Author: Daniel Andrews
If there’s one thing that we’ve all learned from Game of Thrones, it’s that sometimes it pays to be the monarch, but most of the time it means there’s trouble ahead. (Don’t worry, no plot spoilers!)
Stick with me… as I was watching the show it struck me that the fight for the Kingdom of Westeros and a seat upon on the Iron Throne is actually a great metaphor for the disruption taking place in the payments industry. How so, I hear you ask?
While there are a lot less dragons involved and thankfully no blood has been shed in the pursuit of payments glory, the industry’s story is a lot like season one, or book one if you’re more of a reader than a watcher. We start with Robert on the throne, he’s been there for a while and he’s perhaps a little too secure in his position to make life better for his subjects. On the sidelines, we have the young blood, the next generation of potential rulers who covet the Iron Throne, and they’re ready to make waves to topple Robert from his Kingdom.
Now, let’s look at the payments industry—traditionally ruled by incumbent payments firms, but the subjects of e-commerce land demanded better, faster, smarter, and more secure payments options from their shop keeps, who in turn demanded more from the payments processors ruling the kingdom. So, like any good fantasy epic, in come the younger, hungrier, and more agile disrupters who want to revolutionize the industry and become leaders themselves. Yes, payments fintechs, you’re the new Jon Snow, or Sansa Stark, or Daenerys Targaryen—or whoever makes it through the next episode—and the Payments Throne is up for grabs!
The Pressure for the Perfect Payment Experience
Competition for online spend is fierce and the race is on for simple, ‘one-click’ online payments. If an online checkout is unfriendly, time-consuming or complicated, shoppers will abandon their purchases. Especially now that consumers have more choice than ever, and they know how simple online payments can be when the process is handled well.
This is especially true for consumers on-the-go; browsing and shopping on their smartphones. They don’t want to be encumbered by lengthy forms or to feel conspicuous taking out their credit card on the train or in a cafe. For these shoppers, the experience has changed. They’re making their online purchases in public, on the move, working from a small screen while pressed for time. Recognizing this, retailers know their checkout experience needs to match up to consumers expectations if they are to stay relevant and compete.
So where does that leave the industry? It’s not a surprise that it’s evolving quickly, with two types of competitors already vying to take the payments throne from the incumbents:
- payments focused fintechs who saw the opportunity to use technology to overthrow the incumbents
- merchants who have grown impatient with the available options and see the value of bringing payments processing in-house
While these businesses vary in their approach, they all understand that one magical weapon is vital for their future success: technology.
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Helping Merchants Power Seamless Checkout Experiences
Whether incumbent, fintech, or merchant, those looking to claim the payments throne are looking to technology to not just create seamless checkout experiences for customers, but also to simplify the merchant onboarding process. The key to this is to create scalable payment services and onboarding processes that meet all KYC requirements while preventing fraud and mitigating risk. The solution? Automation of sophisticated risk decisioning, fraud, payments, and onboarding processes.
Take Swedish e-commerce company Klarna for example, their merchant clients gain the benefits of advanced risk decisioning to provide a hassle-free checkout process that improves conversion rates. Klarna makes a rapid risk decision on every transaction; shoppers need input only basic personal information (no credit card numbers) and can choose to make payment after goods have been received. They mitigate this potentially risky process with automated risk decisioning.
YapStone is another great example of an innovative company who are using advanced risk decisioning and automation to provide an end-to-end payments acceptance service. While they started by powering peer-to-peer transactions for online home-sharing marketplaces such as HomeAway and Kigo, they’re technology was flexible enough to diversify allow YapStone to launch their product in new verticles. YapStone has developed advanced risk decisioning processes that allow their clients to quickly and easily onboard marketplace merchants while mitigating risk and fraud threats to provide simple peer-to-peer payments in many different currencies and industries.
Let’s not forget the merchants who’ve entered the payments race, most notably Amazon. While they originally developed their payments technology to meet in-house needs, they have now made it available to third parties. They’ve solved their own payments challenges and diversified their product line to diversify into a payments firm in addition to their many other products.
Using Technology to Onboard Merchants in Minutes and Provide Frictionless Payment Solutions
With all forms of credit, there’s risk and the traditional mitigation against that risk is to gather a lot of information, assess it and be reassured. That basic premise hasn’t changed but thanks to technology the way it is done can be improved.
Simple click-to-buy is the way the industry is going. To help retailers meet this demand, payments solutions providers are looking to agile models for risk analytics and decisioning with advanced data analytics and streamlined business workflows that automate more of the process than ever before. As online customer experiences get simpler, risk analytics and decisioning must get smarter.
With merchants not waiting for incumbents to solve their problems and fintechs already edging the incumbents out with disruptive technology, competition is rapidly increasing. Each player in the fight for the payments throne, including incumbents, merchants, and fintechs, will need to look beyond the now to create products and services that can scale and adapt as the industry grows and evolves.
This means that they need to use technology that’s fast, agile, scalable, and perhaps most importantly, able to automate the processes that allow merchant onboarding to be completed in minutes and provide the one-click payments consumers desire.
What do you think? Is there a clear claimant to the payments throne (or will we have to wait another eight seasons to find out)?