It doesn’t matter whether a company is a small to medium-sized enterprise or a large corporation, or where it’s based, we are all now operating in a global economy. Irrespective of the size of an enterprise, its location, or its product offering is, with the right payment and transaction mechanisms, it can compete equally alongside other companies worldwide.
The advent of digital payments and embedded finance has revolutionized the opportunities for companies to offer their products and services via e-commerce websites.
“Innovation on its own is not enough to make a company commercially viable in any market,” says Joel Bronkowski, Country Lead, South Africa at financial technology firm, Paystack. “Today’s e-commerce customers require seamless, secure, contactless payment systems, and the service providers need the same transactional security,” he says.
As such, payment providers must understand this shifting landscape and stay on top of the latest evolutions in the e-commerce sector. Having a thorough understanding of the challenges faced by e-commerce end-customers and the online sellers that those payment providers service.
But what are those challenges? And how is payment technology evolving to meet them?
Instant payments benefit consumers and businesses alike
Instant payments are important for consumers and e-commerce businesses alike. For consumers, being able to make payments instantly has many benefits including greater control and visibility over their finances. Think about it: how irritated do you feel when a payment you made a couple of weeks ago suddenly came off your account a few days before payday? What would it do to your ability to budget effectively for the month?
For businesses, meanwhile, instant payments offer several benefits, including the ability to fulfill orders faster (an important user experience differentiator), enhanced security thanks to the rich range of protective features available in many instant payment offerings, real-time inventory and cashflow management, and reduced costs thanks to lower transaction fees.
Transparent pricing helps give sellers certainty
In a period of mass socio-economic uncertainty, the last thing any e-commerce business wants is to be blindsided by unforeseen fees from its payment tech providers. Transparent pricing models can help overcome this worry. Additionally, they can help build trust and credibility, provide a measure of predictability for businesses, and make it easier for those businesses to be compliant with regulators.
“At Paystack, we know how important this level of transparency is,” says Bronkowski. “That’s why payments are only levied on successful transactions, with no integration or maintenance fees.”
Transaction success and completion rates become increasingly vital
Failed transactions can be massively detrimental to any e-commerce business. In fact, research shows that online merchants lose 62% of customers who experience a failed transaction. It’s also a much bigger problem than you might imagine. In the US, for example around 28% of online transactions fail. Similarly, the figure is around 26% for the EU. The numbers are likely similar for Africa. That means that a lot of e-commerce merchants are missing out on a lot of business.
According to Bronkowski, one key to ensuring that transaction completion rates are increased is to focus on integration.
“Paystack is integrated into some of Africa’s largest banking organizations which ensures an almost 100% payment success rate with bank cards,” he says. “Using different routes and pathways, this kind of integration can help ensure that payments are processed for optimal speed and ease of transaction.”
Improved fraud detection helps save businesses’ bottom lines and reputations
It’s estimated that e-commerce players around the world lost more than US$41 billion to fraud in 2022, with that number looking set to increase to US$48 billion this year. But fraud doesn’t just affect a business’s bottom line. It can also do serious reputational damage, affecting the relationship between business and consumer.
As Bronkowski notes, choosing the right payment-tech provider can be critical for reducing fraud risks.
“E-commerce businesses should look for a payment provider that has advanced manual and automated fraud detection systems, which protect merchants from fraudulent payments and any potential chargeback claims,” he says.
Payment choice drives customer attraction and retention
The days when an e-commerce business could get away with offering just one or two payment methods are long gone. Today’s customers, particularly in emerging markets such as South Africa, expect to be able to pay using whichever method they’re most comfortable with.
That includes everything from traditional credit and debit cards to instant EFTs, digital wallets, mobile money offerings, and even cash on delivery. If you’ve bought something from a big e-commerce site such as Takealot, you’ll have likely already seen how many payment options are now expected as default.
“Providing end users with choices on how to pay gives companies a competitive edge and is an easy way to attract – and retain – new business,” says Bronkowski.
Exactly how much of a competitive advantage it offers can be seen in the fact that almost half (48%) of businesses in a global survey reported losing 10% of their international revenue because payment providers don’t offer suitable payment options.
Borderless payments open up new markets to sellers
Despite what global socio-political ructions might suggest, today’s global economy has no borders, especially when it comes to trade. Businesses therefore need to be able to transact internationally from and into any currency from any bank-issued card.
That’s especially important in a country like South Africa where, despite significant growth in recent years, the e-commerce market remains comparatively small. Giving merchants the option to accept international payments broadens the number of consumers a business can reach by several orders of magnitude.
By Joel Bronkowski, Country Lead for Paystack