I have no doubt that working through and planning for increased physical and digital convergence will still play a primary role for retailers and merchants this year as they seek ways to serve their customers in all realms of commerce. Customers want to be able to seamlessly transition from one channel to the next, and retailers will continue to focus on ensuring the shopping, payment and fulfilment methods can easily support this. This includes arming in-store associates with access to information, inventory and checkout options that allow them to offer line (queue) busting and endless aisle technology for onsite customers.
I fully expect that both the digitization of the in-store and omni-channel initiatives will be a huge focus at ‘The Big Show’ this year, as retailers in the US continue their efforts to tackle these challenges.
However, since the NRF’s premier event is becoming ever more global in scope, I thought it would be interesting to check in with some of ACI’s own eCommerce experts around the globe – to see how they view merchant payments and eCommerce changing in their own regions and identify common trends. Here’s what they had to say:
Richard Jolly, director – Merchant eCommerce, EMEA region
At one of the most crucial customer touchpoints during the entire shopping experience – the moment the customer is asked to pay for the goods they would like to purchase – merchants are faced with a two-part challenge:
- How to deliver a frictionless experience that maximizes the chances of conversion
- How to do this without exposing the business to unbearable financial risk
Research shows that offering the top three payment methods in any market, rather than only the top one, can increase merchants’ conversion rates up to 30% – this is key in delivering against the first part of this challenge. In Europe, this is a particularly big issue, with a wide selection of payment preferences across the region, including traditional cards, e-wallets and mobile wallets (e.g. Apple Pay and Samsung Pay), online bank transfer and invoice, to name a few. Even between countries and across different demographic groups, these payment preferences can change significantly, particularly in countries like Germany where the payments landscape is quite distinctive.
Of course, this isn’t a new challenge – but it is an increasingly important one for European merchants whose efforts in cross-border and cross-channel trade are increasing. To give themselves the greatest probability of international success, they must offer the local payment types that are recognized, trusted and utilized by the end consumer. Payment methods that could previously be described as nascent, are now mainstream.
Cost-effectively accessing the right acquirers and ensuring accurate, frictionless fraud protection is of course an equally important part of this challenge for merchants in our region. Addressing this requires the right technology and expert support.
Phillip Finnegan, vice president & GM, Pacific region
For this part of the world, EMV chip acceptance has had a significant impact on reducing merchant fraud. However, there is certainly more work to do in the coming years, with 85% of fraud in the Pacificregion driven by card-not-present fraud. With online shopping traffic growth increasing to 19.2% in 2017, up from 11.5% in 2016, there is significant opportunity for retailers in the Pacific region, provided they can implement the appropriate fraud protection measures.
In 2019, we will see the payments industry, government and merchant community all working hard to ensure merchants can be more confident about how to deploy effective fraud protection when accepting online transactions.
In line with global trends, we expect the explosive growth of alternative payments in our region. In 2018, we saw significant take up of Alipay and ‘buy now, pay later’ schemes such as Zip and Afterpay. Merchant demand has seen acquirers and larger payments players work hard to ensure acceptance of these payment methods across in-store and online channels. In 2019, many domestic debit card schemes are also set to move online and drive for widespread acceptance.
For retailers in the Pacific region, the unique opportunity is to capture a greater share of the giant Asian markets. Australia and New Zealand products are in high demand in Asia, so being able to effectively service cross-border trade from these markets, particularly into China, is a critical challenge for merchants this year.
Leslie Choo, managing director – Asia
We are seeing more and more payment options being offered in Asia (Alipay, WeChat pay, China UnionPay (UPI), Netspay, etc.) compared to two years ago when eCommerce payments were largely made via Visa and Mastercard.
Of course, China is a huge market for both domestic and international transactions – and many of the very large merchants such as Alibaba group and JD.com are looking at branching out their eCommerce services to capture more ASEAN customers.
This is likely to continue driving the trend towards cross-border commerce in the region and we anticipate that both B2C and B2B cross-border commerce will be a big growth area for merchants in our region this year. There will be a number of challenges to address, including understanding and addressing the local regulations in each country.
The other big challenge that will come with this cross-border growth is the ability to understand and secure against fraud in different countries and new markets. Taking advantage of global consortium data and seeking advice from global eCommerce experts will be a vital step for merchants as they plan their growth path.
A world of common challenges
So, my colleagues have provided some interesting perspectives from around the globe – and it’s evident that there are many common themes and challenges that we all share as a global merchant payments community. Cross-border and international expansion is clearly high on the agenda and I think this will increase focus on fraud and compliance globally as well, especially considering PSD2 and GDPR in Europe are requiring merchants to monitor and adapt their fraud and security approaches over multiple jurisdictions.
As the growth in connected households and the internet of things (IoT) continues, these shared challenges will remain at the forefront as merchants look for ways to take advantage of the emerging opportunities. Clear and tailored payment and fraud strategies will be a critical step to ensuring a seamless and safe experience here as well.
Find out why ACI Worldwide was named a Leader in Global Merchant Payments by Forrester.