“In Europe and the US, the major e-commerce and tech companies are rapidly gaining ground,” said Gaston Aussems, CEO of Mollie. He is referring to e-commerce giants such as Amazon and tech giants such as Apple. These continue to grow at a high speed and are gaining more and more influence on the payment world.
They do this with innovative technology. The same technology that Payment Service Providers (PSPs) have used to inherit payments and the customer experience from the banks.
How to guarantee a smooth user experience with data
What are the tech sector and e-commerce looking for in payment transactions? The answer is simple: data. Data is an indispensable tool for these types of companies to make a profit. Gaston explains: “If you order and pay at an online store via Amazon Pay (Amazon’s payment service), Amazon uses that information to make you personalized offers on their website. In this way they hope to improve the customer experience, which will lead to higher turnover.” If Apple and Google offer payment services themselves, they broaden their offering and benefit from more customer contact moments.
Major e-commerce players such as Zalando, Coolblue and Veepee are working on a new system: check-in. That should make online shopping and payment easier. Gaston: “Check-in actually means that the web store recognizes and greets you immediately after logging in. The store keeps track of what you view and shows you items that you are likely to find interesting. When you then want to pay, everything is already ready. Your address and preferred payment method have already been entered, because the store recognized you immediately after signing up.” The rest of the process is simple. The customer clicks the order button and the order is on its way. Gaston: “They offer you a very smooth user experience, all based on data.”
The advance of ecosystems
Such a check-in is exclusively reserved for large webshops. “Creating a profile is only attractive for shops that offer an enormously wide range and can tempt customers to make new purchases time and again,” explains Gaston. “And if you often buy something, you don’t feel like entering your details again and again.”
The range of the largest web shops now includes loans, marketplaces for sellers and even healthcare. And some players, such as Amazon, also take care of the payment themselves.
Gaston: “Ultimately, those big boys want to become the address where you as a customer can go for everything you need.” The whole process is a snowball effect. Gaston: “The more you order from them, the more they learn about you, the better they understand you and the more they can sell you. If services are added to this, for example free delivery, such as Bol Select and Amazon Prime, these types of providers become a real one-stop shop for their customers. This is leading to an advance of e-commerce ecosystems.”
Digital payments are indispensable
Where do PSPs fit into this picture? Of course, they will continue to provide payments for web shops and some large ecosystems. In addition, there are also many new opportunities.
Gaston: “Have you ever had a meal delivered? The payment for this has been processed by someone. In addition, PSPs have many other services to offer, such as fraud protection, that smaller e-commerce platforms can take advantage of. Going into business with a licensed payment party saves those kinds of platforms time, money and a lot of manpower.” And the B2B segment? PSPs can access that as much as they want. “That’s why we have so many integrations for our platform,” explains Gaston. “We want to make our customers as successful as possible by providing additional services for them.”
“In addition, ownership is now passé. People are sharing or renting more often and that is not going to change for the foreseeable future.” IKEA is already experimenting with furniture rental and you can even go to Coolblue to rent white goods. “That’s why we started eCurring,” explains Gaston. With eCurring we take care of everything for you to set up a model yourself with a subscription.”
All of this shows that e-commerce payments are only a fraction of the payments industry. Step by step, online payments are becoming in all sectors.
And why? Because it is convenient. Gaston: “Electronic invoices with built-in payment options are paid considerably faster. As a result, traditional invoices are becoming less and less popular.”
Now the question is, how big are those e-commerce giants and tech giants really getting? Are they swallowing the entire payment sector?
“It won’t go that fast,” Gaston says. “Europe and the US are being put on the brakes by politics to stop the further growth of the power of these ecosystems.” European and US regulators are preventing e-commerce companies and the technology sector from reaching the same magnitude as Alibaba and Tencent in China. Those two companies provide complete overarching ecosystems, from chat services to shopping platforms and financial services. “PSPs should be aware of these developments, however, and that large online stores and the technology sector are immensely powerful,” said Gaston.
“Ultimately, these giants themselves are not waiting for the extra legislation and increased supervision. That is what you get with an expansion of the financial portfolio. That is just a lot of hassle.” An interesting example of this is Apple. “Apple is taking a smart approach with Apple Pay. Apple takes care of the entire process, right up to the moment a payment is made. That part is handed over to a regulated financial institution. In the meantime, however, Apple gets its hands on all the data.”
And like Apple and other innovative companies, PSPs need to consider where they add value. “Whoever succeeds in this,” says Gaston, “will have a bright future ahead.”