April 19, 2024
PRESS RELEASES

Optimizing payment strategies during the peak shopping season

From White Friday to Cyber Monday, shopping festivals to new year festivities, the coming period accounts for a huge portion of the region’s annual retail transactions. Especially in the digital domain, as merchant processing volumes in the region continue to spike year on year, jumping by nearly 60% in November 2022 compared to the year before, according to Checkout.com data. This year, soaring in-bound tourism into the GCC and a slew of major sporting events will only increase the opportunity—and competition—for discretionary retail spend.

“As a result, this peak season is when every aspect of a retailer’s business must operate at optimum performance, especially digital payments. Already more than 90% of consumers across MENA say they bought products online in the past year, and 70% of consumers cite a digital payment method as their preferred option to cash. The prevalence of cross-border payments in the GCC specifically presents unique challenges to local retailers, from ensuring payments acceptance to navigating regulatory requirements. In fact, many retailers have told us stories of how mass payment failures, increased fraud, and rising payment costs have ruined their businesses’ peak season plans” said Remo Giovani Abbondandolo, general manager for MENA at Checkout.com.

So how can retailers in the region avoid these issues and ensure payments are an enabler of business success? Here are a few good places to start.

Involve payments teams early into your peak season planning

Retailers see higher activity than usual throughout peak season, with total processing volumes by Checkout.com in the month of November growing by a massive 350% in the region between 2019 and 2022. This is usually when marketing teams launch their showpiece deals. These moments are critical and there is little room for error in your payments infrastructure – seeking a provider with a modern technology stack should be front of mind.  A system outage for as little as 10-15 minutes could be catastrophic, and cost a business millions during peak season.

It’s possible to minimize the risk of this nightmare scenario occurring if the team responsible for payments is included in discussions around peak season early. Considerations include ensuring enough people are working at the high-demand moments to monitor the systems and be proactive in solving any issues. Retailers should also inform their payment providers when these spikes in demand will occur to ensure adequate support is available.

Understanding where sales will occur is equally vital, as payment behavior varies dramatically from market to market. So, if the business plans to sell into a new market or ramp up activity somewhere, it needs to know the preferred payment methods offered in each key market, if the checkout flow is localized, and whether consumers can pay in their local currency. Then if the payments teams have enough time to prepare, they can optimize the online checkout for whatever markets the business is targeting.

Delve into the data to solve lingering issues before the season starts

Spikes in transaction volumes during peak season risk amplifying any payments issues that may have gone unnoticed for the rest of the year. Hence it is important for merchants to be working with a PSP that can handle a high volume of transactions per second (TPS). A high TPS rate ensures that the merchant can process more transactions simultaneously. This guarantees that they can accommodate a larger consumer base and peak demand.

Furthermore, in the lead-up to peak season, it makes sense for retailers to dive into their payments data to ensure there aren’t issues hiding beneath the surface. Trends to look out for include patterns with issuing banks incorrectly declining transactions, instances of common decline codes related to authentication increasing, strange activity stemming from specific markets, and so forth. Retailers must leave no stone unturned and work with their payment partners to solve diagnosed issues.

With a baseline established for what’s “normal,” retailers can also quickly spot anomalies and proactively investigate why these are happening to maximize a payment’s chances of success or to detect fraud and minimize false declines. The data retailers should study include core metrics like authorization, chargebacks, and fraud rates, as well as conducting a payment fee analysis.

Optimize authentication without unnecessary friction

Updates to local payment authentication protocols and consumer privacy covenants are certainly a good thing for the region. Yet the enforcement of these rules potentially poses a big challenge for retailers who haven’t yet spent the time doing more than simply becoming compliant with these regulations.

While the data shows that customers welcome the additional security layers, retailers must strike a balance between offering this security and creating too much friction. Given that many retailers are still working to strike this balance, businesses should be focusing on areas such as refining exemption strategies, ensuring transactions are automatically retried through 3DS when soft declined, and clearly communicating the steps consumers must take to authenticate at checkout.

Identify cost savings through your payments

With the cost of doing business rising—and the inability to easily pass these costs onto consumers—many retailers in the region are taking a hard look at where they can spare expenses. One untapped area of opportunity is payments. For most ecommerce merchants specifically, the cost of accepting payments is one of the most expensive line items on the balance sheet. Yet many are unaware of what to do about it because they’re working with providers who offer bundled pricing, which charges a flat fee per transaction. This may make sense in some instances, but most retailers benefit from a more granular view of payment pricing, such as Interchange++ pricing structures. Armed with this data, retailers can take a much deeper look at what they’re being charged for their payments and take action to reduce these charges during this peak shopping season.

    Middle East News 247

    Middle East News 247

    Middle East News 247 delivers the latest business and lifestyle news and essential infotainment for, and from the Middle East region, with key focus on the GCC nations: United Arab Emirates (UAE), Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman.
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