:: By Oren Levy, Zooz ::
In a perfect world, every online browsing experience would involve the customer finding exactly the type of product that he or she wants to buy, proceeding through the checkout seamlessly and becoming forever loyal to the merchant’s brand.
However, more often than not, barriers arise that complicate the checkout process, prevent conversions and compromise long-term customer loyalty.
While potential prospects usually experience online payments as a relatively easy, quick and painless process, you are aware of a hum of activity taking place behind the scenes in the few seconds of an online payment. Each transaction involves a journey through several processing stages and a variety of financial entities, including acquirers and gateways, customer and merchant banks (the issuing and merchant accounts, respectively), the credit card scheme and more.
The process is made even more complicated by the structure of the marketplace platform and the multitude of channels over which transactions are conducted today, including e-commerce, native apps, and, more recently, wearable technologies and social media platforms.
All of this makes encouraging end-users to convert more complicated. It is critical for marketplace platforms to demonstrate how they offer merchants concrete tools and tactics to facilitate a frictionless shopping experience and a streamlined checkout that leads to an approved transaction.
This article will describe the main problems that marketplace platforms face when it comes to attracting merchants looking for a platform to host their business, and suggest strategies that will enable merchants – and, in turn, your platform – to significantly increase conversion rates, enabling long-term end user retention and acquisition of new merchant customers.
Provide a Branded, Hosted Checkout
One of the main merchant requirements my platform must offer is the ability to accept payments from end-users. My merchant customers expect me to provide a secure, frictionless and visually appealing checkout solution to increase conversions on their e-commerce sites and prevent shopping cart abandonment.
While the issue of preventing cart abandonment is key, ensuring that the checkout is secure is no less critical. Added to these components is the merchants’ need to make their brand stand out so that customers will remember it and return. How can I provide a solution that can protect the sensitive data being submitted by paying customers – without incurring chargebacks – while enabling merchants to offer a seamless, branded checkout?
A marketplace platform must be able to offer a streamlined checkout that ensures higher conversion rates for the merchants, as shopping cart abandonment is one of the biggest challenges they face. This problem can be resolved by creating a less demanding checkout that requires customers to fill out as few fields as possible to complete their purchase, but enough fields to ensure that the transaction isn’t fraudulent and to prevent chargebacks.
To avoid situations that will reflect badly on merchant branding and lead to costly chargeback liability battles, make sure that your marketplace payment solution offers hosted payment fields. This means that the payment fields of each merchant’s checkout are actually hosted by a payment platform, and any data submitted in these fields is securely stored on the platform’s PCI (Payment Card Industry) compliant servers. If your platform does not offer merchants PCI compliance, ensure that the payment mechanism you provide to merchant customers offers the PCI coverage. This type of solution minimizes your merchants’ responsibility for securing the payment and ensures the functionality of the checkout, without taking consumers out of their comfort zones or the brand experience.
Recognize Returning Customers with Tokenization
As a marketplace platform, my goal is to enable merchants to collect and store buyer payment data so that returning customer details can be easily recalled to facilitate a faster checkout process. However, I am worried that achieving PCI compliance is a costly and complex undertaking, especially if multiple websites are involved.
You can enable merchants to provide a seamless checkout experience for returning customers by employing a payment platform that uses tokenization, a PCI compliant technology used by leading payment platforms, including Apple Pay. A “token” is a 16-digit number created to represent a credit card used or stored previously for payment purposes. When a return customer reaches the checkout and requests to pay, tokenization technology uses the token associated with the customer to recall the stored payment data from the secure servers. This is quickly becoming the industry standard for businesses looking to recall previously used customer payment data without compromising data security or the customer experience.
Accept Multiple Regionally Preferred Payment Methods
Merchants want to encourage foreign shoppers to convert on their websites, but find that they don’t seem to have many cross-border conversions despite having a fair amount of cross-border checkouts initiated. How can a marketplace platform prevent foreign shoppers from abandoning their subscriptions at the payment stage?
You can enable merchants to significantly boost cross-border conversions by accepting regionally preferred payment methods on your marketplace platform. Regardless of where they reside, foreign consumers always feel more comfortable paying in their local currencies, with familiar payment methods or regional credit cards. This type of familiarity generates trust and encourages conversions. Supporting PayPal is a good start, considering it is used for cross-border transactions by consumers and retailers in 57 different countries.
Detect Fraud to Prevent Chargebacks
Conversion rates on my merchants’ websites seem high, but then they are barraged by chargebacks. I need to provide fraud protection to ensure that my merchant customers have a high number of transaction approvals and a low number of chargebacks, while weeding out and blocking genuine fraud.
You should proactively implement risk assessment protocols to detect fraud and prevent chargeback impact. A smart payment system is able to adjust fraud detection levels at various locations on the basis of pre-set rules. In addition to data-driven fraud technologies, you might consider integrating solutions that reassign chargeback liability. This means that merchants are not responsible for reimbursing consumers for legitimate fraud activity that the fraud detector has failed to identify.
Ensure Transaction Acceptance with Real-Time Data
Many customers are converting on the hosted websites, but their charges are being declined by my acquirer or gateway. This makes it difficult to encourage brand loyalty. How can I discover the reasons behind these declines to prevent this in the future?
Today, there are many data-driven solutions that actively monitor and collect transaction information as payments are processed. With this intelligence, merchants can evaluate the efficiency of their payment options from the aspect of decline rates, among other criteria. By understanding why transactions are being declined, merchants can proactively make changes to ensure better processing performance.
Optimize Payment Acceptance with Multiple Providers
Foreign customers have started taking an interest in the merchants’ marketplace websites, but transactions from specific localities are being routinely declined by my payment processor or gateway.
As a cross-border vendor, you need to work with local acquirers to optimize payment acceptance in problematic regions. Smart payment solutions can route payments in real time to the most suitable regional service providers in order to reduce costs and increase acceptances. This type of solution deals with all of the complexities related to your payments, and has the flexibility to scale dynamically to accept new merchants.
Analyze Behavior to Meet Customer Preferences in the Future
As a marketplace host, I want to enable merchants to utilize aggregated e-commerce data to improve end user experiences, but I am confused by the regulatory requirements of accessing and storing customer data. I do not have the security know-how to safely retain customer information or analyze it.
It is becoming industry standard for payments solutions to offer compliance, enabling merchants to collect and store customer data through their gateway, acquirer or payment service provider (PSP). You should integrate a payment technology that also analyzes this payment data, giving merchants insight into inefficiencies in their processing protocols as well as improved understanding of customer behavior on their website. This kind of actionable data can indicate checkout deterrents, which can be adjusted to cater to customer preferences in the future.
Oren Levy is an experienced professional with over 15 years' experience in payments, commerce and global business. Prior to becoming the CEO of Zooz, Oren was an executive director at Brookline (USA) for 11 years, managing its worldwide sales efforts and strategic partnerships initiatives. Before Brookline, Oren held marketing, business development and technical positions at BATM, Fundtech and L.G.E.S.