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Making the Case for a Digital Payments Transformation in the Ecommerce Sector

Digital Payments

Accounting for an estimated 22 percent of all sales worldwide, ecommerce has become a dominant force in the global market. The global ecommerce industry has been estimated to be worth more than USD 3 trillion as of 2022, and financial experts expect this value to soar upwards of USD 5 trillion by 2026.

Thanks to global customers’ growing preference for online shopping and procurement, as well as continuous improvements in the adjacent fields of logistics, data management, and mobile device technology, ecommerce is likely here for the long haul. But aside from customers and merchants, who stands to benefit from the rapid growth of the ecommerce industry?

Most people think that up-and-coming fintechs have the most to gain because of their agility and familiarity with tech-driven business models. But even players that are considered more “traditional” in their business model, such as long-established banks, have a fighting chance in terms of making a huge profit off of ecommerce operations.

The caveat is for banks and other similar financial institutions to modernize their current payment processing systems and become seamlessly, inextricably integrated into the ecommerce experience. Here’s why your bank should invest in a modern and innovative digital payments solution that’s robust enough to support ecommerce applications, plus a few tips on how to kick off a digital payments transformation that will bolster your presence in the ecommerce sector.

On the Need for Innovation in the Ecommerce Payments Ecosystem

The 2020s have become something of a golden age for the interconnected payment ecosystem. From corporate organizations to individual consumers, there’s now a collective expectation for payment processes to be quick, accessible, and fully integrated into a business’s system.

There’s no better example of that than the ecommerce model. Whether an ecommerce website represents an individual online shop or a whole online marketplace with multiple buyers and sellers, customers already come in expecting multiple payment options and straight-through settlement of their orders. In fact, these qualities often determine which ecommerce businesses get the most patronage.

A fast, reliable payment system with lots of convenient options can win an ecommerce company new business, as well as the loyalty of returning customers. The opposite is also true: a limited, stagnant, or downright unpleasant payment experience can permanently turn off a retail or corporate customer and compel them to take their business elsewhere. That, of course, affects everyone in the ecommerce system—including payment providers, who may end up losing a large chunk of their potential profits.

It should therefore be the goal of any player in this ecosystem to be more than just “enough” for customers and clients. The ecommerce website or platform must facilitate a whole range of trustworthy payment options for anyone who will transact on it. And for its own part, a bank must contribute to this ecommerce ecosystem by doing more than making a payment option available. In the best-case scenario, your own banking brand would be among a customer’s top choices for paying for their orders, putting you toe-to-toe with contemporary payment providers like e-wallet providers and fintech companies.

The best entrypoint for a bank’s digital payments transformation for ecommerce is at the terminal or gateway, or the point that facilitates the transmission of customers’ funds while safely handling their financial information. When you commit to improving the ecommerce payment experience from this point, you’ll make significant contributions to both the ecommerce payment ecosystem and your bank’s bottom line.

A Roadmap Towards Digital Payments Transformation and Increased Success in Ecommerce

If you represent a bank that wants to service retail or corporate customers when they’re buying from ecommerce platforms, you may be intimidated about the challenges that lie ahead of you. For certain, there’s a lot of work to be done to make your payment services faster, more agile, and friendlier to ecommerce ecosystems. With that in mind, below is a three-step payment modernization roadmap that should make it easier for you.

Step 1: Identify Key Ecommerce Payment Capabilities

Before you embark on a full digital payments transformation, you should have an idea of what ecommerce payment capabilities you want to fulfill. Examples of key functionalities that you should achieve when you do an ecommerce-related tech upgrade are the following:

  • Real-time payment processing
  • Acceptance of foreign currencies as payments (for global ecommerce operations)
  • Compliance with regulatory standards, like ISO 20022 for increased traceability of banking payments
  • Built-in security and risk management capabilities
  • Analytics to monitor ecommerce sales performance

Explore a Dedicated Payments Solution

Next, once you have an idea of which core ecommerce payment capabilities you’ll want to achieve, consider finding a dedicated payments solution that fits the bill and improves your organization’s mettle at handling ecommerce payments. Get in touch with a reliable technology partner who knows what the modern payments landscape is like and who can help you tailor your new solution to your bank’s ecommerce-related needs.

Implement and Monitor Your Payment Solution’s Integration

Lastly, once you’ve settled on the right solution and inked your contract with your tech partner, it will be time for implementation. Your tech partner should be able to help you work out both your timeline and your implementation milestones. Note that monitoring, troubleshooting, and maintenance will all be part of the ongoing implementation process, and that you need to take these steps seriously to see if your digital payments transformation is bringing in its intended returns.

Final Words

The world of ecommerce presents many exciting possibilities to those that work in the financial industry. Still, it’s understandable that banks and other financial institutions with traditional beginnings may feel threatened by younger, fresher, and more tech-savvy players when ecommerce seems like their playground.

That being said, with the right planning and implementation decisions for a key area like payment integration, banks can succeed in ecommerce as well. They can leverage traditional strengths—like the reliability of the bank’s basic payment infrastructure and customers’ longstanding trust in a bank’s oversight of payments—to make an impact in the relatively new sphere of ecommerce. As you welcome the golden age of ecommerce, be sure to cultivate those strengths in your bank and use new technologies to shine the spotlight on them.

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