The Golden Rules for Selecting Your E-Payment Solution
Which marketplace payment solution should we select?
WHY IS PAYMENT SOLUTION CRITICAL – PERSPECTIVE
Since a decade, we have witnessed the rapid growth of e-commerce worldwide. The revenue in worldwide e-commerce market is expected to show an annual growth rate (CAGR 2019-2023) of 8.9%, resulting in a market volume of US$2,854,203M by 2023.*
Apparently, the online marketplace is playing an increasingly significant role in this global trend. The best examples being: the Chinese giant marketplace platform – Taobao – has generated a GMV of US$380 billion in 2017; meanwhile, the percentage of paid units sold by third-party sellers on Amazon has reached 52% in Q4 2018.* The economic benefits of integrating scattered vendors has encouraged all kinds of international grand distributors and e-commerce players to build their own marketplace platform, aiming to create a seamless one-stop shopping experience or answer specific audience needs, in both domestic market and foreign markets.
When setting up a marketplace, there are of course diversified aspects to tackle – supply, audience acquisition, technology infrastructure, etc. One of the aspects is essentially a key within the end-user journeys that may drastically impact your marketplace performance if you determine to jump to another level, however often underestimated:
Which marketplace payment solution
should we select?
Every consumer tends to buy and enjoy an efficient online user journeys that most e-commerce solutions manage to build and deliver, however, few people are really willing to pay (as in the brick and mortar world), therefore a smooth payment solution is not only a technical standpoint but more importantly, a key decision to drive your business performance.
THE GOLDEN RULES
With our experience with various types of clients who were planning to build their marketplace platforms, the top-of-mind questions always came as:
- How smooth and efficient is the payment journey?
- How easy is it to implement the solution?
- How expensive is it to adopt the solution?
Just as what has popped up in our client’s mind, these are the golden rules of assessment which will steer the whole decision process:
- Easiness of Implementation
- Cost of the Solution
Thinking at a deeper level of detail regarding the axis of Implementation Easiness, we are assessing the 5 following criteria:
- IT Implementation Easiness
- Developer Friendliness
- Quality of Documentation
- Implementation Support
- Customer Support
By scoring these criteria (see details in section “The Assessment Methodology”), it gives us a quick but comprehensive evaluation on the feasibility of implementing the solution.
Meanwhile, when we look at the Cost of the Solution, the 3 critical criteria should be:
- Transaction with one or multi-merchants
- Costs Transparency
- Commission rates according to the forecasted volume of transactions
Essentially, criterion 1. goes as a pre-requisite depending on the company’s business objective of building this e-commerce platform – it being a marketplace, the flexibility and capability of conducting transactions with multi-merchants become necessary and thus more costly than a single-merchant solution.
Also, please keep in mind that the criteria of “Scalability” and “Mobile Friendly” should be the “no brainers” in our assessment.
THE EXHAUSTIVE ASSESSMENT CRITERIA LIST
Of course, it is not enough to look at only the 2 golden axes since the selection of e-payment solution is always first of all based on the market specificity and availability. It is essentially important to hence review all the unneglectable dimensions to determine the best solution based on the objectives and constraints of your business.
Most of the time, there are numerous solutions among which we do not know how to start scoping our assessment. At Axys, we are able to build your exhaustive and customized assessment list of criteria covering different thematic axes based on your specific context (market, competition, etc.), which will be essentially helpful to filter out the infeasible players in your market, building a clean base before we move forward to a deeper level of assessment:
If you are already getting confused or overwhelmed by the snapshot of this assessment criteria list with its technical terms, do not worry, at Axys Consultants, we have e-commerce and technical experts and a robust methodology to help you go through the solution assessment process.
THE ASSESSMENT METHODOLOGY
With the exhaustive assessment criteria list, we can already provide you a detailed enough yet comprehensive overview of each potential solution. With all these information, we can start formalizing our assessment from both quantitative and qualitative perspectives.
The quantitative assessment should always go before the qualitative one since it can help us quickly lockdown to few solutions standing out.
We can simply rate the features within corresponding criteria/sub-criteria as:
- Green (score = 1): the feature being fully available, or best positioning among all the players e.g the commission rate as one of the lowest
- Yellow (score = 0.5): the feature is available but under certain conditions (limited by transaction volume, device, etc.), or positioned as mediocre among all players
- Red (score = 0): the feature is not available at all, or ranked as the last among all players
With this level of granularity for each criterion, we can already filter out a good amount of solutions that do not meet certain specific pre-requisites. For example, in our previous case with a client based in HK, who would like to build a marketplace platform with a low transaction volume by estimation, we were already able to filter those solutions which have no multi-merchants solution in Asia and those do not support low transaction volumes out of the scope for further assessment.
Moving forward, by summing up the scores of each of the 5 axes, we are now able to further compare the solutions by these main axes.
Let’s start by building an assessment matrix defining X/Y axes with our golden axes – the Implementation Easiness & the Solution Cost. For the 3rd assessment axis, we will help you to select based on your business context.
Here as an example, we are taking the Merchant Experience as the 3rd assessment axis – as this axis plays an important role in evaluating a solution’s coherence with this client’s business objective.
With the visualized matrix, it will be pretty clear that which solutions would stand out by taking all the critical criteria into account – an example of assessment matrix as below:
Therefore, in our use case (as in the slide above), thanks to the matrix, we can now focus on comparing only between Stripe and PayPal.
Simply re-taking our 2 golden axes plus referring to the Merchant Experience axis aside, it is apparent that the winner solution goes to Stripe for our target market of HK.
Qualitative assessment can serve as a supplementary evaluation mostly from the perspective of End-User Experience.
In our use case in which the smartphone penetration rate on the targeted market is > 90%, we have focused on looking into the onsite payment experience (especially for iOS) of both solutions:
Both solutions have decent interfaces and onsite payment journeys on mobile devices, thus our selection of Stripe remains the preferred e-Payment solution for our previous client’s case.
A FINAL TIP
Assessing solutions is never an easy job since we have to take into account diversified criteria and market specificities; in developed markets, it is even more sophisticated since we are facing many more choices and a lot of noise.
Keep in mind that: before applying the golden rules to rank the potential solutions, always start with excluding infeasible solutions based on business and market pre-requisites from the assessment scope. With this approach, our solution assessment can be straight to the point with much higher efficiency.
Axys Consultants are more than happy to lead you through the solution assessment process to help you make the right business decision more efficiently. Moreover, please do not hesitate to contact us to get support around your distribution strategy by exploiting the potential of e-commerce and the platform implementation.
Proudly written by Wenqian WANG (Digital Marketing & E-Business consultant)