May 28, 2021

So, you want to accept a new payment method?

Matt Jackson, Head of Partner ...
4 min
Matt Jackson of PPRO looks at the challenges facing vendors in the digital payment solutions market

Companies looking to sell to consumers from different regions across the globe can miss out on 77% of their potential business if they don’t accept local payment methods (LPMs).

Local payment methods can be credit cards that are only regionally enabled for local purchases, country-specific e-wallets, bank transfer payments, or buy now pay later (BNPL) installments.

Adding these payment methods to online check-out options can be as costly and complex as setting up new corporate operations, each in a different country. This leaves merchants who want to offer LPMs only two options: Tap into existing local payment method service providers, or implement the various LPMs on their own.

The first option exists because the alternative is so onerous. How bad can it be? Here are some details:

Ecommerce is a sprint, not a marathon

Europe, Latin America, and APAC each have hundreds of major local payment methods unique to their region. These are competing systems, each with their own transactional infrastructure and each with their own user base. If a merchant wants to increase sales by offering a local payment method, they need to identify which ones are most used by their prospective consumers.

If the merchant is committed to performing the integration on their own, they need to ensure that the LPMs they’re considering can be supported by their financial platform. This requires a technical discovery project. If they don't have suitable in-house resources, they need to retain a consultancy.

Assuming the merchant has a platform that works—and depending on which LPM(s) they will be integrating—they may need to set up a local presence for legal and operational purposes. This involves all the registrations and licenses one would expect for any business. But, because the merchant is integrating with a payments system, there will likely be additional financial regulations they will need to navigate. 

It will be wise for the merchant to engage a consultant who operates in the country to help them set up the entity, as well as a local attorney to execute the necessary paperwork and avoid legal missteps. Once the merchant has the right to integrate with the local payments methods, they can begin the actual integration itself.

This will get very technical, very quickly. A portion that is almost always outsourced, it will require a liaison from the merchant to assure the project is being executed completely while remaining in-scope and on-budget. If they're doing this on your own, they should allow a year or more to be completely connected. 

The cost of establishing a local presence

Of course, each of these steps comes with a price. Establishing a local presence will include licensing fees and may require cash reserves, as well as whatever reserves are required for transacting in the LPM. 

A custom integration project is always going to be costly. And, like any software platform, it will require ongoing updates and administration. Also, the merchant should budget for the initial discovery that may or may not result in an actual integration project. 

The merchant may need to retain consultants and lawyers throughout the process, in addition to budgeting whatever staff time is required for the project. This includes in-house counterparts for the many external resources required. They will also need to budget for ongoing support and maintenance. 

Bear in mind that all this is required for each LPM. Each one is different, with its own entities to contract, its own technical requirements, and often its own financial requirements. 

Complexity: Payment solutions systems and risk

LPMs, like any payment system, come with ongoing administrative requirements like settlements, compliance, risk and fraud mitigation, chargebacks and unallocated funds processes, etc. To manage their own implementation, a merchant will need to have administrators who monitor changes in the regulations and tend to these requirements. 

Because selected/someLPMs involve an offline element such as exchanging vouchers at a physical retail location, there can be regulatory compliance issues beyond ordinary financial regulations that must be monitored and managed.

Of course, a merchant will also want to be able to capture and analyze their own financial performance data to inform ongoing business operations and strategy. This can be a part of the original integration or done afterwards. But it is the only way to assure a business is getting the full value of its investment.

Simplifying integration

Integrating with local payment methods is crucial for serious market entry into every region of the world. But it is a long, hard, and complicated process. It involves financial risk and it is never really "done" because the payments industry is constantly changing and requires constant maintenance, with LPMs being launched or modified regularly.

This is why there are specialty companies that focus strictly on platforms to simplify the integration with LPMs and enable rapid, cost-effective market access. That is also the reason even the best known global payments processors choose to partner or outsource the set-up and management of local payment methods and focus on their core business. 

Yes, you can do it all yourself. But you better be feeling adventurous… and rich.


* Data supplied by Edgar, Dunn & Company


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Jun 17, 2021

Tink partners with Novalnet AG for open banking payments

2 min
Novalnet AG will collaborate with Tink for the fintech’s payment initiation services

The Munich-based fintech Novalnet AG, which was founded in 2007 and is one of Europe’s leadingfintech companies, has announced a new partnership with Tink, the Swedish open banking platform currently connected to more than 3,400 European banks.

Novalnet AG delivers payment solutions and fully automated services, from checkout to debt collection. Its solutions are also available worldwide. 

According to reports, the fintech company plans to launch a real-time payments feature for merchants across Europe, to expand its current services and enhance the transaction experience it operates through its platform. 

The new feature, says Novalnet, will revolutionise payments for ecommerce with transactions being credited to merchant’s accounts almost instantly. 

Novalnet partnership with Tink

By partnering with Tink for payment initiation services (PIS) technology, Novalnet will take previous region-specific payment methods and offer a new unified digital payments service to its merchants across Europe. 

The fintech’s real-time merchant payments feature, which will be launched initially in Germany and the United Kingdom, will then be integrated across other European markets during 2021. 

Speaking about the new collaboration, Emmanuel Kirse, COO of Novalnet, explained, "We expect great things from our strategic partnership with Tink, which is a significant development for both parties. 

“With Tink, Novalnet can offer a new set of open banking-related solutions in Europe. The new opportunities offered by this partnership will help both Tink and Novalnet grow together, along with our merchants." 

Cyrosch Kalateh, Regional Director for the DACH region at Tink said, “Our partnership with Novalnet is a big step for Tink in the German market, and we are excited to work together to bring new, innovative payments services to merchants across Europe.”

He added, “At the end of 2020 Tink committed to expanding its payment initiation services from five to 10 markets, fuelled by an €85mn investment round. We are proud to add Germany to this list by announcing we have now fully launched Tink’s PIS services in this market.”

Image credit: Novalnet AG

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