Steve Warner, PAY.ON: "End-to-end payment services: a way for acquirers to remain competitive"

What changes are you seeing in acquiring models, as the payments landscape continues to shift, and how is this creating new opportunities for acquirers?

The traditional boundaries between payment service providers (PSPs) and acquirers have become increasingly blurred. We are seeing this in Europe, and also in North America. In the US, Independent Software Vendors (ISVs) and Value-Added Resellers (VARs) are adding payments services to their portfolios, which is challenging traditional ISO models. Irrespective of their core business, payments companies are seeking to own the entire merchant relationship. With the consolidation that we are seeing in the market, offering end-to-end payment services is also a way for acquirers to remain competitive and grow their business.

Additionally, we are seeing the continued globalisation of ecommerce putting pressure on credit card acquirers, as the importance of alternative payment methods rises. As a result, acquirers are rethinking their business models to see how they can add value to their merchants, especially because cross-border ecommerce presents a huge revenue opportunity.

How does PAY.ON, as a technology outsourcing partner, enable acquirers who are looking to take advantage of new revenue opportunities?

Payment service providers (PSPs) are extending their value chain to include acquiring services, in response to merchants’ desire to work with a single payment provider. There is also a trend towards US ISOs who are gaining European acquiring licenses, which is a further threat to the traditional role of the acquirer. Above all, merchants are looking for simplicity, and a suitable “one stop shop” solution allows them to streamline their ecommerce operations. This is causing attrition – and therefore lost revenue – amongst acquirers.

However, acquirers can also extend their payment services and board merchants directly, reducing merchant attrition and creating a portfolio of payment services to attract new merchants. To put it another way, the best defence is a good offence.

This is why PAY.ON delivers a Global Merchant Gateway for Acquirers. This is a fully modular “toolkit” for acquirers seeking a solution that is scalable, flexible and secure. Our core gateway is optimised with advanced modules that give acquirers the ability to extend their value chain by offering merchants fraud prevention tools, extended global coverage, or a wide range of business services. Acquirers gain access to PAY.ON’s global payment network of more than 260 international and local acquirers, and nearly 100 alternative payment methods. This technical connectivity is hugely beneficial to acquirers who want to offer merchants cross-border capabilities and grow their business internationally.

What are the benefits to acquirers who expand their services using a ‘white label’ solution? What part does merchant mentality play?

Merchants are looking for simplicity, especially small and medium sized businesses where payment acceptance is only part of the puzzle. This simplicity can be achieved by dealing with only one solution provider for all of their payment services, however only if that solution provider offers a comprehensive set of services.

A while label offering, such as PAY.ON’s, allows acquirers to become that comprehensive online payments solution provider. Because acquirers brand our merchant gateway as their own, they gain the ability to extend their payment services and board merchants quickly and easily, without incurring substantial technical development costs. In the rapidly-evolving ecommerce space, merchants need to move quickly in order to remain competitive. Acquirers can give these merchants the fast time to market needed to be competitive by partnering with PAY.ON and using flexible, scalable payment technology.

What other considerations are there for acquirers who wish to board merchants directly and offer an end-to-end solution? What challenges exist and how can these complexities best be tackled?

There’s the ‘build versus buy’ question that a business must address internally. In this case, it means evaluating the benefit of building the technology needed to expand payment services, or whether it is more effective to ‘buy’ – or outsource – to a specialist technology partner. Every business will have a different answer to this question; however, speed is often a decisive factor. Buying comes at a cost, but the faster time to market achieved by outsourcing means increasing revenues sooner, and this drives business growth.

Acquirers also need to consider the needs of their clients. To enable internationalisation of ecommerce businesses, they must be able to support the alternative payment methods that are expected in local markets. Card payments still dominate in North America, however a broad range of direct bank transfer, eWallets, and invoice-based payment methods need to be accounted for in each of the key European markets. Simply by offering the three most important local payment methods, merchants stand to increase their conversion rates by 15% to 20% on average. And, by maximising conversion rates, it obviously has implications for the revenues of their payment providers.

Regulatory and compliance issues are also crucially important when boarding merchants who want to take their ecommerce business cross-border. Markets such as Brazil offer huge potential, but complex tax laws and regulations mean that acquirers should foster local partnerships to ensure success. PAY.ON, with an extensive network of connections to alternative payment methods, and local and international acquirers, is in an ideal situation to advise acquirers and make introductions to facilitate growth.

What is the importance of global acquiring in a cross-border ecommerce context? Are there any specific markets profitable for cross-border acquiring?

There are a number of national markets worldwide that are dominated by single acquirers and therefore ripe for competition. American non-bank acquirers in particular are seeing opportunities abroad, with a domestic market perceived by many as saturated. There are challenges though, and this is – in part – what has driven recent acquisitions by US non-bank acquirers looking to establish a footprint in Europe.

The interest in Europe, for example, is clearly evident from the growth of events such as the Global Acquiring Conference (GAC). As a sponsor and invited speaker at the GAC, this is an ideal forum to discuss these challenges and opportunities with acquirers, and foster partnerships that will help these businesses grow.

Steve Warner will speak about the evolving world of e- and m-commerce at the Global Acquiring Conference in London, May 5-7. PAY.ON is a sponsor of the GAC, and will showcase their white label global payment gateway solutions for acquirers, ISOs, payment providers, ISVs, and VARs.

About Steve Warner

Steve is PAY.ON’s SVP of Sales and Account Management for the EMEA region. Previously, Steve was VP Cardnet Merchant Services at First Data and, prior to that, he held senior sales and client relationship roles in Royal Bank of Scotland and Worldpay. Steve brings substantial expertise in merchant acquiring and 20 years’ experience in European payment processing to his pivotal role at PAY.ON.

About PAY.ON

PAY.ON delivers white label global payment gateway solutions to payment service providers, ISOs, acquirers, ISVs, and VARs, enabling them to fully outsource payment transaction processing or integrate a gateway-to-gateway solution. PAY.ON enables payment providers to rapidly increase international revenue, reduce costs and risk, and accelerate market expansion.