So far, PSPs have fared well, but many are now experiencing the effects of rising merchant expectations. Merchants are asking their PSPs not only for secure and reliable payment processing, but for an extensive toolkit that will support any number of different growth trajectories
Key trends in eCommerce that are shaping merchant demands
Cross-border sales reached $300 billion in 2015, which is 25% of total global eCommerce, and this share is expected to increase. Merchants – especially those in digital goods such as gaming and media – know that cross-border expansion is a proven path to rapidly scale their business, but they need a PSP that can support them on this path. This includes having the right fraud prevention strategy in place, tailored on a country by country basis.
Another trend is that alternative payment methods continue to grow in importance, and in some markets have already overtaken card payments. North America is still card-dominated, but the picture in Europe and Asia is much more diverse. While it’s now a given that global expansion requires merchants to enable locally-preferred alternative payment methods, merchants should also be considering how they can optimize the payment mix within their domestic market. Optimization is a never-ending process, but even a slight increase in conversion rate as a result of optimization can significantly impact revenues.
On the technology side, there is a trend towards ‘open’ technology platforms, with RESTful APIs as the gold standard. Payment platforms utilizing such infrastructure are being sought out by merchants that know that the only constant is change, and are choosing to work with PSPs whose solutions are based on open platforms. The flexibility and adaptability that open infrastructure offers reduces the likelihood that a merchant will ‘outgrow’ their PSP, and have to reevaluate vendors as their business grows.
Pressure from new market entrants
PSPs are also facing pressure from new market entrants, as non-PSPs adapt their payments offering in a bid to win market share. Acquirers, logistics companies, banks, and card schemes are all encroaching on the traditional services offered by a PSP, cognizant of the fact that merchants – when it leads to efficiencies – prefer to work with fewer vendors and streamline their operations. In this highly competitive environment, it is critical for PSPs to develop a differentiated product portfolio. This may be via a range of value-added services, or by becoming highly specialized in a certain niche, vertical, industry or region.
Importantly, PSPs should ensure that they are backing up their offering with outstanding customer service. On the technology front, what is next-generation today is standard tomorrow, but superior customer – clichéd as it may sound – is timeless. It should remain a top priority.
The eGuide, “The Brave New Payments World for PSPs” details the trends shaping today’s eCommerce payments landscape, the major challenges facing PSPs, and how they can be overcome.