Online vs Offline Commerce

Online merchants urged to focus on mobile payment solutions

PUBLISHED : Monday, 18 April, 2016, 10:40pm
UPDATED : Monday, 18 April, 2016, 10:40pm

Online merchants are being urged to implement payment services tailored for mobile checkouts as more and more consumers in China and across Asia shop with their smartphones.

According to global payments outsourcing company Adyen’s latest mobile payments index, over a third of online transactions are now made through mobile, with Asian payment methods such as Alibaba-backed Alipay driving growth.

While many consumers used to conduct online transactions on PCs, which have a much bigger screen size and can display more information, the industry has since evolved, said Warren Hayashi, president for Adyen, Asia Pacific.

“[On a PC], typing in 16-digit credit card numbers, expiry date, billing address and all that isn’t that big of an issue,” said Hayashi in an interview with the South China Morning Post. “But a larger number of consumers are now making their transactions via a mobile device. It is a lot more difficult typing in the same information on [such a small screen].”

Adyen provides a payments platform for merchants to integrate into their online websites. The company supports over 250 payment methods, including Alipay, Tencent’s Tenpay, and Apple Pay.

The company’s data shows that 44 per cent of consumers who use Alipay to make payments on Adyen’s platform do it via a mobile device.

But while other payments platforms such as PayPal are more recognisable to consumers, Adyen prides itself on being invisible on that front. The company’s technology works behind the scenes to ensure that payments are processed successfully, including automatically submitting wrongly declined credit card transactions a second time so that it gets approved for the customers.

“Usually, if transactions fail one time, consumers would walk away because they have no other payment method or may be too lazy to try again,” Hayashi said. “For merchants, this is not just a failed transaction - it’s lost revenue.”

“We’re completely invisible on the consumer side because merchants ask for payments to be frictionless,” he added.

Friction in payments come from a slew of issues – from connection time-outs to manual errors that lengthen the time taken to complete a transaction, according to Shiv Putcha, an associate director at research firm IDC.

“Reducing friction is essential to not just to make consumers happy and keep them shopping more, but also for the merchant who needs to be taken care of as well,” said Putcha.

“The higher the friction, the higher the disincentive for the merchant to invest in the adoption of mobile payments.”

According to data from market research firm eMarketer, retail mobile commerce sales in China will hit over US$505 billion this year. But as both e-commerce and mobile commerce increase, so does cart abandonment – where consumers add products to their cart but do not complete the purchase.

“Merchants have to optimise payments for mobile devices,” said Hayashi. “If you have 10 steps in your checkout flow for mobile, the likelihood that the consumer makes it to the tenth step is increasingly low.”

The need to make mobile payments as easy as possible has led payment companies such as PayPal and US-based Stripe to incorporate one-click payment features targeted at consumers who shop on their mobile phones.

Last November, PayPal rolled out its One Touch payment feature in Hong Kong, which allows shoppers to check out at a multitude of online stores with a click on a button, instead of having to constantly log in or input their credit card details.