With payment providers offering 300+ payment methods for acceptance, it can be difficult to determine when and where to display which payment method. Churn can happen thanks to the confusion of integrating so many potential payment methods. The objective of payments orchestration is to reduce churn in the total conversion rate. One of the most innovative functionality elements of payments orchestration in 2020 was Dynamic Payment Method Presentation: the ability to selectively present specific payment methods to the customer on the checkout page based on inputs like region and language.
Readers may be familiar with the card schemes’ solution to “NASCAR-ify” payments through branded features, like Secure Remote Commerce (SRC). Otherwise known as “Click-to-Pay,” SRC was conceived of as the single payment button that reduces friction from the customer having to choose between several payment methods. While the goal to reduce the time a customer spends selecting which payment method to use is ultimately useful, the use of SRC as the button eviscerates merchant routing choices and alternative payment methods. Pilots for SRC went live in 2019, but meaningful adoption of SRC is still several years away. Dynamic payment method presentation is already here and it is better.
By optimizing which payment methods are displayed to the customer by product type or geography, merchants can jointly optimize conversions (by only presenting the top three payment methods for a specific product) and reduce processing costs (by selectively presenting the payment methods that make the most sense for their customers to transact in). This level of flexibility is not commonplace across the entire ecosystem, yet.
Dynamic payment method presentation deepens payment teams’ ties with marketing and fraud. Since the functionality is part of the client’s end-user toolkit, engineering no longer is tasked with these modifications. Payment operations teams have direct control over what payment methods are presented to the end-customer. Dynamic payment method presentation is the most direct customer-facing feature available in the merchant payments industry to date; it also requires joint strategy decisions with fraud teams. It’s important that the payment methods presented on the checkout page don’t further raise a merchant’s risk exposure without net gain. For instance, while SEPA Direct Debits are a great payment method to offer to European customers, the refund rights are especially risky for merchants with immediate fulfillment requirements. To be useful, the tool needs to provide end-users with enough control to configure their checkout pages to business considerations.
Among the Payment Vendor Report participants, a couple have the necessary technology to enable such functionality today: Switch Inc, and optile. At a high-level, their flows are remarkably similar. During checkout, the client (e.g. the merchant) requests, via API, a list of payment methods available for a particular transaction (limited by conditions such as geography, PSP, and available payment methods from the PSP, count of payment methods to present, etc.). From this list, the methods ultimately presented to the customer are dynamically calculated based on the client’s pre-set configurations for payment acceptance. Acceptance is dependent upon their available payment methods, payment service providers, and routing thresholds. The final filtered list is presented on the payment form.
Dynamic payment method presentation facilitates communication between payments, marketing, and fraud without necessitating additional engineering effort. We’re excited to hear from both optile and Switch about their findings for conversion rates based on this functionality! And, we hope to see business cases for how such tools reduce infrastructure engineering costs as dynamic payment method presentation automates a traditionally manual and political task.
To learn more about optile and Switch, find the Payment Vendor Report here: http://paladinfraud.com/mrc-paladin-payment-report/