Alternative REPORT payment methods
Tricia Lines Hill of First Atlantic Commerce believes payment companies need to diversify and accept many forms of online payments to succeed in today's anti-fraud environment
hile I was getting ready for bed last movers and shakers are offering sideline activities so night, I gazed at my rolled-up tube of as not to lose their already acquired customers (that toothpaste sitting on the bathroom coun- want to play a different game) to other operators. Wter, and as my eyes rolled over the brand – Aquafresh Likewise, payment gateways, which in their sim- Extreme CleanTM – I thought about how consumer- plest form used to be the switch between the mer- buying behaviour toward toothpaste has changed in chants and the banks for credit card processing, are the past three decades. now offering other forms of online payment to satisfy Remember when toothpaste was simply there to their customers. Those that differentiate themselves clean your teeth and prevent cavities? Today, how- will gain market share and continue to lead the online ever, toothpaste has morphed into that whole mouth- payment space, while those that stick to credit card Tricia Lines Hill clean trend. It whitens, brightens, freshens breath, processing only will surely fall behind. is vice-president, fights plaque, fights cavities, controls tartar build- Apart from secure and reliable credit card process- Marketing & up, tastes like mint or cinnamon or bubblegum. ing, the leaders are providing other forms of payment Corporate Com- munications, at First through their platform such as debit card processing, Atlantic Commerce PayPal, virtual cash in the form of Ukash and/or Pay- (FAC), a Bermuda- Changing business models safecard, inbound bank transfers and payout solutions based, international Bear with me, I am coming to my point here. such as cheque and bank transfer issuing services and payment solutions The toothpaste industry has matured to satisfy the prepaid cards. provider. She has consumer. So, if a toothpaste manufacturer sticks to The top payment solution providers also facilitate more than 15 years' offering fluoride-only paste with none of the other the set up of your merchant account(s) with the bank(s) experience in global bells and whistles, chances are that toothpaste will no and provide premium fraud-management tools and marketing and com- longer be in demand. Today, consumers are expecting data with which to protect your business from fraud. munications and more from their toothpaste. is responsible for FAC's marketing and Gaming operators are starting to move in the same customer acquisi- direction. Many operators are looking to offer the Embracing alternative online payment methods tion efforts. whole gaming product mix as opposed to one game in We have seen robust growth in alternative online pay- order to stay competitive, which partly explains why ment solutions for all online merchants in the past we continue to see consolidation in the online gaming decade, and the alternative payment market continues sector – it allows for operators to broaden their prod- to grow its share of the acquiring business. uct offerings. They may have one core product, but the Interestingly, just a decade ago, analysts and mer- chants did not hold up much hope for the alternative payment industry. Yankee Group analyst Christine " Payment gateways are Loebar told the Ecommerce Times in 2001 that alter- native payment methods in the US, for example, were now offering other forms of "not gathering steam". She said it was a typical catch- 22 in that consumers were reluctant to adopt a new web payment method if not widely accepted online, online payment to satisfy and merchants were reluctant to set up alternative systems until consumers were comfortable using their customers" them. ■ Tricia Lines Hill I should note here that emerging markets were
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REPORT ahead of the industrialised world in terms of alterna- tive payment method acceptance because credit card "Merchants are embracing penetration is traditionally low in these markets, es- pecially within South America and China. However, these markets were also slower to adopt online sales alternative payment methods in general. Today, merchants are embracing all sorts of alter- to acquire and retain native payment methods in an effort to acquire and retain their customers. It is more a question of which customers. It is a question of alternative payment methods to implement as op- posed to whether or not to use them at all. which alternative payment Consumers and merchants are driving the alterna- tive payment option market as they search for new methods to implement as ways to pay and get paid. For both, alternative pay- ment offers convenience, flexibility and security. Mer- opposed to whether or not to chants are finding that offering alternative payment options can lower their overall transaction costs, in- crease conversions and create new revenue streams, use them at all" while reducing charge-backs and fraudulent activity. ■ Tricia Lines Hill Consumers want the merchant to accept the pay- ment method they want to use. We know that different demographic groups tend to gravitate toward differ- ent payment options. And while alternative payment methods certainly appeal to the under-banked and un- banked for obvious reasons, all types of consumers in- local markets as many cards are issued for use only cluding those that hold credit cards, are adopting con- with local currency). The right international pay- venient alternative payment methods. ment provider can help. The economic downturn has also contributed to al- Through a single integration, a good payment ternative payments use as credit cardholders are more partner will enable merchants to work with various conscious of their credit-based spending. acquiring banks in different jurisdictions around the As expected, online gaming operators and their world for card processing (thereby lowering costs to players are even more driven to alternative payment entry) as well as enable them access to various pay- platforms. The reasons are varied from the basic ment types in multiple currencies, which lowers the motive of anonymity, player profiles, and of course, costs and time associated with direct integrations to the 7995-coded transaction and decline issues. Nev- each payment method. ertheless, credit cards will continue to be crucial to Gaining access to alternative payment options via an online payment strategy, and, even though "im- one implementation is key. Not only is it a cost saver proving economy will lead some consumers back to in terms of integration time and IT resources from credit card products, which may slow the growth of the outset, but it allows the operator to spend less alternative payments", according to Javelin Strategy & time on managing these payment infrastructures Research, alternative payments are also here to stay. going forward. One should remember, however, that it is never possible for one vendor to offer every global payment Working with the right payment provider type. Operators need to zero in on what they require By partnering with an international, internet payment for their business and compare those needs against solutions provider that understands and provides other payment requirements. Many payment solu- credit card processing and alternative payment op- tion providers, for example, do not facilitate direct tions, operators can continue to focus on their game, merchant accounts for credit card processing, which while leveraging key benefits such as access to new means that the merchant will not have direct con- global markets and payment types via one source. trol of their funds. Other payment providers may not As an example, if merchants want to capture the offer a full suite of fraud management tools, so it is Chinese market, they must support China Union- important for an operator to weigh out its needs. Pay (debit) since it is the predominant payment card But clearly, there is an expectation now for pay- in China. Similarly, debit card use in Germany and ment gateways to offer a full portfolio of payment so- Poland is much higher than credit card usage so mer- lutions. Just as the toothpaste industry transformed chants doing business in these geographies must have consumer preferences by introducing added features, access to the local payment brands and currencies best-in-breed online payment gateways shifted the (local currency support increases the capture rate in thinking behind online businesses. ✜
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