Retailers are missing out on higher revenue

Payvision’s new vision for the payment industry

Retailers are missing out on higher revenue - Gijs op de WeeghAn international payment provider with over a decade’s presence at the forefront of the industry, Payvision recently launched its new omnichannel payment platform, Acapture. Today, the Group is transforming the payments landscape by adding a key element to its service, considered to be the future of the sector: the scientific analysis of payment data. This ultimately means getting the best transaction process for consumers and the highest number of successful transactions for merchants, both in-store and online. But what exactly is meant by that? And how is it achieved? Gijs op de Weegh, Chief Operations Officer (COO) at Payvision, explains the company’s strategy in seven themes.

 

Omnichannel: combining in-store and online payment information

 

The modern retailer must take an active role in all relevant channels: online, in-store, mobile and social. That’s what it means to be omnichannel. In the online environment, this is usually simple for the retailer. The difficult part is keeping track of what’s happening in-store. Op de Weegh says: “While 92 percent of all transactions are still carried out in the shop, retailers know very little about their in-store customers. In contrast, they know everything about the eight percent who shop online.” That’s where Payvision and Acapture come into the picture. By merging online and offline payments, the company can quantify and unlock customer data. They then pass on their information about the online customer to the shop. This is the first step in leveraging data in order to offer the consumer a tailor-made product or service.

 

In-store data science: using payment data to tailor retail offers

 

Retailers can use payment information to better understand their in-store customers. Because customers often use the same card, it is easy to link payment information to their shopping history. This reveals buying patterns, providing insight into what certain types of people will purchase in future. One good example is the anonymous Albert Heijn Bonuskaart. The next step is linking this information to online data, which allows you to build a customer profile with key demographic characteristics. By grouping the information, a retailer can predict what people in each group are likely to buy and match offers to the needs of the various demographics. Another option is to introduce a loyalty card, like those issued by H&M, Zara and Bijenkorf. This card allows you to build an individual customer profile so you can tailor a specific offer to that person. “Zara often knows what a consumer wants better than the consumer knows themselves,” explains Op de Weegh.

 

Cross-border ecommerce: no unpleasant surprises

 

It seems so straightforward: we shop online, so surely it’s easy to pay in any currency and buy from any country? The reality is not so simple. First off, the PSP must provide the customer’s preferred, local payment method. Then there are the import duties, the transportation costs and the various laws and regulations of each region. Payvision has years of experience with what is today dubbed "crossborder ecommerce" and so can secure against these issues spoiling a transaction for both merchant and buyer. Op de Weegh adds: “You don’t want to buy something online and find out later that the price is twice as high and your order will arrive a week late.

 

Fraud: fraud reduction without unnecessary revenue loss

 

When handling payments, the platform aims to minimise the number of fraudulent transactions while preserving as many legitimate transactions as possible. Sometimes, payments that appear fraudulent are actually genuine. These are the so-called ”false positives”. For example, by blocking the IP address of an entire country, you also block legitimate payments and you lose all the customers from that country. So, while you have successfully limited your fraud risk, you have damaged your turnover in the process. Op de Weegh explains: “Our goal is to make as many good transactions succeed as possible. We collect historical data on transactions and see whether or not they were ultimately fraudulent. With this data we can build predictive models that reduce fraud to an acceptable level without needlessly decreasing turnover. It may be better to accept a few fraudulent transactions if it results in the acceptance of authentic transactions that would otherwise have been blocked.

 

Authorisation rates: achieving the maximum volume of successful transactions

 

The authorisation rate refers to the number of transactions that have been successfully made from the total number that have been attempted. Banks don’t trust one another and so often block each other’s transactions, which in turn lowers the authorisation rate. “This happens all the time in the international network of payments,” says Op de Weegh. “It might be because the bank is located in a particular country or because of some past events or stringent security measures, such as asking for a password for payments above a certain amount. Banks incorporate security measures into transactions with certain characteristics. If you don’t comply with these measures, the transaction is cancelled. So it’s easy to lose transactions unnecessarily.” Payvision has built models to predict which bank will most probably accept which transaction, avoiding one of the chief pitfalls that damages authorisation rates.

 

Consumer behavior: maximising the amount of data in a minimum number of steps

 

What number of payment steps will a consumer accept before pulling out of the transaction, given that the retailer wants to collect as much data as possible? Op de Weegh says: “At Uber, paying takes no more than the push of a button, while a plane ticket requires around five steps. Yet the consumer consider those five steps acceptable and even necessary for that product.” Every retailer has its own optimised process. Payvision and Acapture continuously evaluate this to work out the optimal number of steps for each client. Of course, the more you know about the customer, the better the buying process can be tailored to them. Most importantly, the customer should not be frustrated into dropping out before paying. “The trick is to find the right balance,” Op de Weegh explains.

 

Privacy: what does the consumer get in return for a violation?

 

How much violation of privacy will a customer accept? Op de Weegh says, “That depends a lot on what is expected in return. When a Dutch bank announced in 2014 that they were going to use the payment data of their customers for commercial purposes, the Dutch were outraged. Why? Because the bank was doing this mainly for its own benefit: money. In contrast, Google gathers much more information from you and also uses it commercially. Not many people find this a problem because Google uses the information to predict such things as the time you will arrive at a destination in Google Maps.” Consumers only want to give up their privacy if they receive something useful in return. A payment provider can do this, offering the customer a better payment process and a bespoke product offering.

 

Download Gijs' article from here.

Originally published in Fintech Magazine by het Financieele Dagblad.

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