Learnings and key takeaways from the Visa eCommerce summit 2019
Cross border trade and installment payments are growing customer trends
Last week Thursday, I had the opportunity of attending the Visa eCommerce summit at the Meydan Hotel, Dubai. The theme of the summit was “Capturing the Digital Consumer”, there were over 17 sessions, and here are some of my thoughts, learnings and takeaways from the summit.
On the diversity of the speaker sectors
There were a host of great speakers from key players in the industry. One thing I liked was the diversity of the speaker sectors. On one hand, you have people from the typical sectors of the eCommerce chain: banks, issuers, payment gateways, marketplaces(Amazon , Noon & DeliveryHero). Then, you also have people from the Government, and businesses that people won’t typically count as eCommerce: Netflix, Spotify, Facebook, AlMosafer (a travel company), and many more. All of whom contributed to the great conversations of the summit.
PayPal on the globalisation of eCommerce
I really liked the Paypal session, Emrah Tuzun (Head of Merchant Services and Market Development MENA & CIS at PayPal) talked about growing trends worth investing in as an eCommerce business, to name a few: Mobile, Marketplaces, Cross border trade.
Their survey on customer attitudes to cross border shopping was also very interesting, It’s not shocking to see that while more people don’t mind making cross border shopping — provided the goods get to them, customers are more comfortable making these cross border transactions through trusted global stores (e.g Amazon).
It’s also a no brainer for any business to increase their reach not just country wide or region wide, but also world wide to reach a higher number of buyers as the addressable market is much bigger. I think this also applies to small businesses, and why they’re more inclined to sell on the “trusted global stores”, because a business that would’ve sold goods to only a handful of people in their community can start shipping to countless countries when selling on a platform like Amazon.
It’s important to note, for cross border trade to work efficiently, so many parties have to work together; banks, merchants, delivery companies, issuers, fraud systems(*wink* *wink*), payment gateways and card networks. This collaboration, can increase jobs for a country too, as so many moving parts are needed to make such systems work efficiently.
Visa on Installment payments
I think it’s safe to say Installment payments was the highlight of the summit, and that’s for a very good reason too.
Surveys done by Visa as well as others which can be found by simply googling “installment payments” show that more customers are moving away from credit cards(especially millennials — aren’t we so smart? 😃) to installment payments as a way to purchase high ticket products. For emphasis, with installment payments, customers get to choose their preferred payment schedule to pay for a product over a fixed period of time, usually at no interest. The capital for this is typically provided by the customer’s bank.
From the survey results, they also identified installment payments as one of the key drivers to eCommerce growth in the future, because it’s a system that benefits all parties;
Merchants: make more sales as non-consumers or customers that would not have bought at all opt to buy when there’s an installment payment option. Even existing buyers indicated they would buy more when there’s an installment payment option.
Customers: are happier because they can get the products they want at their own terms
Banks: More transactions from existing customers, as well as new customers that join the bank because they’re able to buy things they need.
While not everyone is privileged to be in a stable enough economy where banks are able to offer that line of credit for installment payments, I see myself implementing a hybrid version of installment payments on a side project I manage — Selar.co — a platform that enables creatives and businesses in Africa create simple one page websites to sell their products online in less than 2 minutes. I remember in some customer conversations I’ve had with high ticket merchants on Selar, they’ve talked about how their customers usually wish they could pay in installments. So my hybrid implementation will be to allow merchants bear the risk(as most of them are willing to), but simply giving buyers the the option to pay the full amount or setup a recurring payment on their card for the installment payments, I’ll see how it goes.
It’s also up to payment gateways and banks to make the necessary integrations to make this possible,Omar Soudodi (Managing Director at PayFort — an amazon company payment gateway in the middle east) commented on their extensive installment payments integration with multiple banks, which is made available to merchants and customers of Payfort.
It might interest you to know, the first version of Bank of America was setup to extend a line of credit to people that other banks at the time would not offer credit to because they were either too poor or didn’t fit the description, and that simple idea of making that kind of credit available bettered the lives of millions of people and grew BOA to what it is today. Hence, even though the process and implementation for making installment payments available as a bank, issuer, payment gateway or company might not be an easy one, it’s a worth while investment for a company’s growth, and Visa seems to also have solutions that can help too.
On building trust with customers
In the “Building consumer eCommerce behavior” session, reps from AlMosafer, DeliveryHero(one of the biggest if not the biggest food delivery service groups in the world with a presence in over 40 countries) and Noon.com shared their experiences growing their eCommerce market, and one thing I picked up from all three is, it’s common to go around looking for partnerships, discounts, promos e.t.c as a means to build trust, especially for new users, but an effective way is always in the service experience to the customers. Typing that into this post made me realise that’s probably common knowledge, but I still think it’s worth mentioning.
Examples of a better service experience for trust could be easy/faster refunds when issues arise, faster deliveries above anything else, because a customer will take their food getting to them on time, over a 10–20% discount.
I remember my first couple of experiences with Uber eats, they brought my food late every time, and I just stopped using the app completely, I’ve wanted to give them a try lately, but I think I’ll pass. Talabat is always on time for me, and because of that, I’ve found it hard to even try other options. Speaking of Uber, a noteworthy mention is how Uber Nigeria handles complaints, their team weighed the cost of investigating tickets intricately and realised, it would cost them a lot less to not do that investigation in most cases, so they offer an instant refund to wallet for almost all tickets raised. I guess they’re rich so they can handle the cost implication of that decision, but it did build a certain level of trust for their customers in Nigeria.
An echoing theme from the event was collaboration, and while you’re probably rolling your eyes because collaboration is such an overused word in fin-tech space, the reality jumped out when the startups were explaining how lack of efficient payments were impacting their conversions because willing customers were unable to pay. Take Spotify for example, Claudius Boeller (Managing Director MEA at Spotify) explained that recurring payments are at the core of their user experience, for them recurring payment options increase stickiness(customer sets it up once, and doesn’t go back to it), and without that option, entering new markets could be a little more stressful for both them as a company and individuals that don’t want to go back manually paying for it every month. He also mentioned they’re always seeking more payment options and partnerships to help improve this experience in every market they’re in.
Collaboration between banks, issuers, startups and even customers is very important, everyone really stands to benefit too; more profit, and paying customers for the business and more spend for a bank’s customers.
Odd, but still interesting was the mini pitch session. Not really pitch per se, but it was just 5 companies sharing a presentation of what they do, and how they’re innovating in eCommerce.
I loved Letswork.io, they’re kinda like AirBnB for co-working spaces but they partner with hotels —please ignore the paradox of that description. Hehe. What they do is, partner with existing hotels to provide affordable co-working spaces for individuals and companies. I think it’s brilliant; especially for a city as expensive as Dubai, it’s an affordable option for individuals as well as small startups, and it’s also a good way for hotels to make extra income — as we all know AirBnB is giving them a run for their money :)
Another is switchdxb.com, definitely not for me because I‘m a homebody, but they’re an activity marketplace, perhaps you want to do Yoga, workout, or play any kind of group sports, they’re a ton of options, all you have to do checkout the activities on their app, register, pay and show up at the activity. Seems pretty solid, especially for tourists that may not know what to do.
I also did like Soluki.com, mostly because of their presentation. I loved how they explained their platform as the “democratisation of eCommerce”(i.e from the big marketplace players like Amazon, noon). I may just be a sucker for buzz words.
If you didn’t know already
Visa’s global reach is humongous, “with over 70,000 transactions per second and $15T processed yearly” — said Walter Lironi(VP Strategy CEMEA at Visa), they have information, and strategy to help your business & bank grow. I think what sets them apart is not just the extent of their coverage but the depth of the coverage in every country & ecosystem they’re in. They offer custom solutions for various financial services, as well as surveys, studies and reports for banks and businesses trying out new ventures, so you should hit them up if you want to make a dent.
It was a really good event, I learnt so much more that I couldn’t fit into this post. If I have the opportunity to attend their next edition, I’d definitely be interested. I’m also hopeful for the future of all the companies and conversations from the event.
(Not so) fun facts
- Claudius mentioned Spotify has over 200M users, with over 60M of them as active users, I don’t remember the exact % of active users that are paying subscribers, but 90% of their revenue is from premium/paying subscribers, so if you’re still using free Spotify, please do better! — this is even funnier(or maybe sadder) when I remember I have a lot of “Spotify evangelist ” friends that want to pay for Spotify but can’t because their card isn’t supported.
- Cash on delivery is actually a very expensive option for marketplaces, especially when you consider the cash collected has to be transferred back to a source and also verified. Most times, the cash collected is not even worth the trip back and forth. I knew COD was bad, but this is just really bad.