Solving payment complexity key to merchant success in Hong kong

March 18, 2021 10:13
Photo: Reuters

Among the many impacts brought about by a very unexpected year, 2020 saw unprecedented growth for online merchants across Hong Kong and Asia Pacific.

This year, Statista predicts that revenue in the Hong Kong eCommerce market will reach US $7,598M and will continue to grow annually from 2021-2025 by 10.5%. 73.1% of the population will be eCommerce users in 2021 and this user penetration is expected to hit 83.8% by 2025. According to a survey on online shopping behavior in Hong Kong, conducted by Rakuten Insight, 84% of the respondents who had purchased online more frequently during the pandemic said they would continue to do so after businesses opened and social distancing measures lifted.

This growth is undeniably great news for merchants across Asia, as well as those looking to expand across the region and further west. However, with this growth comes lightening-fast development across merchants’ platforms. Whether it’s keeping up with new consumer trends, bringing onboard new sellers, or expanding into new markets, it can be easy for merchants to focus on the new and overlook the importance of their payment setup and its impact on customer experience.

Think about it from your experience as a consumer: we know the feeling of irritation that accompanies a less-than-smooth payment encounter with a merchant. The reality is, the bigger the merchant grows, the more that payment complexity can (and will) snowball. Ensuring that the consumer experience is as streamlined as possible is vital to merchants’ success. Building and maintaining hard-earned customers’ trust, while maximising business growth, means investing in a seamless payment experience and removing unnecessary roadblocks for customers.

The case for payment orchestration

As they are getting up and running, many merchants will choose a single payment services provider (PSP) that combines just enough payment methods and risk management tools to meet their needs. This might work well initially for merchants, but can be limiting in the longer-term. What if your PSP stops supporting the exact payment method that is popular with your customers? What if, during the peak hours, your PSP suffers a system outage resulting in serious revenue loss for your business? Can you actually control your payments? Will they cover the regions where you plan to expand?

To overcome the limitation of a single PSP, merchants then often try to integrate multiple PSPs by themselves. And at a high level, this is a good idea. However, building payment connections in-house risks businesses ending up with a disintegrated, fractured payment setup. Unfortunately, it not only results in a flawed customer experience and decreased payment acceptance, but also high transaction costs and increased demand for internal resources alongside risk and security issues.

This is where a payments headache starts to creep in, and it’s made even tougher by the fact that there is no single solution to solve the problem. Instead, the answer for merchants lies in the ability to bring on board a payment orchestration tool or provider that combines these payment processes on a single platform, and future-proofs their business to ensure a customisable, integrated and seamless payments experience.

Let the POP take the weight

Moving away from a single payment provider, and/or a DIY multi-provider system, and towards a payment orchestration platform (POP) has many strategic benefits.

Firstly, using a POP, merchants can seek out independent guidance - driven by data and analytics - on what works best for their specific business case and then integrate a bespoke payment setup for the markets in which they operate. Payment methods and preferences vary from region to region, so merchants selling and expanding on a regional or global scale can take advantage of a POP that allows them to be able to cater to their customers’ payment preferences. Think about the range of payment types found just in Hong Kong as an example: we can choose Alipay, WeChat Pay, PayMe, UnionPay, Tap & Go (just to name a few), or pay directly by credit card at checkout.

The routing capabilities provided by POPs also help merchants direct their transactions through the most beneficial payment providers. This eliminates declines associated with provider failures or outages and optimises the front-end checkout experience. By helping merchants to boost their payment acceptance rates by routing transactions through regional payment processing providers in appropriate markets, a POP can improve the likelihood that transactions are accepted, making the process quicker and more successful for customers.

Business shouldn’t be risky

A frictionless payment experience at both the front and back end is far from the only positive aspect of opting to use a POP. Having a robust, yet flexible, POP means merchants can protect themselves and their customers with embedded risk management tools - without sacrificing convenience and ease-of-use.

More than ever, many customers are now shopping or using services online out of necessity, so the security of the purchasing experience is of continued importance. Merchants must be sure they can identify fraud without making purchasing so friction-filled that they block out legitimate customers. At the same time, it’s crucial to ensure that returning customers who have registered payment details aren’t falling victim to fraudsters who seize access to their accounts. As you can imagine, getting this balance right is crucial. This is why POPs enable a merchant to embed top of the line risk management tools into their platform - to help alleviate the responsibility, pressure and cost associated with security-proofing merchants’ businesses and to ultimately mitigate the detrimental effects of these situations when they do happen.

A seamless experience

The merchant landscape across Hong Kong and beyond APAC is more alive than ever before and using a holistic payment infrastructure with connections to a wide range of global and local payment providers, tools and risk management systems, comes with a host of benefits for merchants.

The bottom line is that the best possible frictionless and localised payment experience for customers in any country and sector is absolutely crucial for success. Your payment set-up should empower you as a merchant and enable freedom, choice and the ability to go beyond borders and capabilities. With this in place, The alignment between frictionless payments and merchant success will continue to drive growth for those who choose to accept the current pace of change.

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Regional VP and Head of Enterprise, Payoneer