PSPs Under Pressure

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E-commerce has truly become a retailing giant. In 2014, the U.S. and China together handled 55% of all global internet sales, accounting for $1.316 trillion.  The most attractive cross-border e-commerce destinations were the U.S., China and the UK. Amazingly, cross-border sales reached $300 billion, or 25% of total global e-commerce flow.

As the market has grown, so too have the pressures on PSPs to provide merchants with the fast and seamless payments necessary to compete on a global level. In order to further understand the complexities of the current e-commerce environment for PSPs, Credorax recently published a white paper entitled PSPs: Why Does Your Choice of Acquirer Determine Your Future Success?

The paper closely examines the increasing number of merchant demands on PSPs, such as multi-channel access and fraud protection. We also explore the back-office complexities faced by many payment service providers.

Below is an excerpt from the paper, which delves deeper into the issue of merchant expectations in this era of e-commerce growth:

As the PSP market matures, merchants’ expectations and demands are escalating – forcing PSPs to provide merchants with innovative and comprehensive solutions and services that address a wide range of issues – and assist them in running their businesses. PSPs today need to provide a very high quality and reliable platform that enables the highest conversion rates– while ensuring secure integration, protection against risk and fraud, and smooth payment processing.

Merchants want to sell their products across all channels in order to capture potential customers wherever they may be, especially as m-commerce takes huge strides forward.

They expect their PSPs to provide tools for efficient billing, accounting, and logistics – as well as the widest possible variety of payment methods, each with its own type of contract and continuously changing business model.

They are demanding access not only to domestic markets, but want cross-border options that allow them to sell internationally. They expect to pay least-cost-routing, local fees for global transactions, and expect their PSP to have broad and in-depth knowledge of regional preferences and compliance rules and regulations so they can support them at regional and global levels. And for all this, they expect to pay the lowest fees, while enjoying significant cost-savings, and pricing models that are completely transparent.

Minimizing Payment Processing Costs is Key

Domestic fees, regulated by the Durbin Amendment in the US and EU Commission in the EU, are very low. However, the interchange rates for cross-border acquiring – the fees transferred from the acquirer to the issuer via Visa/MasterCard – remain high. Therefore, processing cross-border transactions domestically results in significant savings

In order to process payments domestically, the following needs to be in place:

  • Locally established sales office
  • Correct taxation for the jurisdiction
  • Domestic Acquirer

The paper has much more analysis and stats on how PSPs can successfully attend to merchant needs with the right partner.

Be sure to click and download the rest of the white paper.

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