The Good Payment Experience Guide for PSPs & Acquirers

The Payments Landscape is Constantly Changing

The financial services landscape is constantly seeing new payment methods disrupt the stage. In Europe, for example, buy now, pay later (BNPL) models have been gaining in popularity. Under BNPL, customers can pay for purchases over a series of between six to 12 interest-free installments. This type of payment model has already been in place in Latin America for several years. Meanwhile, new digital wallet payments like Apple Pay, Google Pay, and Samsung Pay are also being offered in different markets. 

Unfortunately, as soon as a new payment type or system emerges, fraudsters are the first ones to adopt it and exploit it. This is the key reason that acquirers and PSPs have to invest in future-proofing their operations. Each payment type – from credit or debit card payments to BNPL to cryptocurrency – comes with its own unique vulnerabilities.

Acquirers and PSPs have a special role to play in keeping merchants safe as the payments landscape expands. Specifically, they must play the role of consultants and experts for their merchant clients. In practice, this means understanding the risk levels of each payment type and the potential fraud losses that each type carries. Not all payment methods are the right fit for each merchant. As partners, acquirers and PSPs help merchants to navigate the risks of each option.

While fraud losses are certainly important, they are not top of mind for many merchants. Instead, merchants want to deliver a good payment experience that delights their customers. This means acquirers and PSPs must become risk experts to support their merchant partners across multiple payment offerings.

Merchants Want to Focus on Friction-Free Sales

Reducing payment friction enables merchants to focus on their growth priorities. Acquirers and PSPs play an important role in ensuring their merchant accounts have access to seamless payments. As partners, these organizations can help merchants focus on sales by using every available tool available – including 3-D Secure 2.0 (3DS 2.0). 

By implementing the right technology, acquirers and PSPs build a holistic view of risk. This view can analyze the risk levels of every entity involved in a transaction in real-time. This includes the cardholder, the device they use, the card itself, and more. Having a holistic view of the customer at each of these touchpoints eliminates the need for authentication steps like passwords that would interrupt the payment flow. Instead, acquirers can waive certain 3DS requirements, allowing customer authentication steps based on their risk level.

Removing frictions like passwords or other strong customer authentication (SCA) requirements allow customers to move through the checkout process faster. Merchants appreciate this because customers have fewer chances to reconsider a purchase. With a holistic view of risk, acquirers and PSPs can reduce their own risk exposure while helping merchants improve their sales.

3 Steps for Acquirers to Enable a Good Payment Experience for Merchants

Shifts in the payments landscape are showing no signs of slowing down. As these shifts continue, acquirers and PSPs find themselves acting as merchants’ support systems. This means helping merchants to navigate fraud risks so they can focus on delivering a good customer payment experience and minimizing friction. 

Here’s what acquirers and PSPs can do to deliver on these goals and help merchants focus on what’s most important to them: their customers.

Acquirers Should Play an Active Role in the Payments Community

The first step acquirers and PSPs can take is to tune in to the payments community for the latest payment and fraud trends. Acquirers and PSPs should become actively involved with this community by attending conferences sponsored by groups like the Merchant Risk Council (MRC) or Money20/20, for example. Events like these attract some of the biggest leaders in the payments industry and the trends they are following. Acquirers and PSPs should use these events as opportunities to understand the payment types that are gaining traction and how payment trends are shifting by geographic location.

Think Local to Go Global

This understanding of different global regions’ payment preferences is critical for acquirers and PSPs to scale. For example, European or US-based companies should understand how consumers prefer to make payments in other markets like Asia or Latin America. Wherever you operate, it’s important for both acquirers and PSPs to become specialists in the payment preferences of each market. Don’t assume that the payment preferences of one locality will automatically transfer to another. Understanding the payment nuances of each market – e.g., if local customers prefer using BNPL or other installment payment options – is key to helping merchants deliver the best payment experience possible.

Monitor Merchants to Protect Your Organization from Risk

Acquirers and PSPs need to onboard successful merchants who can deliver a compelling and seamless payment experience for customers. This means understanding which businesses will make the best partners at the merchant onboarding stage. Monitor merchants throughout their customer lifecycle to make sure they perform as expected for their size and merchant category code (MCC). Don’t offer certain payment types to every merchant if there’s a risk it could lead to fraudulent transactions. At the same time, don’t overlook your organization’s ethical obligations to make sure you aren’t enabling merchants involved in illegal or questionable activities. This includes legal but higher-risk merchants in industries like gambling or firms that sell expensive technology to poorer communities. Investing in onboarding that can be automated can help acquirers understand which merchants will make the most trustworthy partners.

Merchants want to be merchants and focused on winning loyal customers and boosting sales. As their partners, acquirers and PSPs must act as fraud prevention specialists to allow their merchant partners to focus on delivering the good payment experience their customers have come to expect.