Payments Talk: Michael Nolan, Chief Product Officer at eShopWorld11th January 2018
Michael is an experienced eCommerce leader, focused on delivering what the customer needs and improving the online shopping journey. At eShopWorld, he is responsible for building the best online international shopping experience, getting the highest conversion rates for shoppers from website to front door, whilst taking all the hassle out of selling internationally for the retailer. Michael has worked with some of the world’s leading brands during his time at eShopWorld.
We invited Michael to talk about his experience working across borders, and what merchants operating in multiple countries must be thinking about in order to remain market-leaders.
What is your experience of how the global differences we see in interchange rates by country affects merchants?
The first thing I’d say is that this has changed drastically over time. Five years ago, when I was looking at this while working at Paddy Power, the differential offered large opportunities, and I think that’s why the focus then had to be on cost savings. As the cost differential has tightened since then – with the introduction of the IFR – the greatest difference now is actually in success rates. You obviously want to be minimising your fees as much as possible. But hopefully this means merchants aren’t focused solely on the cost metric without the balancing success-rate metric.
Are you seeing that the recent changes in customer payments trends are forcing merchants to offer something different?
Absolutely. I think all retailers will know how competitive the eCommerce space has become in recent years, and how demanding shoppers can be with regards to payment method choices. If you don’t listen to customer payment trends, then you are simply pushing your shoppers into your competitors’ arms. I recognise that this can be difficult for merchants whose international business operations make up only a small part of their overall business revenue. It can be hard to justify investing heavily in individual markets that don’t necessarily yield high revenue. However, if you don’t invest, you won’t be able to grow internationally. I would recommend that if you have any sizable foreign market – or one you feel will offer large potential in the future – that you should review the payment methods available in those markets and compare to your current offering. Are they in line? Should you be offering more?
Another key trend that all merchants need to be aware of is the move in the eCommerce market towards mobile: analyse your success rates on mobile separate from desktop. It is also key that merchants understand how their own sector differs from a general eCommerce market. For example, an online clothing retailer will differ greatly from an online gaming company. Understanding these nuances is important for all merchants operating across multiple geographies.
The importance of understanding your acceptance rates can’t be underestimated. And these really need to be considered on a country by country basis. What influences your acceptances rates in one country may not have as much of an impact in another.
What are the most important factors to consider for merchants reviewing their acceptance rates?
The importance of understanding your acceptance rates can’t be underestimated. And these really need to be considered on a country by country basis. What influences your acceptances rates in one country may not have as much of an impact in another. If you are a predominantly European merchant with a European acquirer, do you need to consider a relationship with an Asian acquirer if you are operating in Asian markets? Understanding your fraud prevention strategy is also key. What might work effectively in Spain for example will not work in the United States. These factors need to be addressed individually. Leveraging your acquirers’ experience and presence is also an important point. If your current acquirer doesn’t have a large presence in a new market you are looking to enter – for example, Latin America – consider whether they are the right partner for that region. If they don’t have the relevant experience, maybe consider using a domestic acquirer with a larger, established presence.
3D-Secure can often have varying effects on conversion rates from country to country. Can you detail the experience you’ve had with 3D-Secure impact rates?
Probably the best example I have is Germany. We’ve found that for the majority of German retailers we work with at eShopWorld, implementing 3D-Secure has had a positive impact. However, this is something that changes frequently and needs to be addressed regularly. When I first turned on 3D-Secure in the UK market several years ago, it had a negative impact on conversion rates. Over time, however, as UK consumers have become more familiar with trends, this can change. Today, 3D-Secure has a positive impact on UK conversion rates, and I would expect this trend to continue in more and more countries around the world.
Has the way in which merchants judge the best partner for their business canged in recent years? If so, how?
The short answer is yes. Historically, cost and stability were the fundamental criteria when you judge a potential partner for your business. These primary factors are still important, but I think more and more merchants need to start to look forward. There needs to be a focus on success rates; in addition to your bottom line, how are your supplier relationships going to drive your business? Are your partners future-facing or are they burdened with legacy technology that makes it difficult for them to integrate new and emerging payment methods? This will be a potential future barrier for your business growth. You need to ask your internal technology teams to weigh in here and advise whether your current provider’s technology offerings are in line with your current and potential future needs.
Another key question to consider here is how data-focused and analytically driven is your partner? When managing multiple markets globally, access to analytics is critical to driving success rates. Your partner should not only be highlighting your own success rates, but they should be sharing what trends they are seeing across your merchant category. This anonymous, aggregated data will be key to driving your business forward and improving success rates.
What are the biggest barriers merchants must overcome when deciding to work across multiple countries?
First and foremost, a merchant’s own internal data is the biggest barrier. Do you have enough data and customer transactions in each of these markets to get a picture of shopper behaviour? This can be difficult without having any aggregated data. ROI is another potential barrier. If you only have 10 transactions a week in the Netherlands, for example, can you justify implementing an alternative domestic payment solution? Will the cost of implementation outweigh the potential benefits down the line? Merchants need to think tactically about this.