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Why payments are more than plumbing

(Image credit: Image Credit: Håkan Dahlström / Flickr)

Transactions are the foundation of business, but too often in our line of work we see payments treated as an afterthought. 

As a consumer, we’ve all gone through an online checkout, only to find they don’t take our card or our preferred mobile wallet; spotted a product online and struggled to find a place we can buy it; had to leave an app, or worse still, download one to buy something; or landed on a confusing looking checkout page that looks completely different to the rest of the website. 

As a merchant, we’ve spent time refining our websites to look beautiful, but the data needed for compliant billing can’t be gathered in a way that fits the site. We’ve found that our audience loves to shop on social platforms, but had to entice them away to a different site to buy. We’ve needed to pay other merchants selling via our online marketplace, or other service providers contributing to our platform, but can’t manage the settlement and disbursement quickly enough.

In all of these, the transaction is tacked on at the end of the experience, like an awkward yell of ‘Wait! You have to pay for that!” as you depart the store.

Clearly, the payment is more than just transacting or getting paid. 

Improving conversion

About 69 per cent of all online transactions are abandoned. Business Insider calculates that this costs retailers around $4 trillion a year. Imagine if that was a physical store. One hundred people walk in, fill their baskets, walk up to the check out, and then 69 of them just leave. 

Now in all fairness, a large portion of cart abandonments are simply a natural consequence of how users browse e-commerce sites – many users will be window shopping, comparing prices, saving items for later, exploring gift options, etc. This is largely unavoidable. However, a substantial portion of these could be converted into a sale through a better experience. Baynard Institute has suggested that around 35 per cent are convertable – just by improving the checkout and payment process.  

These changes include things like a shorter and clearer checkout, surfacing the relevant payment options that people want to use so they can choose the one they want, and stronger security. Research shows that around 42 per cent of millennials currently limit their own mobile transactions because of security concerns.   

It’s clear that cracking online and mobile payments is a huge priority to improve business sales, however it has an impact beyond conversion too.

Finding new customers

By making payments a core pillar of a business’s commerce strategy you can open yourself up to a brand new customer base. This could be as simple as plugging into new online marketplaces or embedding buy buttons within social experiences. Or it could be as involved as creating APIs or custom partnerships with new platforms to deliver new services to audiences you’ve never encountered before. 

For merchants, making payments and being paid have and will always be a core part of doing business, often outright determining success or failure. This means monetisation is never an afterthought. You’re enabling new audiences to buy as and when you find them.

As a consumer, payment often comes down to trust – do you trust the site, app or experience you are about to pay. If you are a repeat customer, the answer is probably yes, but for new customers, trust must be earned. That means presenting simple processes, payment experiences being consistent with the rest of the customer journey and presenting payment options that are familiar to the customer. That includes everything from different currencies to ensuring that their credit card, their digital wallet or even their crypto-currency of choice an option. 

Seeking new markets

Online essentially means that all retailers are international from the outset. PayPal’s most recent data shows that tens of thousands of UK SMEs started to sell online to a new country between July and December 2016. The top 5 online export markets for British SMEs during that period were the US, Germany, Australia, France and Italy. In each of these markets it’s not only currency and taxes that you have to consider. Each have different customs and approaches to payments, whether its credit card providers, invoice systems, digital wallets. If you don’t provide a familiar experience, customers in those markets are unlikely to buy.

This doesn’t mean you have to become an expert in international payment systems, currencies, customs and taxes. As a merchant you’ve probably got more immediate priorities when it comes to growing your business.

Scaling your business

The good news is that by embedding payments within your strategy, scaling payments becomes an automatic by-product of the strategy. Payments is a complicated subject, so becoming an international payments expert probably isn’t worthwhile, considering you have a business to run. Fortunately you can work with partners that will help you get where you want to be. 

By using APIs (an Application Programme Interface, that provides a set of routines, protocols, and tools for building software applications) and SDKs (software development kits) from an experienced payments provider, you can essentially allow them to run the show, using their compliance and developer/integration expertise to build and scale the best possible payments experience. This ease may also open avenues to embark on new partnerships and integrations that may help you scale your business. 

For the CEO of a company, or a CFO looking at costs, or even a marketer optimising user experience -- the payments experience can influence a business’s entire ecosystem. How, where and when you pay and get paid is a powerful asset, and one that should be interwoven through a company’s entire strategy from the start.

UK online retail sales reached £133bn in 2016, an increase of just under 16 per cent, year-on-year. Mobile commerce accounted for much of this growth and with the expected growth of mobile transactions reaching 74 per cent over the next two years, merchants have a short window to tap into that growth, or be left behind.

David Nunn, Head, Braintree Europe
Image Credit: Håkan Dahlström / Flickr

David Nunn is the Head of Braintree Europe.