A business guide to online payment processing services
“If you build it, they will come.” The phrase made famous by the iconic film also applies to today’s eCommerce sites, which are attracting consumers in droves. Quarterly statistics released by the U.S. Department of Commerce confirm that online sales growth consistently outpaces general retail growth.
As eCommerce gains ground among consumers, businesses of all sizes need to be able to accept payments online so they aren’t left behind. From new payment methods to emerging security concerns, we asked Vantiv Senior Leader and eCommerce expert Kathy Biedenbender for her insights.
How do you see online payments changing in the next year?
Large merchants like Amazon are setting the trend that others are following. If brick and mortar merchants don’t go online, they will be left in the dust. And they need to be able to accept the different payment types their customers want to use.
Everyone is looking for convenience and easy purchasing, and we find that online. Industries we wouldn’t have even considered going online five years ago are doing so now. Take grocery stores for example. This segment of online shopping is growing rapidly because consumers are interested in the ease of purchase and the convenience of delivery. I know the last thing I want to do after a busy day at work is go to the grocery store. It’s so much easier to get online, place my order, and arrange to pick it up curbside or have it delivered.
In terms of credit card processing, it’s about making the checkout experience as easy as possible. Merchants are broadening their acceptance strategy by allowing many different payment options such as Paypal and digital wallets. They are looking for payment processing solutions that offer these options.
Another shift has to do with online checkout. Merchants don’t always make this easy. Even returning customers often have to reenter information. This is where account on file becomes a very important feature. It reduces friction at checkout by eliminating the need for cardholders to input all of their data
What is driving these changes?
The biggest factor driving everything online is convenience—shoppers want everything right now. They are extremely busy, they know what they want, and they don’t want to wait for their orders to ship. The faster a merchant can deliver their products to customers, the better the shopping experience, and the more likelihood of repeat business.
Convenience is key from the merchant perspective, too. Businesses enjoy a lot of advantages by selling online. They can test out new products, unload excess stock, or add items to a clearance page without having to rearrange a showroom in a brick and mortar location.
Additionally, merchants are looking for high card approval rates with little risk. So the more they know about their cardholders, the better the experience will be. Recurring merchants should incorporate account updater solutions, which reduce issues and touch points with cardholders because data is systemically updated from the networks.
What key features should an online payments solution include?
Aside from payment security and fraud prevention tools, it really depends on the merchant’s business. For example, how do they want to grow their business? What card types do they want to accept from their customers? Do they want to sell internationally? Answering these types of questions will help determine the features they need in an online solution, and then, what type of partner can assist in the endeavor.
What challenges need to be addressed when accepting payments online?
Businesses need to do everything they can to reduce their exposure to a data compromise. They should look into tokenizing transactions to reduce PCI scope. And since fraud risk increases with online transactions, implementing a fraud monitoring system is key.
Ease of payment is another hot area. Cart abandonment is the #1 killer for merchants. They have to make easy for customers to checkout. Facilitating easy checkout and adding personalization features like product recommendations helps reduce card abandonment.
There are other considerations, too, such as factoring in sales tax and shipping costs. Consumers want to know exactly how much they will have to pay before they check out and if it’s significantly higher than what they expect, they may not complete the sale.
What is the biggest opportunity with web based payments?
Creating an online business allows a business to bring their products to a vast market, which is a great benefit in and of itself. But to do so, they really need to take a serious look into accepting digital wallets such as Apple Pay, Google Pay, and Samsung Pay. Consumers want that ease of payment that digital wallets offer. Additionally, all merchants should take a cue from Amazon, who is now accepting ACH payments. ACH can be cheaper than card payments for some merchants.
All this said, it’s important for businesses to start small and test out the waters with the payment types they accept online. They should see what their customers are using. For some merchants, accepting ACH can be as effective as accepting some of the newer payment types.
What can be done to mitigate fraud in ecommerce payments?
All businesses should be mindful that anyone can be a target for fraud. Implementing a chargeback fraud tool right away is the smart approach and will help save money in the long run. Many merchants wait to implement a fraud tool until it’s too late and they are already experiencing loss due to fraud and chargebacks.
Today’s fraud tools have come a long way, offering device and IP address/location and other features to ensure the person making the purchase is the cardholder and the purchase is legitimate. Additionally, the use of tokenization is paramount to reducing risk in the payments environments.
How do online payment offerings differ for brick and mortar merchants that want to expand online, versus eCommerce-only merchants?
eCommerce-only merchants don’t have the luxury of allowing customers to order online and pick up in-store. However they do have the advantage of easier inventory management.
Brick and mortar merchants have almost no choice but to go online if they are going to compete. We hear stories about retail stores closing or going bankrupt all the time. For businesses, allowing customers to place their orders online is key to survival.
Merchants need to consider where the industry they work in is going. Anything that can be conveniently shipped to someone’s house is going to go online. What has worked in the past is not going to work now, and business owners need to look to the future of payments and the merchant services that incorporate online transactions.