It's no secret that the payment industry has come a long way. From 1997, when Authorize.net started it all by collecting transactions by fax and email, the developments have been extraordinary. Today, we are looking at a rapidly evolving industry, from instant payments, thousands of payment methods, global infrastructure, open API, remote KYC, to purchases for cryptocurrency. Keeping up with the technological developments has proven to be quite challenging for even the most modern payment service provider (PSP). However, compromising on technological advancements is not an option for those who want to stay at the forefront of the business.
It’s needless to say that nowadays payment providers should offer much more than just a platform for transaction processing. They should be able to offer merchants with every payment method and type that present profit opportunities. Their business processes should be automated, with fast and clear analytics, and technology should be dynamic and innovative.
The choices are endless with payment gateways. However, for a PSP business, the perfect recipe can be questionable. Payneteasy has brought together a number of thoughts, based on case studies, client and partner surveys and communications, and the firm’s own research on what separates leading PSPs from the crowd.
The ability to integrate fast with financial institutions, banks, new payment methods, products, etc. is one of the most important factors in being a great PSP. Merchant demands are constantly on the rise, and the PSPs that can deliver the fastest are the ones that will win the race. Upon request for certain integrations that can boost their profits, if it takes months to deliver, or the PSP hesitates because it's not worth the financial investment that the project requires, the company will most likely lose the client to a more prepared PSP.
"Our merchants have such an array of needs and requests, and if we weren't able to customize our solution for them, we wouldn't be where we are today," says one of Payneteasy’s leading clients. Those clients that bring profits know their worth, so if a PSP doesn’t value them enough to customize projects that further their growth, they will go to another PSP that does and has probably already propositioned them. Each PSP can grow from their clients’ needs because upon creating for them, that PSP will have just added another product to its portfolio. Requests repeat themselves, and expanding an offerings only increases the PSP’s value.
For example, Payneteasy’s client SBC Tech, a large Russian PSP, was launching a new product for micro financial institutions (MFIs), and the goal was to provide an efficient solution in terms of cost and productivity. Payneteasy approached it by dividing classic P2P transfer transactions into 2 parts – CFT and AFT- account to card and card to account. For the loan payouts, CFT was used, so MFIs could easily make their payouts to client cards. For the loan repayment, irrevocable AFT operations were used which could be configured as a recurring payment according to the needed scenario. The solution including a scoring function, that provides cardholder information regarding reliability and history that activates upon start of processing. This customization positioned SBC Tech as leaders in their field who are known for innovation, and currently they hold over 70% of the Russian MFI online market.
Firms need to make every transaction count. A legitimate transaction should never fail and PSPs can use tools to increase traffic volume and acceptance rates.
The first way to go about this is with easy, customizable, smart payment forms. Most modern PSPs have all the global payment methods from Visa, MC, to APM and local payment methods. It is inarguable that providing all possible methods definitely increases the number of payments. However, one of Payneteasy’s clients discovered that too many options sometimes lead to confusion and abandonment of their merchant's website. In conclusion, the company discovered that too many choices aren't good either and the best approach is to be smart and informed, and to give only the relevant choices. Together with Payneteasy, the firm designed a payment form that should not accumulate all possible payment methods on one page, but only to display relevant ones according to customers' IP address or other criterion. This simplifies the process, and provably increases payments.
The second way is to customize payment routing and balancing systems. Directing traffic the right way is imperative to optimizing payments. For this to take place, PSPs need a flexible routing system that could be based on any transaction API parameter, that could also include any additional parameters obtained after undergoing third party systems (such as a loyalty system that defines whether it's a returning customer, etc.).
The combination of routing and balancing systems that consider different transaction criterion before directing to the acquirer or chain of acquirers will significantly boost acceptance rates and henceforth profitability.
Innovation is key in an industry whose regulatory initiatives are constantly evolving, fraud is prevalent, customization is necessary, and insight and analytics are crucial. Anyone operating in this sphere wants to be the trend-setter, not the follower, in order to be positioned as a leader.
When building a payment solution, it’s important to keep in mind that the faster you’ll be able to provide partners with the new high-demanded technologies the more success you get. Although being innovative could be quite challenging for payment providers as it costs a lot and takes up huge resources, there is always a way to achieve this. The option is there to partner with a platform provider that enables the PSP to be the best and to implement innovations fast and without necessity to develop it by yourself.