Traditional business models continue to change with the advent of e-commerce. Online merchants have to provide easy and secure payment solutions in order to cope with the increasing volumes of sales in e-commerce. At E-commerce Day in Hamburg, Johannes F. Sutter of Saferpay gave an update on trends in payment services for online shops.
Saferpay, a product of SIX Card Solutions, is one of the leading e-payment solutions in the German-speaking market. The payment platform provides national and international payment solutions and offers a global network of acceptance partners. Johannes F. Sutter is responsible for the operative business, sales, strategy at Saferpay.
PaymentObserver: What are the latest trends in the e-payment industry?
Johannes F. Sutter: As a payment service provider (PSP), we see strong demand among our online customers for the payment on invoice. This is not surprising as the checkout cancellation rate drops up to 90% if this method of payment is available. In contrast, mobile phone payment does not really seem to be gaining acceptance on the market. Retailers offering the option of mobile payment in their online shops are not reporting any increase in turnover. Not infrequently, mobile transactions account for less than 3% of total turnover. This goes to show that the market acceptance is not yet there.
PaymentObserver: These days everyone speaks of m-payment as being the next big thing. Can you give more insights from the PSP point of view?
Johannes F. Sutter: M-commerce is the new e-commerce. We help our customers to organize cashless payments easily and securely whatever the sales channel, be it at the POS or in the e-commerce/phone and mail-order business. We currently find that our customers are increasingly expanding their sales channels into the realm of m-commerce. We already have more customer queries and projects for the introduction of m-commerce solutions than queries relating to the launch of a standard e-shop in the e-commerce model. The retailers’ goal is plain: as well as the e-shop, the end-customer must also be able to purchase products and services on his or her mobile phone or iPad. Retail sales figures for m-commerce solutions are still not very high. But more and more people are finding out about services and products on their mobile devices and go on to order them in the e-shop or in their local outlet.
PaymentObserver: The other trend you mentioned is payment on invoice. What are the advantages of this payment solution ?
Johannes F. Sutter: The advantage is obvious: the customer orders goods from the large mail-order chains and pays for them on invoice. This is why the payment on invoice mode has such a high conversion rate. It’s interesting to note, however, that online retailers who have purchase on invoice as a method of payment try to offer their customers other methods of payment. The reason for this is the high level of returns among customers who wish to pay on invoice. The customer looks at the goods at home and decides a second time whether he or she needs the article or not.
PaymentObserver: The high level of returns is a big downside of payment on invoice. Is it also that high with other payment methods ?
Johannes F. Sutter: This is an interesting observation made by large mail-order companies: customers who have paid by credit card return 30% fewer goods. Returns are very expensive, so mail-order companies push for methods of payment like credit cards. They reduce returns and increase turnover.
PaymentObserver: Consumers have concerns about using their credit cards for online shopping because of security issues. How do online merchants and card companies address this problem?
Johannes F. Sutter: On the one hand, online retailers are becoming safer all the time in how they handle card data thanks to certification by card companies. On the other hand, the debit and credit cards issued by banks and card companies are becoming increasingly secure. Already more than 20,000 online retailers in Germany are in a position to process the new online cards with security queries (password, m-TAN or PIN). Furthermore, Visa is issuing new card types, called Visa CodeSure. The card has an inbuilt authentication function for diverse applications on various channels. The cardholder can generate the passcode on the card itself for the online transaction. In other words, having the card number and name of the cardholder is no longer enough to conduct a fraudulent transaction online. Both cardholder and the online retailer are protected in equal measure by the new technology.
Summary by Johannes F. Sutter: E-commerce and m-commerce payment is becoming safer and easier. Online retailers offering the payment options purchase on invoice with payment protection, debit and credit cards, PayPal and payment in advance are well positioned today.