Why merchants shouldn't underestimate working with PSPs

Merchants and retailers are increasingly making use of payment service providers to facilitate their financial transactions. While this paves the way for benefits in speed, efficiency and customer service, implementing and working with such external vendor providers and their platforms is not always an easy ride. 

On the back of her 14 years of experience in the e-commerce and payments industry, Chantal de Meere – a Consultant at Connective Payments – has gained deep insights in the interaction between merchants and payment service providers, and the technical and commercial requirements needed to make their collaboration a success.

In her experience, by fully digitising the payments process and optimising available functionalities of payment partners, merchants can unlock major opportunities. “PSPs such as Adyen, Stripe, Checkout.com, Worldpay, Ingenico and many others offer plug & play solutions to get rid of complexity in the payments process.” Examples include managing a hybrid payments landscape, consolidating several schemes and automating necessary reconciliation rules, timelines and conditions. 

“In addition, they offer more and more platform capabilities to increase conversion and improve efficiency, such as client-side encryption, split pay-out solutions (marketplace pay-out), business intelligence tools, intelligent routing, account updaters, retry logic, customer profiling, advanced fraud management and so on.”

Magic bullet?

However, while working with a PSP “makes perfect sense,” she says, it shouldn’t too quickly be considered a magic bullet. “There are a number of caveats that should be considered for a smooth collaboration.” 

The first mistake many companies make is in the early stages, during a PSP selection. “They underestimate the complexity and often place too much emphasis on price, rather than a well-founded assessment of the business, operational and technical requirements the company needs versus what the PSP has to offer.” 

“Furthermore, the payments platform’s capabilities are often presented as the ultimate solution for the merchant’s challenges. It is therefore assumed that the PSP will take care of everything after the integration phase. This is obviously not the case, because the optimal deployment of the PSP’s functionalities remains the responsibility of the merchant. It is key that merchants have knowledge of and take ownership of the payments process.” 

Another caveat lies in the handover of responsibilities go-live. “During the implementation phase, disciplines such as finance, IT, marketing and e-commerce are all involved in the project. After the launch and the elimination of aftercare issues, everyone retreats and is relieved that the project is over. The consequence is a lack of ownership and subsequently internal knowledge gets fragmented,” unpacked De Meere. 

This behaviour she says typically leads to a number of issues:

• Little insight in how to steer towards cost reduction (processing costs, transaction costs, interchange fees, cross border, foreign exchange and costs related to internal processes);
• Limited understanding of how to increase payments conversion based on rejected or unsuccessful transactions considering that little to no use is made of available PSP functionalities and business intelligence tools;
• An unhealthy dependency on the PSP or other third parties.

“It is therefore imperative that someone within the organisation takes ownership of the payment partner(s) and associated processes. This person should have overall knowledge of the payments process and serve as the link between finance, IT, e-commerce and business intelligence. And understand how a payment is processed from A to Z and how processes can be streamlined, costs can be reduced at transaction and process level and conversion is increased based on specific data and functionalities that the PSP has to offer.” 

Ultimately, according to De Meere it comes down to “thorough analysis and hard work” to find the sweet spot and take advantage of all the benefits of working with a specialised PSP.

“At Connective Payments, we have broad experience in dealing with these challenges and are committed to turning payment service providers into true business partners.”