The Big Question: Can global payments become more local?
When considering the multitude of payment solutions that exist globally, one cannot help but conclude that we’re living at a time where consumer choice has never been greater. Hastened in part by the COVID-19 pandemic, which saw the hygiene conscious swap cash for contactless options, popular alternative payment solutions have exploded in popularity, including:
- Card-based payments
- Bank transfers completed in real-time
- Direct debits
- Mobile wallets
- Buy now, pay later
- QR codes
It’s clear that the hegemony of cash is being toppled. In the UK, card payments accounted for 51% of all transactions for the first time in 2019, while the US’ contactless usage grew 150% between 2019 and 2020, with 175 million cards now on the market (according to Visa). With new payment trends unlikely to reverse in the post-COVID world, it seems as if the change is only going to accelerate.
In this new and diverse space, there is no profit in excluding any solution from the US$2tn payments market. Instead of restricting options to a small handful of generic choices, could it be that enabling local methods to flourish within a global network is the ultimate method for facilitating cross-border payments that are as effortless in practice as local?
Claire Gates (CG), Chief Commercial Officer at PPRO, certainly thinks so. PPRO is one of fintech’s most trusted providers of local payments infrastructure and a determined driver of global development.
Heading up the company’s sales and marketing efforts and pushing forward new commercial initiatives, it is Gates’ responsibility to create partnerships that further PPRO’s own growth. Here, we ask her about the challenges of cross-border payments, the opportunities still available, and how greater financial inclusion can be achieved.
Meet Claire Gates…
Joining PPRO in April 2021, Gates’ appointment is the latest in an exciting career that’s included CEO of Paysafe Group, Group Head Key Issuers at Mastercard, MD at Virgin Money, and VP of Global Sales Strategy at American Express.
“Having worked across four continents, I have experience both setting and executing strategies and launching and scaling new and existing businesses,” she states.
She holds a BEng in Chemical and Process Engineering from Newcastle University (1995), an MBA from the University of Warwick (1996), and a Corporate Finance Diploma from London Business School.
The Big Question: Can global payments become more local?
Q. Which technologies facilitate PPRO’s local payments infrastructure?
CG: PPRO allows payment services providers, as well as enterprises with payment platforms, to plug into an extensive range of local payment methods preferred by consumers via a simple API.
While the API simplifies the integration for our clients, they can tap into a complex infrastructure of regulatory compliance, banking relationships, and local payment methods (LPMs) established by PPRO in over 80 countries worldwide. This allows them to offload complexities and avoid significant investment costs.
Q. What are the most prominent security challenges of cross-border payments?
CG: Cross-border payments are more complex than domestic payments and, because of this, involve more risk and regulation. Prominent security challenges include fraud, money laundering, and other legal and compliance issues. PPRO helps reduce those risks and exposure to security challenges through four main approaches: processing, contracting, collection, and knowledge and data.
Q. How can the customer experience on both ends of a transaction be optimised?
CG: PPRO’s broad range of payment-related services helps all our partners grow their businesses and provide a seamless customer experience.
Our partners are local payment methods and payment service providers alike, to which we connect through our single payments platform via a single contract and a single integration. This enables merchants to offer their customers the widest and most relevant range of local payment types and services in markets worldwide.
By doing so, PPRO helps consumers pay with the local payment method they trust and know, wherever they are. Combined with our recent findings that 44% of consumers abandon a cart at checkout if their preferred payment method isn’t available, merchants are poised for growth by offering a comprehensive gamut of payment methods.
Setting up an LPM in a new country is a complex and time-consuming process, which multiplies as more LPMs and countries are added - often involving the need to set up a local business entity, registering with authorities, and having local banking relationships. However, PPRO has done the heavy lifting, thereby eliminating these barriers, lowering go-to-market costs, and speeding up the process exponentially. We also remove the need for custom software integrations with a company’s commerce and accounting platforms.
Our singular focus on local payment methods helps customers significantly increase time-to-market and reduce operational costs. Furthermore, PPRO’s infrastructure helps its customers get the best conversion rates in markets around the world.
Q. Are cross-border payments inaccessible to those outside of general financial inclusion, or are there active efforts to also reach these people?
CG: In developing countries, there are systems in place such as cash-voucher schemes whereby consumers, who are often unbanked, can buy a voucher with a cash value at a convenience store and then use it to pay for goods and services online.
To succeed in the global marketplace, merchants and the payment service providers servicing them need to offer the local payment methods for any and every market in which they intend to sell.
Besides, there is every reason to want to expand into new markets. The global e-commerce market is worth more than US$4.3tn. By 2019, the cross-border e-commerce market was worth $780bn, and the pandemic took this burgeoning market and turbo-charged it. The volume of cross-border e-commerce surged by 42% in Q2 of 2020.
Q. Does there need to be a ‘levelling’ of payment tech globally to make cross-border payments more viable?
CG: I can tell you it’s incredibly unlikely. Local payment methods will only proliferate as they address more and more specific demands of consumers. All these payment methods exist because of local preferences, cultural considerations, and infrastructure.
PPRO enables cross-border commerce thanks to years of building technology and relationships with companies situated in every position of the payments ecosystem. Our clients, which include some of the largest payments companies in the world, have found this is the most effective way to grow.