‘The Paypers’ met our CEO, Markus Rinderer, to talk about the latest trends in payments, global opportunities, and challenges payment service providers face in a rapidly changing market. The discussion offers valuable insight into the challenges of international e-commerce, recent market developments in certain regions of the world, fraud risks of alternative payment methods, and what actions payment service providers have to take to set up their business for the future. Today, the conversation was published. In the following you find an extract of the interview.
Markus Rinderer, CEO PAY.ON AG
‘The Paypers’ – What issues do merchants, and therefore payment service providers, face when they want to expand internationally?
Markus Rinderer: The greatest challenge for merchants who want to expand internationally is the ability to offer the relevant set of payment methods shoppers expect to have at checkout in a particular region, and to manage the risks associated with them. For the merchant it is very important to achieve the maximum conversion rate of shoppers who want to buy something on their web shop, but also to understand the local habits of shoppers, because this influences the set of payment methods they should offer. These aspects are crucial for merchants, as the payment part usually makes the difference. Merchants must find the right PSP partner to work with.
‘The Paypers’ – What is currently the most promising yet complex region for example, within the BRIC countries etc.?
Markus Rinderer: A while ago I would have said Latin America, in particular Brazil. Together with our partner Allpago, we have spent a lot of time and energy building a payment service that can be used by anyone in our network to serve merchants from within LATAM or merchants that want to enter the LATAM region.
Just recently, we have partnered the Turkish PSP iyzico. iyzico is our first client in Turkey and actually the first PSP in the country at all. Turkey is a very promising and complex market for several reasons, including the fact that market players are faced with nine local banks that control the market. Furthermore, entering in contractual relationships with those banks to conduct e-commerce as well as connecting the suitable set of payment methods is a tedious and long-time project, especially for entrants outside of Turkey. Thus, the challenge for providers who want to enter the Turkish market is the fact that they need local people, with local knowledge and expertise to help them do business, but also to overcome cultural barriers. The fact that PAY.ON is already there with our partner iyzico will make it easier for our clients to enter this market.
‘The Paypers’ – How would you assess the Asian region?
Markus Rinderer: Although Asia is a very promising market, it is still lagging behind. Of course, it depends on which part of Asia we are talking about. Korea and Singapore are currently the regions where we see a lot of movement. Being PCI compliant and controlling fraud are important topics in Asia and PAY.ON can handle these on behalf of them. However, from a technological perspective, it is rather demanding to operate in these regions, the payment systems are very unreliable and not of a high quality. Yet, it is good for us that we have managed to enter that market. We have several local PSP partners we are working with in different countries.
‘The Paypers’ – Alternative payment methods have brought new challenges with regard to fraud and online security. From your perspective, what tools are available to assess the fraud risk and how can merchants manage these risks?
Markus Rinderer: The level of online security and risk or fraud certainly depends on the type of alternative payment methods. For instance, if we are talking about online bank transfers such as iDEAL in the Netherlands, the risk is close to zero as the money is immediately available on the account. No one can really do a chargeback and sometimes refunds are not even possible, the risk is very low in this situation. When deciding on which payment method to use, merchants have to understand the particular flow of money and, of course, the scheme by itself. Direct debit, for example, is very risky. There is a high chance that you deliver the goods or services and never receive the money. From PAY.ON’s and the PSP’s perspective, I think is our duty to teach and educate the merchants on how the money flow goes, what are the risks of the individual payment methods and how easily chargebacks or fraud can happen in the background.
‘The Paypers’ – Taking the PSP perspective, apart from offering the right payment method mix per country, what else does it take to add value to merchants?
Markus Rinderer: I don’t think it makes sense for a PSP to re-build payment connections in the background that is time consuming and requires expert technical resources. Instead of focusing or building technology on the payment processing side, the PSP must focus on building technology that enables them to differentiate themselves in the e-commerce/m-commerce and the mPOS space or around loyalty programs. Successful providers build solutions that can be added on top of the payment platform to create value for merchants and consumers. In a very dynamic market and in order to remain competitive, the PSP must adopt innovation that can solve real consumer problems.