Editor Introduction: Under the epidemic, live short videos and social media have developed rapidly, and Chinese companies have set off a craze for overseas travel, but overseas marketing, cross-border payments and collections are in the forefront. Payment is the "last mile" of the consumer shopping journey, and the smoothness of the payment process is crucial to improving consumer experience and ensuring the implementation of corporate income. This article will focus on explaining the payment success rate faced by companies going overseas. Interested friends will read it together!
The new crown epidemic swept the world, and the global retail links were impacted. The home isolation measures under the new crown epidemic have changed users' consumption habits, and the penetration rate of online consumption has been greatly improved.
The concentration of e-commerce in major countries in the world is far less than that in China, and third-party platforms cannot form a monopoly. Chinese companies' DTC overseas model has gained greater benefits in this round of consumption evolution. Driven by live short videos and social media, a craze for overseas companies has set off a new cross-border enterprise industrial ecosystem.
During the operation of independent websites, 37% of companies believe that overseas marketing is the biggest problem faced, and 832% of companies believe that cross-border payments and collections are the second problem .
payment is very professional, and it is difficult for overseas brands to find a "package" payment service, and there are many difficulties in the process of accessing payment. From the perspective of the reasons, the main problems are the high fees and few payment methods.
Payment is the "last mile" of the consumer shopping journey. The smooth payment process is crucial to improving consumer experience and ensuring the implementation of corporate income.
traces the root of the source, and the essence of payment is a highly professional financial sub-field. A seemingly ordinary overseas order actually has complete financial and technical support behind it.
Today focuses on explaining the payment success rate faced by enterprises going overseas. The content is divided into three parts:
1. Unlock overseas payment knowledge points
1. Overseas payment overview
Overseas consumers basically have two payment methods:
The first type: bank card, including credit card and debit card, which is more mainstream in Europe and the United States;
The second type: local payment methods for non-bank cards, such as Netherlands iDEAL, Klarna, Germany.
It is worth noting that unlike the domestic Alipay and WeChat payment monopoly market, overseas, credit cards are still the most commonly used payment method. Even e-wallets Paypal and Apple Pay, which have good market share, are actually bound to credit or debit cards, and only digitize credit and debit cards through mobile payment.
Why do you like credit cards so much overseas without mobile payment?
credit cards were first issued in the United States in the 1950s. By the time mobile payments emerged, credit cards had already had a very complete financial system and supporting credit systems.
For example, when we make payment, we need to take out our mobile phone, unlock it with our face or fingerprint, open WeChat or Alipay, click to pay, and after the merchant scans, the entire payment process is completed.
In the United States, you just need to take out your credit card and swipe it, and you don’t even need to enter your password. For American consumers, swiping cards is actually more convenient than mobile payment in a sense. mobile payments have not provided a huge improvement in payment portability for them.
Plus, overseas, the banking industry is monopolized by the capital group, and the capital group controls the lifeline of the economy. According to a McKinsey report, in 2017, the total payment amount in North America was US$470 billion, of which 46% were driven by credit cards, nearly half, of which commercial credit cards accounted for 11% and consumer credit cards accounted for 35%.
In the Asia-Pacific region, this number is only 8%. Under capital monopoly, it is unlikely that third parties such as Alipay will develop electronic payments, and electronic payments will be strictly regulated. (If you have any questions about this place, it is recommended to read "Payment War", and you will also read the reviews at the end of the article)
2. Panoramic view of the overseas credit card payment value chain
payment requests will go through payment gateway, risk control and bank authorization respectively, involving a total of 5 roles.
card issuing bank (issuer bank): The issuing bank used by the consumer side, the issuing bank reviews each payment request from the deck transaction, pass or refuse, that is, the bank authorization, whether the issuing bank authorizes the payment request from the acquiring bank. All 5 roles above
need to charge a service fee, among which the acquiring bank, card organization and issuing bank fees involved in the bank authorization process are the most expensive, which is called Interchange++ fee .
If the consumer uses Chase card to purchase $100 products on the merchant website, the merchant’s collection account card Citi can only receive $97 in the end, of which $3 is earned by these 5 roles on the ecological chain.
3. Overseas payment core data indicator
For merchants, payment success rate (authorization rate) and rejection rate (chargeback rate) are two important indicators. When a
refusal occurs, the issuing bank can directly return the payment to the user without the permission of the merchant. Common reasons include fraudulent transactions, mis-ordered goods, failure to deliver services smoothly, etc. The higher the rejection rate, the more losses the merchant will lose.
For payment success rate, merchants should try their best to continuously improve; for the rejection rate, merchants should avoid occurrences as much as possible to maximize revenue.
2. Recently understand the payment success rate
1. Why is the success rate important
If an order of 30$ fails to pay, what is our cost?
In this case, our loss should be US$30, and the cost of the gateway fee paid. But in addition to this, there are actually some other hidden costs . For merchants, users have already gone through a long journey before receiving a payment order request.
We start from the user's new recruitment, to the user browsing the product, to the user adding shopping cart, and selecting payment methods. There will be jumps and losses in each of the above processes.
When the user actually starts submitting payment orders, it comes to the last step of the user conversion funnel, which will profoundly affect the success rate of payment. If the user pays in a poor manner or the transaction fails during the process, it will have a great impact on the user experience, and it is very likely that new users will be attracted and cannot continue to retain them.
So the real loss also needs to be taken into account the cost of users' new recruitment, not just the order itself and a little payment fee. This is also the importance of payment success rate, and we often emphasize the importance of payment is the last mile.
If this final link fails, it is very likely that new users will be lost. On the other hand, if the merchant can provide a very smooth payment experience and improve the success rate of payment, it can help the merchant develop the entire operation and improve the user's repurchase rate.
2. Payment process disassembly
Let’s take a look at a practical case.
As a merchant, I have now received 100 order requests. But I sent it to the service provider, and then I collected only 45 orders for successful payment. For me, the success rate of the order dimension is actually 45%, which is a very intuitive number.
But you will find that when we need to optimize the success rate of 45% and increase it to 60% or 70%, we need to disassemble the data and understand where the orders from 100 to 45 are lost?
We will show you the complete route of the order:
Step1: The user chooses payment method at the merchant cashier to initiate payment. Perhaps only 70% of the payment may continue due to various reasons. 30 orders have been lost in the first step.
Step2: The user has successfully submitted all the information, and the merchant has also transmitted the payment request to the gateway. The next step is to the risk control inspection process.
risk control is a very important node for payment (risk control is needed to prevent credit card fraud in order to reduce the refusal rate). After some orders were rejected by risk control, 7 more orders were lost in the second step.
Step3: After the risk control inspection is completed, the next step is the 3DS verification process.
Assuming that according to the 80% pass rate, there are 7 more losses in this link, and there are only 50 orders left in the previous order. Compared with the first 100 orders, we only have half of the orders left.
Step4: After completing the 3DS verification process, it is time to transaction bank authorization step.
In fact, only at this step can the transaction really start to be transmitted to the bank card group and then to the user's issuing bank. In this step,
, banks will judge whether the transaction should be passed through the intermediate deck based on their own risk control system. They have their own check logic. If the bank's authorization is passed, you can check the order status and it will change from received to authorized authorization successfully; but the bank will also reject this authorization for different reasons, and the order will become refused. There is only one state for
transactions to be successful, but there are thousands of reasons for rejection.
Let's assume that the bank's authorization pass rate is 90% for the 50 orders just now, and 5 orders are rejected in this link, and then we will only have 45 orders left next.
Step5: The last step is rear risk control. In most cases, the rejection rate of post-risk control will not be as high as that of pre-risk control. For example, 99% of the orders will pass just now, only one transaction we think is risky will be intercepted, and in the end we have 44 orders left.
or above is the complete order link we have experienced every step we have experienced. This link is very difficult, and every order can be paid successfully requires numerous obstacles. What to do for
to do for payment?
basically optimizes the link that can cause loss in each step above to recover lost orders.
3. Four major factors of payment success rate
. To summarize, it is really not easy for orders to be paid successfully. Generally speaking, we will see that the order payment is not successful, and there are four very important elements.
For these four elements, merchants generally adopt the following methods:
3. Optimize the success rate
1. Optimize the checkout page
For this purpose, merchants can generally provide safe and convenient payment processes.
2. Risk control rules do not hurt
When it comes to overseas payment, we have to talk about fraud. As the saying goes, there are "river and lakes" wherever there are people. Fraud in overseas markets is actually very rampant, and the popularity of credit card-free (CNP) fraud is beyond imagination.
Overseas credit card fraud is very common.
Why do we need to do risk control to prevent fraud?
On the one hand, fraudsters can steal consumer credit cards to consume and cause consumer chargeback fees. We mentioned earlier that refusal may lead to cost loss.
On the other hand, the deck implements fraud monitoring projects on merchants, such as the Visa Fraud Monitoring Program of the Visa deck. If the merchant has a high fraud rate for a long time, the deck will freeze the merchant’s overseas payment account and even have high fines.
Risk control and payment success rate are like two sides of a coin. Whether to adopt radical strategies to maximize transaction pass rate, or to adopt conservative strategies to avoid risks as much as possible to eliminate fraud, merchants need to find the perfect equilibrium point.
Although some merchants have a high sales volume, they suffer heavy losses because they contain a large number of fraudulent transactions.
optimized risk control solutions can effectively help merchants monitor and prevent payment fraud. The risk control settings are not "one-time" tasks, but require regular adjustment and optimization of risk settings to better balance the relationship between risk and transaction authorization.
Generally speaking, there are two types of risk control services:
- merchants do their own risk control, and the assigned personnel are specifically responsible for risk control;
- third-party fraud prevention service providers.This allows a large number of consumer portraits to be obtained through large-scale transaction data, and allows every cross-merchant transaction of the cardholder to be tracked. Both
models have their own advantages. Merchants can consider choosing one or both to complement each other. maximizes revenue through anti-fraud strategies.
3. Improve the authorization pass rate
3.1 Add local acquiring instead of cross-border acquiring
uses the local entity at the place of transaction, and collects local consumer with local acquiring bank with local acquiring bank with local acquiring bank with local acquiring qualifications. Example: Establish a US corporate entity and carry out local acquisition processing through acquiring bank with US acquisition qualifications.
In order to explain the difference between cross-border acquisition and local acquisition, let’s set a scenario:
If a cross-border independent website has a foreign entity from Hong Kong, the target market is the United States, and an American consumer wants to shop on this independent website.
This independent website seller has no American entity, only a Hong Kong entity, and cooperates with acquiring bank with Hong Kong acquiring qualifications. The Hong Kong acquiring bank contacted the consumer's card-holding Bank of America and requested to collect the transaction. The entire process is carried out by the acquiring bank outside Hong Kong.
But there is a problem that Bank of America may not be familiar with this Hong Kong acquiring bank. Moreover, the collection request information may contain data that the bank does not recognize. In addition, because it is a cross-border transaction, there may have been a surge in cross-border fraud cases from Hong Kong acquiring banks recently. The US Bank of America rejected the request for careful consideration. (Of course, it does not mean that every cross-border transaction will be rejected. But considering the above reasons, this situation is not uncommon.) The seller of
, an independent website, has opened a main company in the United States and cooperates with acquiring banks that hold local US acquiring licenses. When the US consumer clicked "pay", the acquiring bank made a request for collection to the local bank. The bank regards the request as a local request, with a complete format and complies with the specific requirements of the bank. The bank approved the payment, the acquiring bank released the loan, and everything was successfully completed.
Local acquiring has a greater advantage in payment success rate than cross-border acquiring.
Is there any other way besides local acquiring? People who don’t pay are likely not aware of it, but people who do pay basically know it: payment route .
3.2 Use payment routing to improve authorization pass rate
payment routing?
routing refers to the network path that determines the end-to-end when a packet is from the source to the destination.
payment routing is based on the characteristics and business requirements of the collection channel itself. It uses certain strategies to filter out the optimal collection channel for transactions to improve user payment experience and maximize returns.
When a user places an order to pay on a merchant website using a Visa card. How does the payment system handle this payment request?
system selects the appropriate payment channel 1 for the current payment request based on historical data.
4. Content review
briefly summarizes the content of this article:
The payment link itself constitutes an important part of the overall consumption experience. Payment can provide driving force at the operational growth level and can also provide basic information for data analysis to feed back to retail brands. The importance of payment is self-evident.
#Columnist #
Flowers are undefeated, WeChat public account: Han Xiaoxian, everyone is a product manager columnist. A young literary woman, working during the day and writing at night, loves beauty, running, and traveling. I hope that I can write my heart by hand, and I will not give in to the rest of my life.
This article was originally published on Everyone is a product manager. Reproduction of
without permission is prohibited. The title image is from Pixabay, based on the CC0 protocol
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-