Amid Alternative Payments, International Scope

Beyond cards — debit and credit cards — there’s a growing movement for merchants to accept alternative forms of payments in eCommerce, with digital wallets and bank transfers, to name just two.

But with choice comes complexity, especially for merchants, who want to reach far-flung locales but must navigate acquirers and processing and data collection. In one recent deal aimed at streamlining those activities, Vantiv at the end of 2016 said it was partnering up with PPRO Group, a cross-border e-payment provider, to smooth those flows for Vantiv’s merchants.

In an interview with Neeraj Gupta, leader of Product Management, at Vantiv and PYMNTS’ Karen Webster, the executive noted that just over a year ago, Vantiv made its first foray outside of North America with card acceptance operations. The company had been able to support local acquiring and local settlements in the European region and for merchants working with credit and debit cards.

But for merchants to maximize their conversion online, he said, offering alternative payment methods to customers becomes important, especially among a trend when global APM (alternative payment methods) has exceeded online use of cards to complete transactions.

With a nod to the partnership with PPRO, Gupta stated that the choice has been one to serve the most desirable types of alternative payment methods. There are, of course, several methods, Gupta said, likening the pure number of choices as “a long tail,” thus necessitating a choice of “quality over quantity,” he said, pointing to a road map where “we started in North America, now Europe, and then later this year [we’re] moving into Asia-Pacific. We wanted to be able to serve those high-growth and high-share payment methods for both card and non-card payments.”

The linking with PPRO works as “they sit behind our platform … [allowing our merchants to deal only with us] when it comes to reporting, integration, customer service … but they’ll power our alternative payment methods throughout the world,” Gupta said.

The pact starts with direct debits in Europe, which launched recently, and in the coming months will include bank transfers across the region.

With the eventuality of gaining a foothold in Asia, Gupta projected that Alipay is about 55 percent of Chinese spend. Vantiv is “on track for local acquiring in Asia-Pacific, [and] global cards, for the back half of 2017,” he added, “and in tandem with that, we will be supporting Alipay through the PPRO relationship.”

Webster noted that the best-in-class merchants offer as many as six to nine of the more popular methods of payments and queried Gupta how the firm can pinpoint which half-dozen or so methodologies are most relevant to certain merchants.

One way comes from industry research, said Gupta, showing the most commonly used payment methods on a market-by-market basis and how quickly they are being embraced, in some cases, by certain merchant verticals. That gets cross-checked against what merchants are telling Vantiv, as a form of what Gupta termed “empirical evidence.”

Vantiv also maintains several efforts to ensure that routing is conducted to the correct local acquirer, he said, regardless of the mix of alternatives tied into payment methods. The commerce opportunity may be global, Webster and Gupta agreed, but the payments are local in nature. For merchants, said Gupta, “once you get past the local acquirers for an approval,” concerns about overhead kick-in, especially in reference to international payments. Merchants know they can bill through multiple processors, integrate with banks directly and load any number of solutions, “but that is [many multiples] the amount of overhead that [they] have in mind,” Gupta said.

For Vantiv, he said, reconciling everything from the reporting to the back-end vendors allows merchants to have what he called “a value proposition for international relationships that we’re trying to ensure … that ‘single throat to choke’ remains with Vantiv. We’re not asking our merchants to integrate into multiple relationships.”

Moving forward, said Gupta, who noted that payments remains a relatively small but important piece of the localized experience, Vantiv is likely to focus efforts on optimization of approval. There’s the local acquiring case, he said, with an attendant 10 to 15 percent uptick in approvals, but in getting into the granularity of issuer locations and merchant locations, there’s also room for Vantiv to help work to “increase those approvals even more.”

He said the firm is working on approval optimization within the domestic realm and will look to extend that to cross-border acquirers as well.