What is your view on the importance of global online bank e-payments (OBeP) in cross-border ecommerce?
Nowadays, the bank account is really at the heart of all ecommerce activities. If you think about it, all other payment methods are dependent on the bank account. Whether you buy with your credit card or with invoice, that bill has to be paid each month, from the bank account. The debit card is normally connected to the checking account. Even the exchange of cryptocurrencies has got a deep link with the bank account today. In all of these contexts online banking payments is essential for ecommerce. And offering local bank payment methods on foreign marketplaces is very important for consumer trust.
The bank account is really the financial hub of people’s everyday life today and I don’t foresee a shift on the horizon. The real paradigm shift would be if employers of the world would start paying salaries in other ways.
The real importance lies in what problems OBeP really solves for ecommerce.
What are the issues that online bank payments solve for ecommerce?
Well, the problematic nut to crack with online banking e-payments globally is mainly for the merchants. How can a multinational merchant offer bank payments to multiple markets and getting a bank market coverage in those individual countries? How do the merchants integrate with all those banks separately and how do the finance departments at those merchants handle all the settlement reports? All this is a monstrous administrative headache for the ecommerce companies today.
And banks seem to struggle to create a viable product for ecommerce on a global level. And I don’t really blame them. It is not their core business. That is where we step in, covering multiple banks for the consumer and still maintaining that high security the consumers enjoy with online banking.
Companies like Trustly move independent of the current banking systems and enable geographical spread through technology. With Trustly you sign one agreement, integrate once for all markets. At the end of the day your finance department will only deal with one settlement report for all markets and banks combined.
How do financial institutions, merchants and consumers benefit from online banking e-payments?
Online banking e-payments enjoys a few unique features in general, a couple of common denominators. You could argue that the bank account is actually the original e-wallet. It became digital when the online bank office was introduced 15 years back. The consumer intuitively knows how it works. It has got the highest possible safety and a user interface and means of authentication that the consumer recognizes. The transaction history is gathered in one place.
I think what OBeP can bring in general is trust. Banks are trusted institutions for money transfers. And online bank e-payments takes that trust to the commercial world.
But at this point you need to start looking at the differences between services to understand the benefits for different target groups.
Trustly competes with a number of bank-operated online and mobile bank account payment solutions in Europe, such as MyBank and Sofort (recently acquired by Klarna). What makes Trustly unique?
Because of our bank independent setup we are unique in many ways. One thing that I want to point out is that Trustly is both a receiver and sender of funds which means that we take responsibility for the whole payment chain. This also means that we have a product that is much more versatile, and relevant for many more applications. Let me elaborate.
For ecommerce, refunds is a practical example and a huge headache for merchants which have profound effects on the bottom line. In the fashion segment, for example, return rates are at staggering 30-50%. This creates a long chain of administrative tasks not least in the finance department. With Trustly, refunds to bank accounts can be automatized because we know the consumer,we know who the sender is.
On marketplaces, where consumers trade goods and services between each other, trust is a huge factor. Because we identify both parties in the transaction we are in a unique position to create that trust. Also, marketplaces fail many times to monetize on the platform itself. The exchange of money takes place separately with cash predominantly. This is a huge untapped revenue opportunity for the marketplace which we can help solve.
These are just a few practical example that makes Trustly unique. Another aspect, which I know is important to many readers of The Paypers, refers to minimized chargebacks since the transfer is irreversible and, thus, minimizing risk of fraud.
What are Trustly’s future plans?
We have got an ambitious plan for further growth. We kicked-off 2014 with 6 markets. In the beginning of 2015 we will be in 15. Strategic partnerships are key of course and we are looking to tailored-made solutions for global customers that are looking for a partner to support their own expansion. Platforms and PSPs are strategically important and we will supercharge the tech team to keep up with this growth. On the marketing side my team will work with a continuous work to listen to our customers, both merchants and consumers, to refine the existing products and make the offering even more attractive. It will be an exciting 2015 to look forward to.
About the author:
Stefan Backlund is Head of Marketing and Communications at Trustly since 2014 and has previously had leading consumer marketing positions at Klarna and Philips. Stefan is passionate about user experience and has a background in interaction design.
About Trustly
Trustly is a Swedish Fintech company that develops secure online banking e-payment solutions for ecommerce. Founded in 2008, it currently processes more than 7 million payments annually. It was ranked as one of Swedens fastest growing technology companies in 2013. Trustly is licensed and supervised by the Swedish FSA.
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