There’s no doubt that online sales are driving growth at many businesses across various markets. It’s not hard to find some examples—recently, Lululemon reported a robust 47% increase in e-commerce sales spurred by a high sales order conversion rate. E-commerce now makes up 23% of the athletic apparel maker’s total revenue. On a similar theme, Ulta Beauty disclosed a 38% rise in e-commerce sales. The list goes on, but this trend indicates how important e-commerce sales have become for growing businesses. Many companies are expanding into new product lines or are looking to sell into new markets, and will require that their e-commerce payments platforms have the right functions and features to handle the growth.
Payment acceptance is a critical path by which online businesses sometimes live and die, and payment providers play a crucial role in this process. The sales transaction hurdles are many, ranging from website checkout friction to security issues. Cross-border sales add another level of complexity since shoppers may use different payment methods and are typically reluctant to buy products and services in a foreign currency. Further, sales transaction conversions decline when the bank is not local to the buyer’s home region. All this spells out why payment routing considerations based on local banks and currencies will increase sales for online businesses.
Mercator Advisory Group sees that online businesses are at the epicenter of the payments acceptance landscape that has experienced significant changes in recent times. Online and mobile shopping give consumers new leverage to shop and buy when, where, and how they want. E-commerce businesses are now challenged to meet this evolving buyer behavior.
In order to be competitive, e-commerce businesses need to have the right systems and tools in order to capitalize on rising online sales. By most estimates, including the U.S. Department of Commerce, e-commerce sales have surpassed 10% of total retail sales. Double-digit annual online sales growth is anticipated to run in the low to mid-teens for the next several years.
Payment processing companies are an established and distinct payment services category within the payments acceptance ecosystem. They offer online businesses the essential purchase transactions services that help to increase sales and reduce costs. Mercator’s experience with e-commerce businesses and merchants finds that they do not realize the selection and breadth of vital business services that payment providers can offer. The Mercator 2019 research agenda will include a report on payment providers and facilitators to review and assess the mix of services that are now necessary for online commerce. One such company is BlueSnap that offers a powerful, All-in-One Payments Platform for e-commerce businesses.
Mercator has attended various BlueSnap events and briefings to get a better view of its role as a payment services provider. BlueSnap aims to ease many pain points for online merchants by providing payment processing, a merchant account, plus business tools and data analytics that can help guide management decision-making. Many e-commerce businesses, especially those that are growing, think that they need multiple payment vendors to handle sales transactions. BlueSnap proves otherwise by demonstrating that it actually simplifies the online payment acceptance process. It reduces the amount of time and resources that merchants would typically spend to manage multiple vendors, not only in the implementation stage, but also throughout the business relationship, including ongoing customer service and technical support.
Often, e-commerce businesses find it costly to operate in the global online marketplace due to the intricacies of cross border transactions with different currencies. While international markets open up additional sales opportunities, this business expansion brings with it a more complex payment transaction process. For example, international growth for online companies means that they have to set up accounts with different banks and gateways. A solution is to deal with a single payments provider that already has the necessary banking relationships in place to easily handle online sales orders.
Typically, companies that use multiple payment providers or gateways find unnecessary complexity, higher processing costs, and additional time needed to coordinate the different vendors. Businesses can also face lower order conversion rates due to checkout abandonment as well as raised chargeback levels due to card-not-present (CNP) fraud. This often occurs if their payment provider does not provide them with an integrated tool set essential to handle e-commerce transactions.
Besides B2C online businesses, B2B e-commerce has become a faster growing segment of the market with greater expansion opportunities as well. As with B2C, B2B sellers also find it difficult to operate in the global marketplace, and need easier ways to accept payments. They can experience efficiencies and less complexity when dealing with a sole payment provider, ideally one whose payment routing includes connections to multiple world banks. Besides B2B online businesses, payment providers such as BlueSnap can assist other e-commerce businesses including SaaS providers who have special subscription billing needs. Their transactions require handling different pricing models with the ability to connect with many integrated platforms that facilitate access to payment data with the systems they already use.
In brief, welcome to the evolving world of payment providers—the emerging powerhouses of the payments acceptance ecosystem. As e-commerce sales continues to grow, online businesses need to select payment providers that can offer a single solution set for payment processing and the right tools to manage their business.