yet predict how and when biometrics will begin to play a role in global and national payments. From a purely technological point of view biometrics can be useful, since they simplify and accelerate security checks for consumers, doing away with the need to remember passwords and PINs.

About the author:

Markus Rinderer, CEO, PAY.ON is responsible for strategic planning and development, human resources as well as key account and product management. Previously, he was responsible for various product developments at Germany’s leading payment service provider.

Company description:

Founded in 2004, PAY.ON offers global outsourcing services and routing for monetary transactions, wallet solutions, risk management and monitoring services, as well as various technical solutions.