Installment payments explained
How global brands are using payments to thrive in a period of economic turbulence
In 2022, we entered a period of economic abnormality, creating a new wave of challenges and uncertainty for businesses across all sectors.
With the global economy faltering, businesses must, and are, getting smarter by focusing on what matters to navigate the headwinds and thrive in this era of turbulence. For many merchants, this means ensuring their payment systems are functioning at peak performance.
In a recent webinar, as part of our Build Beyond series, Checkout’s VP North America Zack Levine sat down with two payments practitioners, who are at the forefront of managing these systems: Cheeson Tan, Staff Payments Strategist at PlayStation and Kelsey Dowling, Senior Technical Product Manager at GE Healthcare.
Changes ahead for payments
While the last few years have been focused on “riding the Covid wave,” says Tan, “this year, we do feel the pressure.” He adds, “we are tasked with saving costs and generating more revenue. This year is the year of alternatives for us.”
While innovation is an important part of the strategy, the payments team must separate developments that are rehashes of methods they’ve already used, from those that are novel innovations that may take longer to come to fruition. One example of the latter, which Tan highlights, is machine learning. Where previously they had handled BIN routing manually, “month by month, quarter by quarter,” now, this is done by algorithms alone. “Hopefully, we get to a stage where we can do it on a transaction level rather than a BIN level,” Tan says. Other areas of exploration for Tan will be alternative card rails, new 3DS providers, and sharing more data with issuers as further opportunities open up.
To Dowling, it’s important to look closely at prioritizing when it comes to innovation in payments—it’s all about listening to stakeholders, both on the customer and business side. “We want to make sure we maximize opportunities that are going to keep revenue growth in our mature areas, while developing those more emerging markets,” she says. Instead of building products in the hope that customers will begin to use them, Dowling focuses on using data to show that processes are meeting existing demands: “we heavily rely on those inputs from customers,” she says. She credits “research, time and investment” as the best tools to ensure their work in payments will be successful. “Being the advocate in your business for why payments are important is only a good thing,” she adds.
Localization is all-important
The industry is also seeing widespread changes in international regulations, making for a more complicated life, where localization is becoming increasingly important. For a large company like PlayStation, that has traditionally structured itself around tax, this means they are now looking at creating more legal entities, as payments become more of a driver for the corporate structure.
For them, using an app-based flow and relying on 3DS, a local change like Brexit can mean big changes behind the scenes, just to maintain the status quo.
Dowling agrees that localization is one of the major challenges facing payments. “We've typically tried to set up global strategies and then roll those out and hope that they're going to be successful. We've very quickly learned that we're going to have to pivot on that,” she says. “Offering local solutions is the key to growth and success for ecommerce.” This means balancing the needs of each region individually.
Picking the right partner
With turbulent times ahead, it becomes crucial to know that the people around you are going to be all hands on deck. When it comes to selecting the right payment provider, there are a number of factors currently moving the needle, our panelists explained.
For Dowling, size and reliability are a priority: “Global coverage is obviously very important, this being such a large business,” she says. “The production support element is very important to us.”
But for PlayStation, being able to adapt to the shifting playing field is a priority: “One of the key things we look for now is agility, because we found having too rigid a structure in this day and age really doesn't help us and our consumers. So, being able to do things like AB-test is a key factor in choosing.” This kind of testing allows for incremental improvement that can make all the difference at scale: “When you've done the big things, the AB testing really helps you identify what the consumer likes, and what they don't.”
For Tan, flexibility is key for future-proofing. “Challenges keep coming and keep changing. Building in that agility will help you for the future.”
Despite the uncertainty, our panelists were keeping a close eye on future trends in payments. “I am really interested to see how cryptocurrencies kind of come into play and if that does become a predominant option in the market. Are people and merchants really gonna start offering that?” asks Dowling.
Both panelists also spoke about the growing use of biometrics as a payment tool. “Things are becoming more and more personalized,” said Dowling. “With people expecting that in their typical day-to-day consumer life, how do we bring that into more traditional business platforms?”
Tan also cites the growing use of network tokens as a growth area. “It's been around for a little while, but they're infiltrating all of our ecommerce lives these days! I'm particularly interested in how to potentially make it interoperable—that seems like a hard task.”
To learn more about the trends that we can expect this year, download our guide and hear what other payments experts are expecting.
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