Being flexible in a regulated industry

Payment processing

Payment processing - Being flexible in a regulated industry - Gijs op de WeeghIn e-commerce, fast and reliable payment processing is crucial. The question, however, is to what extent payment companies are able to adapt to developments such as omnichannel, the rise of online marketplaces, cross-border activities and the stricter legislation that will take effect in 2018.


With its roots in Amsterdam, the payment company Payvision handles transactions all over the world, and advocates far-reaching flexibility.


‘Payment companies, also known as Payment Service Providers (PSPs), take away entrepreneurs’ worries about payment processing so that they can focus on their core business. E-commerce is, however, affected by various developments that present this group of businesses with major challenges,’ according to Gijs op de Weegh, COO of payment companies Payvision and Acapture.


One of these developments is the rise of omnichannel strategies. Since customers are making more and more purchases, day and night, everywhere and via every channel, this means that payment processing activities have to accommodate this. A second development that presents payment processing with challenges is the increase in the number of online marketplaces. Businesses all over the world are becoming affiliated with platforms belonging to larger parties such as Amazon and Alibaba, and, more specific to the Netherlands, The opportunities this offers are endless; it puts cross-border expansion within reach. Unfortunately, this means that payments also become more complex. Add to this the new European guidelines incorporating stricter requirements for payments starting in 2018, and it is clear that the sector has entered a new phase.


Omnichannel and data


‘The challenge with omnichannel lies in combining the (old) brick-and-mortar shops with e-commerce. At the same time, the channels offer an incredible number of opportunities. For years, many online businesses have been aware of consumers’ precise movements, how they behave and what they buy in this environment, whereas many owners of physical stores have practically no information on who their customers are and what they want. This is why it is absolutely necessary to translate online knowledge about transactions and behaviour to physical stores, and apply this to these stores. No fewer than 94% of transactions are made in brick-and-mortar shops, and there is an entire world of opportunities there,’ says Op de Weegh. This means that 94% of the business is ripe for improvement. This is essential, according to the COO, given the current retail landscape where failing companies are a daily occurrence because they are no longer up to the fight. Op de Weegh believes that omnichannel and data can turn the tide. ‘The reverse is also true; the knowledge that physical stores provide may be applied online, creating an interaction. Physical stores definitely have a future; a major player like Amazon is building a shopping mall. And this is possible because the company knows what customers want. It’s about the right combination of and interaction between channels. This is where we provide companies with support.'


Rise of marketplaces


The rise of online marketplaces also brings with it many challenges. According to research by Ecommerce Foundation and Nyenrode Business University, these platforms for businesses and customers will represent 39% of the online market by 2020.


In looking at the daily practice, the scenario in which a customer buys three items from three different merchants at an online marketplace is a very real possibility. It is also conceivable that the three suppliers will all be based in different countries, each with its own payment methods and local legislation. This is a situation that makes payment processing difficult, to put it mildly. ‘The marketplace has to process the customer’s payment and divide it between the three merchants, the logistics company and itself, while at the same time taking different currencies and legislation into account. It must also accommodate the wishes of consumers who want to pay in their own currency, and with as little red tape as possible. Manually processing these types of transactions is incredibly time-consuming and expensive, and increases the chances of mistakes considerably. This is why you have to automate everything.’


SlicePay and millennials


Online marketplaces are currently struggling with two problems that can slow down their growth. On the one hand, they fall under the new, much stricter EU PSD2 (Payment Services Directive) legislation that aims to protect consumers when they make payments. If a marketplace wants to meet the challenges of payment processing activities, it will need a licence. The other problem is an operational one. Before a company actually gets a licence - and the payment processing system that must satisfy various requirements has been set up - it can take 18 months, and cost a business 350,000 Euros.


Payvision was convinced that there had to be a better way to do this and introduced SlicePay via its subsidiary Acapture. This tool takes certain tasks off the hands of marketplace companies, and accelerates payments thanks to an automated process. Op de Weegh: ‘The company tells us how much has to be paid, to which parties, when and in which currency. Our system does the rest, and ensures that payments are sent to the right bank or the right PayPal account. These processes also comply with local legislation.’


Flexibility appears to be the most important word right now for coping with the aforementioned developments, both now and in the future. This is particularly the case with the large group of millennials making omnichannel purchases. ‘In the long run, they will have enormous purchasing power. Businesses that want to guarantee their income would be smart to join forces with a dynamic PSP that can satisfy the high expectations involved in payment processing.’


About Payvision


With its roots (and headquarters) in Amsterdam, Payvision has focused on fin-tech solutions since it was founded in 2002. As a payment provider in the broadest sense of the word, Payvision sets itself apart in its flexibility and the high-quality services it provides. For some time now, Payvision has also been fulfilling the function of acquirer; the company therefore acts as a bank for webshops, receiving payments on their behalf and processing them. The focus is on medium-sized companies. Payvision has offices all over the world.


Download the Dutch article from here.

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