Imagine you run a shop on one of Europe’s busiest high streets. You have spent a lot of money on your fixtures and fittings, not to mention marketing. And your business has really taken off. Lines of locals and tourists with armfuls of merchandise wait their turn to pay. But before they get to the cash desk, they see a small sign: ‘We only accept payment by Visa or MasterCard!’ In other words, you can forget about paying with cash, cheque, debit card or with a voucher, and the tourists will have to put away their American Express or China UnionPay credit cards.
This slightly exaggerated example can easily be translated into the world of ecommerce. By excluding certain payment options you are bound to lose sales because some customers will have no choice but to leave without purchasing what they wanted. They will simply go elsewhere – and probably will not bother coming back to you. In a 2014 survey conducted by the PPRO Group, almost 50% of purchasers said they were likely to end a transaction if their preferred payment option was not available. You might not think that any merchant would damage their own business in this way. But many online merchants – whether they are retailers, travel companies or service providers – do exactly that.
The main attraction of international ecommerce to businesses is, of course, the opportunity it offers to enlarge the target audience, thus increasing revenue and profit. Numerous studies support the potential of international ecommerce: OC&C Strategy Consultants estimate that in the world’s six largest ecommerce markets cross-border trade will increase more than five-fold by 2020, from around USD 25 billion in 2013 to USD 130 billion in 2020 alone. There are estimated to be several hundred APMs, including real-time bank transfers, e-wallets, mobile wallets, direct debits, prepaid cards, electronic cash payments, local card schemes and payout services, which vary in popularity according to region and country. An understanding of local preferences is essential for successful business, and offering locally appropriate payment options enables merchants to maximise conversion rates.
Identifying the best payment methods for particular markets and target groups is costly, time-consuming and requires a certain level of experience. That is why online merchants usually turn to payment service providers (PSPs). Ideally, PSPs should not only provide a wide-ranging portfolio of local and international payment methods, but also offer valuable experience in those markets. Looking beyond technical on-boarding of merchants and transaction performance, factors such as experience, a large selection of payment methods and a comprehensive portfolio of value-added services generally outweigh even the most attractive fee structures. Online merchants who want to expand their business internationally would therefore be well advised to look closely at these factors when searching for a new PSP partner. Ultimately, payment is a defining factor when it comes to increasing reach and conversion rates.
But even when access to all the relevant payment methods is secured via a well-connected PSP, the merchants’ funds are still a long way from arriving in their bank accounts. Most PSPs are not licenced to handle money on behalf of their customers. In this case merchants have to collect their funds themselves, which requires a significant effort for each and every payment method they want to offer: negotiating different contracts in different countries and languages, considering different laws and regulations, opening and maintaining foreign bank accounts, obtaining local tax numbers and creating local liabilities, going through numerous KYCs – and that is just for the initial setup. On an ongoing basis, they would have to collect and track all payments individually and probably pay their banks a transaction fee for each one of them. Additionally, they have to create all the reports which they need to consolidate everything across all payment methods. If they can afford a bigger finance team, they could try to reconcile all incoming payments against their pending transactions, dispute chargebacks and find ways to provide refunds when required.
This is where PPRO steps in. Acting as a payment hub and acquirer between the payment scheme and the PSP, its services will make go-to-market extremely fast and ongoing management a breeze. With one contract and one integration, PSPs can give their merchants access to a vast range of alternative payment methods worldwide with value such as, for example, refund capabilities, being added to those payment methods. PPRO is more than a payments processor as it holds a licence to collect payments for PSPs and their merchants and therefore can also provide them with end-to-end reconciliation. The collection results in just one consolidated settlement to an existing bank account of the PSP or its merchants, no matter where they are, accompanied by a comprehensive report detailing all information needed. Additional services range from a single on-boarding and KYC of new merchants to sophisticated risk management and thus cover the full e-payment value chain. New payment methods are continuously being added throughout the world and are automatically available through a simple API without any further integration work. It’s important to note that PPRO does not provide its services to merchants directly. It is a pur wholesaler, white-labelling services exclusively to PSPs and other merchant aggregators such as acquirers, processors or marketplaces.
Hence, any PSP-like business wanting to offer their merchants a one-stop-shop solution to extend their reach into international markets and increase their ecommerce revenue should take a close look at PPRO’s offer.
About Ralf Ohlhausen
Ralf Ohlhausen, MSc in mathematics and Master of Telecommunications Business, has over 25 years’ experience in ecommerce, financial services, mobile telecommunications and IT. At PPRO, Ralf is responsible for increasing PPRO’s global reach, focusing on the addition of new payment choices to the company’s portfolio.
About PPRO Group
PPRO Group (PPRO), a cross-border e-payment specialist since 2006, removes the complexity of international ecommerce payments by acquiring, collecting and processing a range of alternative payments methods for Payment Service Providers under one contract, through one platform and one integration. PPRO supports international payment in over 100 countries.
This article is part of the exclusive Ecommerce Payment Methods Report 2016, an educational overview of the global payments industry. For more insights into the latest trends in ecommerce and e-payment methods developments please download a free copy here.
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