As published on FintechFutures June 26, 2020

The coronavirus pandemic has seen online shopping soar to record levels. In fact, new analysis from Nielsen shows that, in the grocery retail category, there has been a 7% spike in online sales over the same period last year.

In this climate, many businesses are placing increased emphasis on their e-commerce operations and, for over a third of small and medium-sized enterprises (SMEs), it’s the first time they’ve started trading online, according to Small Business Saturday UK. That means companies are navigating a totally different landscape and are facing new challenges.

A key consideration for online sales is the smoothness of your checkout process. Consumers demand a fast, frictionless experience but one which is also safe and secure. It’s a complex trade-off between a business’ appetite for risk and the ambition to give consumers what they want.

To help, here are five ways that companies can streamline their payments and maximise digital sales:

  1. Choose the right payment gateway

Different gateways will offer different capabilities and versions of 3D Secure. The new, upgraded version of 3DS (3DS Version 2) offers some significant improvements and benefits to businesses and consumers. If you’re a consumer, it’s much easier to use if you’re shopping through a mobile device, such as a phone app or tablet. If you are a retailer, it helps to limit friction and potential customer drop-out rate, meaning fewer shoppers abandon their online baskets and more go through to complete the payment process.

  1. Take advantage of strong customer authentication (SCA) approved exemptions

Automatically routing all transactions through 3DS could have a negative impact on customer satisfaction and may result in fewer purchases. Our advice therefore is to use 3DS selectively for those transactions which carry a higher risk.

Businesses need a clear strategy, taking advantage of SCA-approved exemptions to balance fraud protection against customer experience, and ultimately, the rate of transaction success they wish to achieve. As part of that, they need to be clear about which exemptions they wish to use, and work with their acquirer and gateway partners to deliver them.

  1. Flag transactions correctly

We see a lot of online businesses mix up how they flag their transactions. Different terminology is used – including wording such as “recurring”, “card-on-file” and “merchant-initiated” – and inconsistencies can mean that some payments are declined. Merchants should therefore work with their acquiring and payments gateway partners to ensure that transactions are flagged correctly and, in the process, to increase the rate of payments that get accepted.

  1. Know your customers and the payment type they prefer

Consumers now have a plethora of different payment methods to choose from, from more ‘traditional’ card schemes such as Visa to digital and mobile wallets like PayPal, Apple Pay and Google Pay. This extends to payment methods such as Alipay and WeChat Pay that are popular in other parts of the world.  It’s vital, therefore, that you understand your customer base and accommodate transactions for the most popular payment types. Some will carry more risk than others and again, it is crucial to work in partnership with acquirers and payment gateways to mitigate against any security concerns.

  1. Use data analytics

Another big reason for transaction declines is unavailable funds. There will be specific, regular times in the day that funds (such as a regular payment from an employer) clear into customer bank accounts. Data analytics can help merchants find out the optimum time to process transaction batches and achieve a higher percentage of those transactions being approved by card issuers.

To help businesses of all sizes navigate this complex payment landscape, Barclaycard launched Transact, a suite of tools designed to reduce fraud, improve payment acceptance rates, and intelligently apply SCA exemptions to reduce friction for shoppers. We’ve also partnered with award-winning AI-driven fraud prevention solution, Kount, to develop Transact’s state-of-the-art fraud protection module.

Whatever the size of your business, the commercial case for streamlining the online payments process is clear. Work with your acquirer and payments gateway to reduce friction, reduce fraud, increase payments acceptance, and ultimately drive up your sales figures. When the world is increasingly searching for products and shopping online, you can’t afford not to.

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