Payments do not seem to be anyone’s dream job – however, they can obviously keep an entire industry from realizing their dreams.
These are two of my three key impressions of the Payment Summit in Hamburg – a place where e-commerce champions honestly revealed how they fought their way through the COVID-19-driven acceleration of online shopping. Although I heard a multitude of success stories, none of them was a walk in the park.
Back in March 2020, when COVID-19 closed all the brick-and-mortar stores, we had all the technology and regulation in place for e-commerce to flourish: our card details were already saved in our mobile devices, account payments were being initiated from any merchant website and both were secured by two-factor authentication. But then came the interrupted checkout processes, the returns of orders and news of fraudsters taking advantage of the surge of online shopping. Payments which were meant to be so simple (and best kept as an invisible part of the overall shopping experience) became a major headache.
Large e-commerce businesses, like Otto Group, took matters into their own hands and produced their own aspirin: they became payment service providers. They made the payment process a competitive advantage – an integral part of the customer journey from purchase to collection. A variety of payment methods, digital invoices and a professional customer service around payments were included. The customer benefitted from the required convenience and was also able to control the money flow.
Yet, how many e-commerce businesses can afford to develop this specific competence fast enough to support their growth? The leading German white-label BNPL provider Ratepay says those who try often get lost in the complexity of the payments universe and then pay the price with 25% less growth. Luckily, there are a number of payment specialists, incl. the collection specialist Lowell, that support some of the most tedious parts of the process. Market valuations of 60x and above show the hype around some of the specialists – their services are currently facing an insatiable demand.
Still, an average e-commerce provider would need a couple of specialists to support its business (especially internationally across Europe with all the local variations of EU regulations and local payment methods). On one of the panels, Tink and Novalnet proposed the idea of a full e-commerce service provider – a carefree package of processes, countries and payment methods. After all, there has to be someone who wants to be the bartender at the e-commerce party.
This brings me to the third key impression of the Payment Summit: according to some of the leading market analysts, the market for e-commerce services will double in the coming years.
This is a huge potential for the payment industry as a whole, therefore the race for a new champion is on.