Payment choice is a good thing that came out of the pandemic, but it’s gotten so complicated that eCommerce players need to optimize now so that complexity doesn’t lead shoppers to abandon their carts en masse.
In a conversation with PYMNTS, PayU Chief Technology Officer Ronen Morecki discussed the dizzying array of choices available now and how merchants must look at things differently.
“You need to make sure that once a user wants to pay you, they actually are able to pay. [Given] approval rates of payments, not every payment transaction ends with a success. You want to improve that,” he said. There are several ways payment service providers (PSPs) like PayU are facilitating controls on payments complexity to ensure more conversions.
Noting that more merchants are now selling cross-border in multiple countries using localized payments, he said eCommerce companies need to master the art and science of offering the best payment methods at the optimal moment in the customer journey.
Reciting a litany of new payment methods, systems and regulations that can lead to declines, fraud and chargebacks, Morecki said it’s bringing forth the need for greater payments orchestration. That decisioning is increasingly clearing a path for more streamlined flows.
“The logic is becoming more and more complex, and the good providers today that do real optimization, give tools to make those decisions very easy, very fast and without the need to develop or code,” he said. He used PayU as an example, noting that its decision engine “allows you to choose what is sent to fraud risk management, what is sent to chargeable guarantee, what is sent to 3D Secure,” and other ways transaction routing can be upgraded.
Decisioning delivers top-line revenue improvements between 5% and 20% for merchants that route intelligently, applying friction where data suggests and easing up in other cases.
“Every transaction that we save is money to the merchant, and every fraudulent transaction that we don’t block is fraud and a chargeback,” he said.
See also: Payments Are Digital Passport for Businesses Seeking Access to LatAm Consumers
Flavors of Fraud
With fraud at record highs shadowing an economy that has lurched heavily into digital in the past two-plus years, payment service providers are justifiably obsessed with beefing up their defenses against it.
Labeling fraud and risk as two world-class challenges confronting all merchants today, Morecki called out fraud detection methods like 3DS and more, saying, “all those come into play when you do optimization. If you do optimization right, with the same website, with the same goods, with the same services, with the right optimization you can significantly increase your top line.”
Good thing too, as these services all cost money to use. That often leaves merchants bewildered by the back-end system choices that enable all that payments optionality for consumers. Useful services like chargeable guarantee, for example, eat into profits.
“The differences between these services, and I’m talking about optimization, is that each one costs something. There is a cost to use chargeable guarantee,” he said. “It’s pretty expensive. There is also cost to use risk vendors and risk processing. How do you optimize all of them?”
Using a PSP that understands how to optimize with cost controls at the core is a good start. For example, he said, sending everything to 3DS from the start may not be the most efficient or cost-effective solution.
“There are rules on what you need to send and what you don’t, but for the ones that you don’t send to 3DS,” he said, “do some risk evaluation to protect yourself, and based on that score, decide to accept the transaction or not.”
This is what an orchestrated transaction flow looks like and how it streamlines high volumes of digital transactions, using data signals to apply risk friction only where it’s needed.
See also: Africa’s Digital Future Beyond Mobile Money
No Code — and ‘Coopetition’
In the orchestration space, no-code integrations are gaining ground with merchants for simplicity and effectiveness across the challenges they face in digitizing payments. Morecki said they let companies easily customize their payments interface to optimize user experience.
“If you [make] the checkout experience, the payment experience extremely easy and extremely seamless, you probably will optimize that part of the checkout experience,” he added. “That’s very important.”
Dealing in localized payments is another way merchants and PSPs optimize for the growing trend of cross-border commerce, he said. Confusion multiplies when entering overseas markets, and merchants limit options region by region — honing down to the preferred methods consumers are used to paying within each specific geography. That means, for instance, working with PIX in Brazil and iDEAL in the Netherlands, offering installments in places like Turkey where there’s a strong preference for buy now, pay later, and accepting cards everywhere.
“Offering those options at the right time to the right user can significantly increase the funnel of payment and the success of that user,” he said. “When possible, allow the user to store credentials, definitely in goods where there’s repeated customers, repeated purchases, don’t ask the user to redo all the payment settings again and again in every purchase.”
He offered the example of online travel agency (OTA) Kiwi, which optimized its site for numerous languages and allows bookers to pay by whatever means they wish.
“They took these two parameters, the currency and the language, and they show you different checkout pages based on that,” Morecki said. “If you choose Chinese, for example, or Chinese currency, you will see Alipay as one of the payment methods. If you choose something else, you will see PayPal and cards.”
Optimization needs of the new wave of digitization may also usher in a new era of “'coopetition’ — cooperation and competition — between same vendors,” he told PYMNTS.
This is where flexible orchestration through platforms like PayU and others is coming to bear more as solutions need to work as one to achieve the best outcomes.
“I think we’re going to continue seeing more and more companies join together. There is no one vendor that can give everything with this complexity,” he said, adding this is where a platform can orchestrate services. “There’s no single provider in the world that can give all the options, all the payment methods, all the countries, you always need to work with multiple providers.”
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