CEO of BlueSnap, the leading payment orchestration platform of choice for B2B and B2C businesses.
As businesses continue to expand their global reach, they often encounter challenges when it comes to managing payments. The rapid growth in global e-commerce is making it so businesses need to manage their payments more efficiently in order to avoid any negative impact on their bottom line.
My company’s recent cross-border digital payments survey found nearly half of global businesses use multiple payment gateways, with some using as many as six or more. However, this approach can lead to technical debt, data opacity, poor customer experiences and unnecessary costs and fees.
As someone who leads a platform for global payment orchestration, I’ve seen how this system can offer the required functionality and management for various payment use cases and help drive your return on investment.
Here are five aspects you should look for when considering a payment orchestration platform and the best ways to take advantage of them as a critical part of your growth strategy.
1. Increasing Checkout Conversions
Global payment orchestration can help businesses increase customer conversions by providing localized payment types and currencies across geographies. By allowing customers to pay in local currency and offering trusted and familiar payment options in different regions, businesses can reduce friction and confusion during the payment process to improve their chances of completing transactions and increasing conversions.
To get started, it’s vital to assess checkout abandonment rates. This can be done by analyzing internal or Google analytics to determine the percentage of customers who abandon during the checkout process. Additionally, businesses should consider the location of customers and the payment types and currencies that are popular in those areas. It’s important to offer a variety of payment options, including the increasingly popular BNPL (buy now, pay later), to make the transaction process as seamless as possible. Lastly, ensure that payment providers have the necessary capabilities required to support the currencies and payment types.
2. Raising Authorization Rates
Global payment orchestration can also help businesses raise their authorization rates by providing a more optimized and streamlined process. Businesses can leverage smart routing technology to route each transaction through the most appropriate local bank in accordance with card brand rules. By doing this, I’ve seen businesses raise their authorization rates by 3% to 6%.
To increase authorization rates, there are several factors that can be controlled. Transactions originating outside of a bank’s local region are often viewed as riskier and more likely to be declined. So, it’s essential to match the customer’s card currency with the transaction currency and comply with local regulations such as strong customer authentication (SCA).
Proper transaction meta-tagging is also crucial as it informs the processor about the type of transaction being made. It’s essential to avoid tagging a recurring charge as a one-time transaction as banks and processors view these transactions differently. Calibrating fraud rules is also important, for poor fraud screening can negatively impact authorization rates. Fraud rules should be adjusted based on the countries in which business is conducted, the products sold and how frequently those products are purchased.
3. Reducing Payment Fees
Without global payment orchestration, businesses are often forced to pay higher fees and incur less favorable exchange rates. Even worse, if a customer uses a card that was issued in a country or region different from where payment is processed, they may incur an extra charge in the form of a cross-border interchange fee, which is added to standard interchange fees.
To assess cross-border fees, businesses should thoroughly review their processing statements, taking note of customer location and the percentage of those located outside the region where card payments are processed. (Here’s a tip: multiply this percentage by 1% to 2% to determine the amount paid in cross-border fees.) It is also advisable to check if there are local business entities that can process card payments in a location to leverage lower fees.
4. International Expansion
The right global payment orchestration platform will provide a variety of local, preferred payment methods that can empower businesses to thrive in different regions. Additionally, expanding into new markets also means navigating different regulatory environments, which can be complex and time-consuming.
To ensure successful international expansion, it’s essential to understand the specific compliance and tax requirements in each region. Failure to meet these requirements can result in penalties, damage to reputation, loss of revenue and business interruption. Effective global payment orchestration platforms can provide businesses with automated tools and built-in solutions to ensure compliance with local regulations, keeping payment processes secure and up to par with industry standards.
5. Supporting New Revenue Streams
If your business operates in a single region and only accepts card payments, a payment gateway may suffice. Otherwise, utilizing a payment orchestration platform can lead to improved outcomes for both the business and its customers.
For example, providing businesses with recurring billing capabilities can make it easier for businesses to manage their cash flow and reduce errors. This can help businesses save time and resources that can be redirected toward other revenue-generating activities. Secure and reliable payment processing solutions build trust to help lead to increased transactions.
As global e-commerce continues to grow and customer experience becomes increasingly important, I believe companies should look into the ways they can take advantage of global payment orchestration as a crucial aspect of their growth strategy. Anything that introduces flexibility and scalability is key to achieving success in today’s competitive and global marketplace.
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