FUTURE TRENDS SHAPING ONLINE PAYMENTS · 2019-07-22 · as Unified Payment Interface in India or...

FUTURE TRENDS SHAPINGONLINE PAYMENTS

Future Trends Shaping Online Payments2

Executive Summary

E-commerce growth is brisk. According to the e-Commerce Foundation, global B2C e-

commerce sales touched $2.1 trillion in 2018. Likewise, CapGemini and BNP Paribas

state digital transaction volume (“non-cash transactions”) will top 725 billion by 2020,

representing a gross processing value of USD 5.4 trillion. As the digital payments’

evolution continues, payment processors need to extend the value proposition

beyond payment processing. FSS analyzes emergent trends shaping the market that

would help acquirers stay ahead of the curve.

Rise of Alternate Payment Mechanisms

Activate Commerce on Call

Disrupting Convenience with Optimised Checkout

Invisible Authentication

Advanced Fraud Detection Tools

Data, Data and Data

MRM for Cementing Engagement

Get Cloud-Ready Infrastructure

3Future Trends Shaping Online Payments

Future Trends Shaping Online Payments2

Executive Summary

E-commerce growth is brisk. According to the e-Commerce Foundation, global B2C e-

commerce sales touched $2.1 trillion in 2018. Likewise, CapGemini and BNP Paribas

state digital transaction volume (“non-cash transactions”) will top 725 billion by 2020,

representing a gross processing value of USD 5.4 trillion. As the digital payments’

evolution continues, payment processors need to extend the value proposition

beyond payment processing. FSS analyzes emergent trends shaping the market that

would help acquirers stay ahead of the curve.

Rise of Alternate Payment Mechanisms


Disrupting Convenience with Optimised Checkout


Advanced Fraud Detection Tools

Data, Data and Data

MRM for Cementing Engagement

Get Cloud-Ready Infrastructure


Future Trends Shaping Online Payments4 Future Trends Shaping Online Payments 5

Rise of Alternate

Payment Mechanisms

According to an Aite Impact Note 2019, an approximate 50% of e-commerce transaction

volume originates from alternate payment mechanisms. Currently, the different types of

payments include:

The payments landscape continues to evolve, and consumers today use a range of

emerging payment options to transact online. Wide payment method coverage can

help acquire a large base of merchants. Whether it is to improve conversions in their

domestic market, or to achieve successful geographical expansion, the ability to

support local currency methods is the key.

Figure1: Evolution of digital payment ecosystem

Source: Aite MPE 2019

TMFrictionless Payments

Real-Time Rollout Live Real - Time Countries Planned go live in 2018-2020 In discussion or design

Bank transfers-based payment methods

Real-time payment schemes

Local card-based payments scheme issued bank cards

Digital wallet-based payment methods – Wallets linked with bank accounts and

cards; can support QR Scan and Pay functionality

Invoice based payment methods – Customers can pay for goods and services

purchased online post-delivery

Every country has distinct preferences, whether it’s paying by online banking as

Germany and Finland do or using QR Payments or real-time payment schemes such

as Unified Payment Interface in India or mWallets in China. Paytment service

providers and acquirers need to adapt to the shift and offer a broad array of

emerging payment mechanisms to incent transaction volumes, win merchant and

customer trust and reap benefits in terms of:

Higher sales conversions

Support for popular payment

methods drives higher

conversions

Lower interchange fees

As alternate payment methods bypass

expensive conventional card schemes,

merchants and acquirers realize

significant savings on interchange fees

Faster fund settlement

The merchant’s payment service

provider can initiate payments directly

from the consumer’s account and

expect these payments to clear

immediately using real-time or instant

payment rails. This provides the

merchant with improved liquidity and

lower working capital requirements

Access to a global shopper base

Borderless shopping is increasingly

popular among consumers worldwide.

Merchants can connect with customers

across the globe and boost conversions

by accepting payments in local payment

methods and preferred currency

Future Trends Shaping Online Payments4 Future Trends Shaping Online Payments 5

Rise of Alternate

Payment Mechanisms

According to an Aite Impact Note 2019, an approximate 50% of e-commerce transaction

volume originates from alternate payment mechanisms. Currently, the different types of

payments include:

The payments landscape continues to evolve, and consumers today use a range of

emerging payment options to transact online. Wide payment method coverage can

help acquire a large base of merchants. Whether it is to improve conversions in their

domestic market, or to achieve successful geographical expansion, the ability to

support local currency methods is the key.

Figure1: Evolution of digital payment ecosystem

Source: Aite MPE 2019

TMFrictionless Payments

Real-Time Rollout Live Real - Time Countries Planned go live in 2018-2020 In discussion or design

Bank transfers-based payment methods

Real-time payment schemes

Local card-based payments scheme issued bank cards

Digital wallet-based payment methods – Wallets linked with bank accounts and

cards; can support QR Scan and Pay functionality

Invoice based payment methods – Customers can pay for goods and services

purchased online post-delivery

Every country has distinct preferences, whether it’s paying by online banking as

Germany and Finland do or using QR Payments or real-time payment schemes such

as Unified Payment Interface in India or mWallets in China. Paytment service

providers and acquirers need to adapt to the shift and offer a broad array of

emerging payment mechanisms to incent transaction volumes, win merchant and

customer trust and reap benefits in terms of:

Higher sales conversions

Support for popular payment

methods drives higher

conversions

Lower interchange fees

As alternate payment methods bypass

expensive conventional card schemes,

merchants and acquirers realize

significant savings on interchange fees

Faster fund settlement

The merchant’s payment service

provider can initiate payments directly

from the consumer’s account and

expect these payments to clear

immediately using real-time or instant

payment rails. This provides the

merchant with improved liquidity and

lower working capital requirements

Access to a global shopper base

Borderless shopping is increasingly

popular among consumers worldwide.

Merchants can connect with customers

across the globe and boost conversions

by accepting payments in local payment

methods and preferred currency

Popular Alternate

Payment Mechanisms

Future Trends Shaping Online Payments6 7

1• iDEAL, a real-time payment method in Netherlands, is the most popular with 59%

share of the online transactions market.

• Klarna is a payments solution centered around making it smoother for consumers

to shop Klarna combined its checkout experience with products like Pay Later, Pay

Later in 3 parts and Slice it, and is gaining wide acceptance in Northern Europe.

The convenience afforded to customers to choose when and how to pay has

helped improve consumer conversion rates and in some cases using Pay Later in 23 parts increased average purchase value by 68% .

• Bahrain’s Electronic Network for Financial Transactions (Benefit) has launched a

national electronic wallet payment system, BenefitPay, to allow consumers and

merchants to transact without the use of cash or cards. User can download an app

on their smartphones (iOS/Android) to either send or accept payments. There is a

one-time step of the addition of the card, which is saved. The BenefitPay app 3works by using QR code scanning technology .

• Giropay (Germany) - Giropay is an interbank system, and the official

implementation of German banks for online banking. It is accessible to more than

40 million users in Germany, and is one of the most popular methods of payment

in the country. Giropay facilitates real-time bank transfers from customer to

merchant account, and it is integrated with more than 1,500 German banks.

“PPRO iDEAL”, accessed May 23, 2019, https://www.ppro.com/wp-content/uploads/2017/06/ps_iDEAL_170808_web.pdf

https://www.klarna.com/uk/business/products/pay-later-in-instalments/

https://www.bankingtech.com/2018/05/bahrain-benefit-s-from-national-payment-system/

1

2

3

• Asian social media giant WeChat implemented WeChat Pay, a payment feature

integrated into the WeChat app. It is one of the leading mobile payments solutions

in China and actively used by 900 million users every month. Users can complete

payments quickly with their smartphones. WeChat has Quick Pay, QR Code

Payments, In-App Web-Based Payments, and Native In-App Payments, all to fulfil

the full range of scenarios customers expect to fulfil and fully supported by most

Chinese retailers. At the end of every transaction, a confirmation is automatically

sent both to the merchant and the customer by the system. As of Q3 2018,

WeChat Pay had 84.3% market share in the third-party mobile payments sector in

China. WeChat Pay supports credit or debit cards or a Chinese bank account

(for real-time payments as well as to wallet top-ups).

• Unified Payment Interface (India): Unified Payment Interface India’s real-time

payment network allows customers to transact online using a virtual private

address linked to their bank account. The service has been adopted by

all banks in India and has crossed the 1Trillion volume mark.

• mPesa in Kenya is one of the most popular online payment instruments.

The company has 2.1Million active customers and 22,000 active merchants.

M-Pesa has partnered with AliExpress enabling customers to shop online and

pay via m-Pesa.

Future Trends Shaping Online Payments

Popular Alternate

Payment Mechanisms


1• iDEAL, a real-time payment method in Netherlands, is the most popular with 59%

share of the online transactions market.

• Klarna is a payments solution centered around making it smoother for consumers

to shop Klarna combined its checkout experience with products like Pay Later, Pay

Later in 3 parts and Slice it, and is gaining wide acceptance in Northern Europe.

The convenience afforded to customers to choose when and how to pay has

helped improve consumer conversion rates and in some cases using Pay Later in 23 parts increased average purchase value by 68% .

• Bahrain’s Electronic Network for Financial Transactions (Benefit) has launched a

national electronic wallet payment system, BenefitPay, to allow consumers and

merchants to transact without the use of cash or cards. User can download an app

on their smartphones (iOS/Android) to either send or accept payments. There is a

one-time step of the addition of the card, which is saved. The BenefitPay app 3works by using QR code scanning technology .

• Giropay (Germany) - Giropay is an interbank system, and the official

implementation of German banks for online banking. It is accessible to more than

40 million users in Germany, and is one of the most popular methods of payment

in the country. Giropay facilitates real-time bank transfers from customer to

merchant account, and it is integrated with more than 1,500 German banks.

“PPRO iDEAL”, accessed May 23, 2019, https://www.ppro.com/wp-content/uploads/2017/06/ps_iDEAL_170808_web.pdf

https://www.klarna.com/uk/business/products/pay-later-in-instalments/

https://www.bankingtech.com/2018/05/bahrain-benefit-s-from-national-payment-system/

1

2

3

• Asian social media giant WeChat implemented WeChat Pay, a payment feature

integrated into the WeChat app. It is one of the leading mobile payments solutions

in China and actively used by 900 million users every month. Users can complete

payments quickly with their smartphones. WeChat has Quick Pay, QR Code

Payments, In-App Web-Based Payments, and Native In-App Payments, all to fulfil

the full range of scenarios customers expect to fulfil and fully supported by most

Chinese retailers. At the end of every transaction, a confirmation is automatically

sent both to the merchant and the customer by the system. As of Q3 2018,

WeChat Pay had 84.3% market share in the third-party mobile payments sector in

China. WeChat Pay supports credit or debit cards or a Chinese bank account

(for real-time payments as well as to wallet top-ups).

• Unified Payment Interface (India): Unified Payment Interface India’s real-time

payment network allows customers to transact online using a virtual private

address linked to their bank account. The service has been adopted by

all banks in India and has crossed the 1Trillion volume mark.

• mPesa in Kenya is one of the most popular online payment instruments.

The company has 2.1Million active customers and 22,000 active merchants.

M-Pesa has partnered with AliExpress enabling customers to shop online and

pay via m-Pesa.




The retail landscape has changed significantly in the last few years due to an increased

demand for self-service, digitization of shopping and shifts in consumer buying behavior.

Increasingly, customers are turning towards new conversational platforms for everyday

access to digital services. By 2023 UK-based Juniper Research forecasts 8 billion digital

voice assistants will be in use by 2023, recording a 25.4% compound annual growth rate.

Voice shopping currently makes up a small fraction of total sales. However, as machine-

learning-based Natural Language Processing models mature, an ability to offer convenient

and contextual shopping experiences would improve traction. A key shopping talent built

into Alexa is the ability to easily reorder items from a user’s purchase history to make the

process quick and seamless for customers. So when customers order a product, Alexa

determines existing brand preferences based on transaction history.

Walmart, for instance, has partnered with Google Assistant, Google's AI-powered voice

assistant, which is available on more than a billion devices. The company is rolling out a

new voice-ordering capability, Walmart Voice Order, that works across Google Assistant-

powered platforms, including Google’s smart speakers and displays, smartphones,

smartwatches and more. Walmart customers' purchase histories will be linked to Google 4

Assistant, so the assistant will know which type of products customers prefer .

https://techcrunch.com/2019/04/02/walmart-partners-with-google-on-voice-enabled-grocery-shopping/4

Disrupting Convenience with

Optimized Checkout

An optimal checkout flow can positively influence transaction fulfillment rates, and

overall brand perception. One-touch checkout across channels using any payment

instrument has become a the new normal for driving consumer convenience. Many

acquires and PSPS today support recurring payments by storing payment credentials

and executing payments “in the background” without customers' direct involvement

in the experience.

FSS Payment Gateway enables customers to transact instantly using their

mobile number or e-mail id. At the backend, the customer credentials are

linked to a bank account, saving customers the time and the hassle of

entering card data and bank account details.

Instagram launched in-app Instagram Checkout in 2019. To use Checkout, an

Instagram member stores a credit card or PayPal data (can be bank account

information) and a shipping address within Checkout. The app also lets

shoppers initiate returns, cancel orders and get shopping support. Instagram

has become important to retailers and offering native checkout makes the

mobile buying experience seamless.

Pinterest is utilizing “Action buttons” within their platform to allow users to

add items to their Amazon Wish List or to complete a purchase directly from

within the Pinterest site. With Amazon set to take advantage of instant

payments and PSD2 in Europe, it is likely that account-to-account payments

will be offered through this solution.




The retail landscape has changed significantly in the last few years due to an increased

demand for self-service, digitization of shopping and shifts in consumer buying behavior.

Increasingly, customers are turning towards new conversational platforms for everyday

access to digital services. By 2023 UK-based Juniper Research forecasts 8 billion digital

voice assistants will be in use by 2023, recording a 25.4% compound annual growth rate.

Voice shopping currently makes up a small fraction of total sales. However, as machine-

learning-based Natural Language Processing models mature, an ability to offer convenient

and contextual shopping experiences would improve traction. A key shopping talent built

into Alexa is the ability to easily reorder items from a user’s purchase history to make the

process quick and seamless for customers. So when customers order a product, Alexa

determines existing brand preferences based on transaction history.

Walmart, for instance, has partnered with Google Assistant, Google's AI-powered voice

assistant, which is available on more than a billion devices. The company is rolling out a

new voice-ordering capability, Walmart Voice Order, that works across Google Assistant-

powered platforms, including Google’s smart speakers and displays, smartphones,

smartwatches and more. Walmart customers' purchase histories will be linked to Google 4

Assistant, so the assistant will know which type of products customers prefer .

https://techcrunch.com/2019/04/02/walmart-partners-with-google-on-voice-enabled-grocery-shopping/4

Disrupting Convenience with

Optimized Checkout

An optimal checkout flow can positively influence transaction fulfillment rates, and

overall brand perception. One-touch checkout across channels using any payment

instrument has become a the new normal for driving consumer convenience. Many

acquires and PSPS today support recurring payments by storing payment credentials

and executing payments “in the background” without customers' direct involvement

in the experience.

FSS Payment Gateway enables customers to transact instantly using their

mobile number or e-mail id. At the backend, the customer credentials are

linked to a bank account, saving customers the time and the hassle of

entering card data and bank account details.

Instagram launched in-app Instagram Checkout in 2019. To use Checkout, an

Instagram member stores a credit card or PayPal data (can be bank account

information) and a shipping address within Checkout. The app also lets

shoppers initiate returns, cancel orders and get shopping support. Instagram

has become important to retailers and offering native checkout makes the

mobile buying experience seamless.

Pinterest is utilizing “Action buttons” within their platform to allow users to

add items to their Amazon Wish List or to complete a purchase directly from

within the Pinterest site. With Amazon set to take advantage of instant

payments and PSD2 in Europe, it is likely that account-to-account payments

will be offered through this solution.


1110 Future Trends Shaping Online Payments Future Trends Shaping Online Payments

“Fifth report on card fraud, September 2018”, European Central Bank, accessed, May 24, 2019,

https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudreport201809.en.html#toc7

5

The vectors of fraud attacks have become more sophisticated with the launch of new

payment modes across markets. (View Table on Fraud Types) According to the

European Central Bank report on card fraud (September 2018), the share of card not 5 present fraud in total value of fraud is 73% as of 2016.

Further with deployment of real-time payments, the transaction processing window

is shrinking rapidly, drastically reducing the time available to detect fraud and

suspicious transaction patterns.

Most acquirers have deployed rule-based fraud detection systems. The rules are

effective in performing basic transactional checks such as velocity and value controls.

While rule-based risk scoring allows companies to respond well to quick changes in

fraud, they cost more to maintain and test. Statistical models can also deteriorate

quickly without warning or the ability to fix them. Predictably, these rules based on

‘and/or’ principles can result in false positives or false negatives, if an exception is

overlooked. For example, a rule-based systems will flag transactions as suspicious if

customers deviate from the pattern of normal goods they typically purchase, even

though that alone is not a guaranteed indicator of fraud.

Machine learning-based fraud detection tools can help acquirers and merchants

improve fraud KPIs. Sophisticated data algorithms operate autonomously and can

leverage a range of parameters transaction size, location, time, device type and

purchase to learn customer and merchants’ transactional profile. Based on the

insights machine learning- insights. For instance, a transaction from a genuine

customer even if originating from a different device IP can be verified by corelating

with the behavioral profile of the customer.

Minimize Risk with

Machine Learning-based Tools

Chargeback Fraud

Card-Testing Fraud

Friendly Fraud

Clean Fraud

Account Takeover

Merchant Identity Fraud

Fraud Type Description

Chargeback fraud involves purchases that are reported as never delivered and

then charged back to the merchant by the issuer.

Card-testing fraud happens when thieves with a list of stolen card numbers

essentially "play the slots" by attempting purchase after purchase from an

online store with different numbers until they find a card number that succeeds.

They then use this number to make fraudulent purchases at other stores.

Customers purchase a product online using their own card and call the issuer to

dispute the charge, complaining that the refund was not processed.

Fraudsters can steal data required to make the transaction look legitimate and

complete the purchase, this type of fraud is almost impossible to discover

because it looks completely legitimate.

Fraudsters poses as a genuine customer, takes control of an account and

makes unauthorized transactions.

Fraudsters set up a merchant account on behalf of a seemingly legitimate

business to a charged stolen credit card


“Fifth report on card fraud, September 2018”, European Central Bank, accessed, May 24, 2019,

https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudreport201809.en.html#toc7

5

The vectors of fraud attacks have become more sophisticated with the launch of new

payment modes across markets. (View Table on Fraud Types) According to the

European Central Bank report on card fraud (September 2018), the share of card not 5 present fraud in total value of fraud is 73% as of 2016.

Further with deployment of real-time payments, the transaction processing window

is shrinking rapidly, drastically reducing the time available to detect fraud and

suspicious transaction patterns.

Most acquirers have deployed rule-based fraud detection systems. The rules are

effective in performing basic transactional checks such as velocity and value controls.

While rule-based risk scoring allows companies to respond well to quick changes in

fraud, they cost more to maintain and test. Statistical models can also deteriorate

quickly without warning or the ability to fix them. Predictably, these rules based on

‘and/or’ principles can result in false positives or false negatives, if an exception is

overlooked. For example, a rule-based systems will flag transactions as suspicious if

customers deviate from the pattern of normal goods they typically purchase, even

though that alone is not a guaranteed indicator of fraud.

Machine learning-based fraud detection tools can help acquirers and merchants

improve fraud KPIs. Sophisticated data algorithms operate autonomously and can

leverage a range of parameters transaction size, location, time, device type and

purchase to learn customer and merchants’ transactional profile. Based on the

insights machine learning- insights. For instance, a transaction from a genuine

customer even if originating from a different device IP can be verified by corelating

with the behavioral profile of the customer.

Minimize Risk with

Machine Learning-based Tools

Chargeback Fraud

Card-Testing Fraud

Friendly Fraud

Clean Fraud

Account Takeover

Merchant Identity Fraud

Fraud Type Description

Chargeback fraud involves purchases that are reported as never delivered and

then charged back to the merchant by the issuer.

Card-testing fraud happens when thieves with a list of stolen card numbers

essentially "play the slots" by attempting purchase after purchase from an

online store with different numbers until they find a card number that succeeds.

They then use this number to make fraudulent purchases at other stores.

Customers purchase a product online using their own card and call the issuer to

dispute the charge, complaining that the refund was not processed.

Fraudsters can steal data required to make the transaction look legitimate and

complete the purchase, this type of fraud is almost impossible to discover

because it looks completely legitimate.

Fraudsters poses as a genuine customer, takes control of an account and

makes unauthorized transactions.

Fraudsters set up a merchant account on behalf of a seemingly legitimate

business to a charged stolen credit card

12 Future Trends Shaping Online Payments


Clunky authentication experiences and long wait times for one-time passcodes are a

key reason for customers abandoning their purchase at the checkout stage. With

customer delight a key element driving new age commerce, there is a need to deliver

frictionless checkout experiences whilst meeting increased demand for risk-free, fully

secure transactions between diverse parties.

Adaptive authentication solutions based on the 3DS 2.0 protocol allows acquirers to

optimally balance security and customer experience. Merchants can verify the risk

level of each transaction based on improved amounts of data provided by the

merchant. Leveraging data elements such as device iD, overall IP address, user

intelligence, acquirers can create scoring models to verify genuine customers in

the background.

Impact of Strong

Customer Authentication

Strong Customer Authentication (SCA) is a new European standard created to make

online payments more secure in the era of open banking. SCA mandates customer

authentication using a minimum of two factors, each of these must be from a

different category - knowledge (for example, a password, PIN,) ownership (for

example, a hardware token, mobile phone, or possession (for example, a biometric

such as a fingerprint, facial recognition, or iris scan.) In addition, the elements

selected must be mutually independent, i.e. the breach of one should not

compromise the other(s). At least one of the elements should be non-reusable and

non-replicable (except for inherence), and not capable of being surreptitiously stolen

via the internet. Authenticating customer identity using 3DS2.0 can help acquirer

and merchants to be prepared for the new SCA environment.


12 Future Trends Shaping Online Payments


Clunky authentication experiences and long wait times for one-time passcodes are a

key reason for customers abandoning their purchase at the checkout stage. With

customer delight a key element driving new age commerce, there is a need to deliver

frictionless checkout experiences whilst meeting increased demand for risk-free, fully

secure transactions between diverse parties.

Adaptive authentication solutions based on the 3DS 2.0 protocol allows acquirers to

optimally balance security and customer experience. Merchants can verify the risk

level of each transaction based on improved amounts of data provided by the

merchant. Leveraging data elements such as device iD, overall IP address, user

intelligence, acquirers can create scoring models to verify genuine customers in

the background.

Impact of Strong

Customer Authentication

Strong Customer Authentication (SCA) is a new European standard created to make

online payments more secure in the era of open banking. SCA mandates customer

authentication using a minimum of two factors, each of these must be from a

different category - knowledge (for example, a password, PIN,) ownership (for

example, a hardware token, mobile phone, or possession (for example, a biometric

such as a fingerprint, facial recognition, or iris scan.) In addition, the elements

selected must be mutually independent, i.e. the breach of one should not

compromise the other(s). At least one of the elements should be non-reusable and

non-replicable (except for inherence), and not capable of being surreptitiously stolen

via the internet. Authenticating customer identity using 3DS2.0 can help acquirer

and merchants to be prepared for the new SCA environment.


With commodification of payment processing, acquirers must focus on added value

services including analytics and merchant self-service applications, to cement

merchant engagement.

Leverage Data, to Maximize Revenues and Minimize Risks

Payment transactions generate vast amounts of transactional data. Acquirers need to

harness raw payment data into interactive and easy-to-read dashboards that lets users

quickly identify and act on opportunities and benchmark performance against peers.

Merchant Relationship Management

for Improved Engagement


For acquirers and merchants these insights aid in improving conversion rates by

planning sales and promotion strategies based the consumer preferences such as

preferred payment methods, price points, locations and employing measures to

reduce chargeback and fraud.

Merchant

Use Case Description

Analyze shopper spends by time, instrument, location type,

currency to understand transaction preferences and improve

gross merchandise value via effective promotional strategies

Analyze payment volumes by merchant category and

segment to optimize merchant portfolio and segment by

turnover and profitability

Use Recency Frequency and Monetary Value and predictive

analytics to arrest merchant attrition

Leverage aggregate category patterns, transactional data and

predictive analytic tools to analyze total value generated by a

merchant over its lifetime

Optimize total costs of payments processing by analyzing fee

paid to interchange

Minimize chargebacks and maximize approvals with

fraud reporting

Risk score merchants based on location, merchant category,

chargeback volumes and transaction history

Risk score customers based on location, merchant category,


Understand root cause for transaction success and decline to

improve payment success rates

Risk

Operations

Merchant Portfolio

Optimization

Sales Optimization

Merchant Attrition

Analysis

Merchant Lifetime

Value Analysis

Merchant Interchange

Fee Minimization

Fraud Management

Merchant Risk Score

Customer Risk Score

Transaction Reports

With commodification of payment processing, acquirers must focus on added value

services including analytics and merchant self-service applications, to cement

merchant engagement.

Leverage Data, to Maximize Revenues and Minimize Risks

Payment transactions generate vast amounts of transactional data. Acquirers need to

harness raw payment data into interactive and easy-to-read dashboards that lets users

quickly identify and act on opportunities and benchmark performance against peers.

Merchant Relationship Management

for Improved Engagement


For acquirers and merchants these insights aid in improving conversion rates by

planning sales and promotion strategies based the consumer preferences such as

preferred payment methods, price points, locations and employing measures to

reduce chargeback and fraud.

Merchant

Use Case Description

Analyze shopper spends by time, instrument, location type,

currency to understand transaction preferences and improve

gross merchandise value via effective promotional strategies

Analyze payment volumes by merchant category and

segment to optimize merchant portfolio and segment by

turnover and profitability

Use Recency Frequency and Monetary Value and predictive

analytics to arrest merchant attrition

Leverage aggregate category patterns, transactional data and

predictive analytic tools to analyze total value generated by a

merchant over its lifetime

Optimize total costs of payments processing by analyzing fee

paid to interchange

Minimize chargebacks and maximize approvals with

fraud reporting

Risk score merchants based on location, merchant category,


Risk score customers based on location, merchant category,


Understand root cause for transaction success and decline to

improve payment success rates

Risk

Operations

Merchant Portfolio

Optimization

Sales Optimization

Merchant Attrition

Analysis

Merchant Lifetime

Value Analysis

Merchant Interchange

Fee Minimization

Fraud Management

Merchant Risk Score

Customer Risk Score

Transaction Reports

Improve M-Sat with Self-Service Tools

Merchant experience is the new battle ground for competition. Acquirers need to

deliver an optimal services experience across the merchant lifecycle spanning

onboarding, transaction processing and merchant care.

A case in point companies such as Square, Stripe and PayPal can onboard merchants 6

within a few minutes, whilst traditional acquirers take 3-5 days to complete the

process. Apart from digitally onboarding merchants, the key features that will improve

merchant experience are dispute management, reporting and analytics, merchant care

using a self-service app or a voice bot. For acquirers merchant self-service applications

can improve turnaround time reduce the cost to serve.

Delivering unique revenue-generating, value-added solutions

Increasingly large-scale merchants are approaching digital payment capabilities as

strategic to their overall customer engagement, rather than an essential cost of

doing business. To capitalize on this opportunity, acquirers need to integrate

adjacent business services and enable new functionality to lock-in merchants and

grow their share of the business. Rather than deploy multiple standalone solutions,

look for vendors with a breadth and depth of expertise to improve time to market

and lower total cost of ownership. Sophisticated vendors such as FSS answer this

call by helping acquirers deliver more value to their clients’ payment experiences.

A suite of customizable, easy-to-integrate, added value capabilities including wallets,

gift cards, data analytics and loyalty, can help merchants increase basket size and

help processors differentiate their offerings.

16 Future Trends Shaping Online Payments 17

Assuring 24/7 support for non-stop payments

In a digital world, payments never sleep and every second equals transaction

revenues. Slow service response or unplanned disruptions, even lasting a few

seconds, can have an irreparable business and reputational fallout, triggering

merchant attrition. A comprehensive set of AI-based service management tools and

capabilities to proactively monitor transaction streams around-the-clock in real-time

to automatically identify and troubleshoot potential problems before they ever

escalate into an actual event are crucial.

Transaction insights such as monitoring response time and correlating with

abandonment rates, identifying heavy traffic merchant locations can aid decision

makers make vital decisions that improve the speed, quality and reliability of service

they can offer to merchants.

“Taking The Pain Out of Merchant Onboarding”, PYMTS.COM, https://www.pymnts.com/news/acquiring/2014/

talking-the-pain-out-of-merchant-onboarding/

6

Cloud-Ready

Payments Infrastructure

Transaction processing is at the core of the payments business. On-demand, scalable

infrastructure to handle traffic spikes without over-provisioning capacity is critical. For

instance, FSS works with the largest Railways company in the world where traffic spikes

between 11.00 am and 12.00 pm, instant ticket booking window for last-minute travelers.

India’s leading cricket app recorded 300,000 transactions in 3 hours during the World Cup

match. Likewise, on Big Billion Day and festive sales traffic register an increase between 30

per cent and 50 per cent. Cloud-ready payment processing infrastructure can enable

service provider ramp up capacity within minutes whilst transforming economics of

transaction processing. Further cloud providers ability to provide environments world

wide can help meet regulatory data localization requirements.


Improve M-Sat with Self-Service Tools

Merchant experience is the new battle ground for competition. Acquirers need to

deliver an optimal services experience across the merchant lifecycle spanning

onboarding, transaction processing and merchant care.

A case in point companies such as Square, Stripe and PayPal can onboard merchants 6

within a few minutes, whilst traditional acquirers take 3-5 days to complete the

process. Apart from digitally onboarding merchants, the key features that will improve

merchant experience are dispute management, reporting and analytics, merchant care

using a self-service app or a voice bot. For acquirers merchant self-service applications

can improve turnaround time reduce the cost to serve.

Delivering unique revenue-generating, value-added solutions

Increasingly large-scale merchants are approaching digital payment capabilities as

strategic to their overall customer engagement, rather than an essential cost of

doing business. To capitalize on this opportunity, acquirers need to integrate

adjacent business services and enable new functionality to lock-in merchants and

grow their share of the business. Rather than deploy multiple standalone solutions,

look for vendors with a breadth and depth of expertise to improve time to market

and lower total cost of ownership. Sophisticated vendors such as FSS answer this

call by helping acquirers deliver more value to their clients’ payment experiences.

A suite of customizable, easy-to-integrate, added value capabilities including wallets,

gift cards, data analytics and loyalty, can help merchants increase basket size and

help processors differentiate their offerings.


Assuring 24/7 support for non-stop payments

In a digital world, payments never sleep and every second equals transaction

revenues. Slow service response or unplanned disruptions, even lasting a few

seconds, can have an irreparable business and reputational fallout, triggering

merchant attrition. A comprehensive set of AI-based service management tools and

capabilities to proactively monitor transaction streams around-the-clock in real-time

to automatically identify and troubleshoot potential problems before they ever

escalate into an actual event are crucial.

Transaction insights such as monitoring response time and correlating with

abandonment rates, identifying heavy traffic merchant locations can aid decision

makers make vital decisions that improve the speed, quality and reliability of service

they can offer to merchants.

“Taking The Pain Out of Merchant Onboarding”, PYMTS.COM, https://www.pymnts.com/news/acquiring/2014/

talking-the-pain-out-of-merchant-onboarding/

6

Cloud-Ready

Payments Infrastructure

Transaction processing is at the core of the payments business. On-demand, scalable

infrastructure to handle traffic spikes without over-provisioning capacity is critical. For

instance, FSS works with the largest Railways company in the world where traffic spikes

between 11.00 am and 12.00 pm, instant ticket booking window for last-minute travelers.

India’s leading cricket app recorded 300,000 transactions in 3 hours during the World Cup

match. Likewise, on Big Billion Day and festive sales traffic register an increase between 30

per cent and 50 per cent. Cloud-ready payment processing infrastructure can enable

service provider ramp up capacity within minutes whilst transforming economics of

transaction processing. Further cloud providers ability to provide environments world

wide can help meet regulatory data localization requirements.


Capitalizing on these TrendsAcquirers and merchants can capitalize on these trends by partnering with the right

technology and solutions provider. FSS Acquirer suite with its omnichannel

capabilities, advanced risk management and security methods framework and fraud

management tools, enables Tier one acquirers as well as merchants to grow

payment volumes and optimize revenues. The key capabilities include:

Process

Scalable processing engine with optimal traffic routing that can be

deployed in-premise or on public and private cloud


Secure

Balances twin needs for security and frictionless shopping

experience with support for tokenization, PCIDSS certification and

3DS Server modeled on EMVco 3DS2.0 guidelines

Protect

Advanced fraud management tools to minimize chargebacks and

fraud whilst maximizing revenues

Serve

Manage the complete lifecycle of the merchant – onboarding, fee

and tariff configuration, consolidated reporting and monitoring,

reconciliation and settlement

Analyze

Sophisticated analytic capabilities for improved business and

operational insights

Support a range of payment methods and currencies that best fit

the acquirer’s business model and help them scale with the right

mix of products and services for each growth phase

Accept


Capitalizing on these TrendsAcquirers and merchants can capitalize on these trends by partnering with the right

technology and solutions provider. FSS Acquirer suite with its omnichannel

capabilities, advanced risk management and security methods framework and fraud

management tools, enables Tier one acquirers as well as merchants to grow

payment volumes and optimize revenues. The key capabilities include:

Process

Scalable processing engine with optimal traffic routing that can be

deployed in-premise or on public and private cloud


Secure

Balances twin needs for security and frictionless shopping

experience with support for tokenization, PCIDSS certification and

3DS Server modeled on EMVco 3DS2.0 guidelines

Protect

Advanced fraud management tools to minimize chargebacks and

fraud whilst maximizing revenues

Serve

Manage the complete lifecycle of the merchant – onboarding, fee

and tariff configuration, consolidated reporting and monitoring,

reconciliation and settlement

Analyze

Sophisticated analytic capabilities for improved business and

operational insights

Support a range of payment methods and currencies that best fit

the acquirer’s business model and help them scale with the right

mix of products and services for each growth phase

Accept


About FSS

Contributor: Harish Konda, Assistant Manager, Software Products

Reviewer: Manoj Chopra, Head Acquiring, Prakash Katri, AVP Paynalytix

Date post:	04-Apr-2020
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