The Asia-Pacific (APAC) region is home to over 4.2 billion people and with more than $900 billion in online retail sales growing each year, sees new records set for eCommerce sales in the region. 2015 marked a global turning point when APAC became the clear majority holder of the digital retail market at 53 percent of total global spending and, by 2018, this number is predicted to reach $1.9 trillion. With a plethora of choices from established big names like PayPal and Alipay to a multitude of start ups, the evolution of FinTech, new applications, processes, products or business models in the financial services industry, helps SME owners decide which payment gateway to adopt, and more.
Evaluating Online Payment Options
A merchant account is a specific kind of bank account for receiving payments from credit and debit cards. Merchant accounts come with two options; dedicated accounts that are provisioned specifically for your business, and aggregated accounts (PayPal) that use a single merchant account to provide credit card processing for an entire portfolio of companies. The differences between these two can be summarized by:
Every SME is different so it is essential for each SME to understand their operating requirements then assess the payment gateways that are suitable. When evaluating the options, look at your estimated volume of monthly transactions, currency requirements, hosting considerations, desired user experience, the level of support required, as well as the available integrations for your chosen eCommerce platforms. Here are seven key factors for evaluating payment gateway options:
Key entry credit or debit card purchases are still the most common but other options are now becoming popular such as PayPal and AliPay where only password entry is required to complete the transaction rather than billing, shipping and card details.
Check that the gateway can process the currencies you want to accept and that it can connect to merchant banks where you want to set up a website locally. It is also worth considering if the gateway can provide Dynamic Currency Conversion (DCC) where customers can choose their preferred currency when paying.
A payment gateway can either be hosted or non-hosted: A hosted gateway will redirect your customer away from your eCommerce website at the payment stage. Once the customer has paid they will be redirected back to your store. These are easier to set up and integrate but disrupt the shopping experience. Customers can be put off when they are directed to 3rd party hosted solutions. This affects sales volumes. A non-hosted gateway keeps your customers on your website to pay directly within your site with no redirection.
There are several fees that can vary from vendor to vendor;
An initial setup fee will cover setting up the integration and approval to your merchant account. Merchant Discount Rate: a small percentage charged for each transaction, typically between 2-5% that varies depending on the number of monthly transactions your store processes. Flat Transaction Fee: a set transaction fee irrelevant of scale.
Security and Support: a fee to provide technical support services and increased fraud detection. Other fees: for refunds and/or charge for chargeback fees.
Online fraud is growing fast and can incur losses and damage your brand and reputation, so choose a payment gateway that provides maximum security and save money and hassle. All gateways should include data encryption; a second layer is recommended so look for vendors that offer CVV2 verification and 3D Secure (mandated in many countries including Singapore). Some offer fraud monitoring systems and restrictions on data that is sent and stored. An SME can either install an end-to-end encryption system or outsource the payment process to a provider that tokenizes sensitive data externally.
Reliability, Scalability and Uptime
The payment process is crucial to your eCommerce success. Make sure your chosen payment gateway provider has proven reliability and availability in high-volume transactions periods.
With any payment gateway the money takes time to reach your account because the funds need to be cleared by the issuing and acquiring bank. To avoid doing a transfer each time a purchase is made payment gateways will have a payout frequency which can be daily or even monthly. If your business is prone to cancellations or refunds it is better to select a weekly pay-out as it is easier to issue in-app refunds if they have not yet been transferred to your bank account.
A Force for Good in APAC Finance: Fintech
Fintech is going strong in Asia but, still has a long way to go. Fintech startups illustrate the different challenges fintech is trying to resolve in APAC countries, ranging from financial advice to blockchain applications and different forms of online payment. “Fintech is important because there are people around the world that do not have access to basic financial services. There are still two billion people worldwide that do not have a bank account. Around the world, more than 60% of SMEs cannot get credit. Fintech can help close the gaps,” said one industry expert.
Fintech Start Ups in APAC
BankBazaar is an aggregator for loans, credit cards, and insurance. It tracks financial products from more than 30 partners and claims to have over 5 million customers in India. Its value lies in addressing the traditional system’s inefficiencies helping small businesses and individuals that have difficulty accessing financial services.
Coins uses blockchain technology to enable money remittances, bill payments, and mobile credit top-up. Its e-wallet service enables unbanked people in the Philippines and Thailand to transfer and collect cash at partner locations like small stores.
Dianrong is China’s answer to US-based Lending Club, a peer-to-peer (P2P) lending platform that allows users to borrow money crowd sourced from the community. Dianrong struggled under Ponzi scheme fraud and tightening restrictions but has weathered the storm and retained users’ trust.
MC Payment (Singapore)
MC Payment is one of Singapore’s oldest fintech companies. It started out trying to develop mobile payments for feature phones. Over the years, it has produced e-wallet applications, mobile point-of-sale systems, and non-cash payment products.