HOW ISOs CAN TURN THE 5 MAJOR eCOMMERCE CHALLENGES INTO OPPORTUNITIES

eGUIDEFOR ISOs

LEARN HOW TO ENABLE SEAMLESS PAYMENTS PROCESSING WITH FRAUD MANAGEMENT TO INCREASE REVENUE AND DECREASE COST.

ISO

With the explosive growth of global eCommerce, the entire retail industry has become increasingly digitized. The rise of a generation expecting omnichannel experiences means merchants, and thus ISOs, merchant service providers and payment facilitators have to change dramatically to meet technology advancements and evolving customer expectations.

The race to offer end-to-end payment applications turned into an all-out sprint after new entrants to the ISO market—acquirers, logistics companies, card schemes, banks, accounting and billing firms, and POS manufacturers, among others—began to change the payments landscape and entice merchants to their solutions.

The winners of this race will be those that provide superior and secure payment solutions globally, at any time, through any device, and most importantly, do so simply and quickly where, when and how customers want to purchase.

This eGuide explains how trends in the payments industry are influencing ISO, merchant service providers and payment facilitators. It presents the five key challenges they face today in eCommerce and the solutions to turn them into opportunities to increase revenue and decrease cost. Learn how simple and effective solutions can remove obstacles to free you to concentrate on growing your core business to increase revenue in 2017.

HOW ISOs CAN TURN CHALLENGESINTO OPPORTUNITIES

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9 KEY DRIVERS IN TODAY’SPAYMENTS LANDSCAPE

THE EXPLOSIVE GROWTH OF eCOMMERCE IN THE US

Steady US eCommerce sales growth of 15+% per year continues to outpace stores. In 2015, for the first time small merchants outgrew their larger competitors in the Top 500.*

CHECKOUT CONVERSION RATES ARE KEY TO SUCCESS

Sub-optimal conversion practices cost merchants hundreds of billion dollars in revenue a year. Most merchants do not realize the extent of their losses.

OPEN API TECHNOLOGY IS PREPARATION FOR THE FUTURE

The payments industry is dynamic, which means ISOs must be flexible and able to adapt quickly. ‘Open‚ technology enables the flexibility and simplicity merchants demand.

* Source: Top500Guide.com

ONLINE SHOPPERS CROSS BORDERS EFFORTLESSLY

Global eCommerce is growing at 10%–20% a year with over 1M digitally active customers spending over $2 trillion a year online. At the core of digital growth is international expansion. Merchants are forecast to earn $2.2 trillion globally by 2020, and projected to continue this upward trajectory.

THE OMNI-CHANNEL PAYMENTS EXPERIENCE

Two-thirds of online shoppers use mobile devices to make purchases, a figure that will continue to grow. Omni-channel payment processing capabilities are essential for merchants to keep pace with customer preferences.

SCALABLE, NEXT-GENERATION PAYMENTS INFRASTRUCTURE

Merchants want their ISOs to build and provide infrastructure that can scale rapidly and easily.

THE CONTINUED RISE OF ALTERNATIVE PAYMENT METHODS

Alternative payment methods are forecast to comprise 59% of global eCommerce payments by 2018, having already overtaken cards in 2015.

FRAUD ADAPTS AND MUST BE MANAGED

Fraud rates continue to rise and international fraud rates average three times more than domestic. Now the EMV chip has opened a new Pandora‘s box of fraud issues. ISOs with an intelligent, real time fraud management solution have a distinct advantage to protect merchants and customers anytime and anywhere.

ISOs FACE NEW COMPETITION

Banks and non-banks will shift their focus to traditional ISO-sector business, in order to control a greater part of the payments value chain.

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ENABLING FRICTIONLESS INTERNATIONAL PAYMENTS PROCESSING

OFFERING A SEAMLESSOMNI-CHANNEL PAYMENTS EXPERIENCE

ISO

MANAGING FRAUDULENT PURCHASES AND CHARGEBACKS

PROVIDING TOOLS TO INCREASE CHECKOUT CONVERSION

EMPOWERING MERCHANTS WITH INNOVATIVE, STATE-OF-THE-ART

TECHNOLOGY

THE 5 MAJOR CHALLENGES ISOs FACE WITHIN eCOMMERCE TODAY

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PAY

CHALLENGEGlobal eCommerce payments revenuegrowth has exceeded expectations and alternative payment methods surpass credit cards. There are undeniable benefits for ISOs and merchants who expand beyond their domestic market. However, first ISOs need to consider the impact of alternative payment methods. Second, payment habits and consumer behavior differ by country. And third, the integration of these different payment methods can be time-intensiveand incur high development costs.

SOLUTIONSuccessful international expansion requiresoffering not just the right payment methodsand acquiring options, but also the ability toconfigure them quickly and efficiently. It hasbeen shown that simply offering the threemost popular payment methods in eachcountry can increase checkout conversionby 30%. This can be achieved eitherthrough partnerships, outsourcing toa payment provider, or by connectingto an existing modular paymentgateway—that can ‘switch on‚

alternative payments as andwhen needed—to achieve rapidglobal expansion.

ENABLING FRICTIONLESS INTERNATIONAL PAYMENTS PROCESSING 1

VOICE OF THE ACI CLIENT Planet Payment Solutions – a leading provider of international payment processing and multi-currency processing services.

“Supporting our merchants’ alternative payment needs as they expanded into new markets was a roadblock for Planet Payment. Now we can negotiate a commercial arrangement with a local payment provider and enable technical connectivity with the flip of a switch, allowing us to give better payment support to our merchants.” Paul Levine, President Planet Payment Solutions

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CHALLENGEOnline shoppers, in the age of the smartphone, have more information than ever at their fingertips. These self-empowered consumers have high expectations and assume online and offline channels will blend for a seamless end-to-end shopper experience with easy and secure checkouts.

Merchants want their ISO to provide thetechnology that enables such solutions, tosecure new revenue streams.

SOLUTIONAn ISO must adapt to ever changing merchant needs and offer successful integration for mobile point-of-sale, mCommerce, eCommerce and in-store POS transactions. By offering this technology the ISO enables the merchant to provide a consistent retail experience across all channels, to drive shopper conversion and repeat business.

In addition, an ISO that delivers the full solution from consolidated reporting to API integration and the ability to monitor all channels, will empower their merchants to remain agile and profitable in such a competitive landscape. This reduces attrition from merchants going to others for added value.

OFFERING A SEAMLESS OMNI-CHANNEL PAYMENTS EXPERIENCE 2

VOICE OF THE ACI CLIENT Scheels is a U.S. destination sporting goods store with 26 locations and 6,000+ employees. “We needed a solution that could help us strategically address our business needs and enable us to respond effectively and swiftly to emerging payment trends like mobile wallets and Apple Pay.” “ACI’s experience handling traditional, complicated and emerging payment trends was important to us; their history dealing with large-volume merchants in need of routing options and optimizing payments performance at a granular level were key factors in us choosing them as our payments partner.” Marc Windahl, VP for Scheels

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CHALLENGEGlobal fraud attempts increased by 31% during the 2016 holiday shopping season. Hundreds of millions of online transactions are processed each holiday shopping season. Merchants are constantly under threat from fraudulent shoppers domestically and internationally. ISOs are expected to offer their merchants a fraud prevention and risk management solution that is tailored to their individual business needs, configured for local habits, and capable of adapting rapidly with ever-faster order fulfillment.

SOLUTIONConfiguring fraud prevention strategies for each market is essential to protect hard- earned revenues. In the card-dominatedU.S. market for example, chargeback management solutions help companies manage fraud. In Germany, where two-thirds of online purchases are completed by open invoice, behind the scenes background risk checks that determine a shopper’s reliability are a more appropriate solution. To give another example, 3-D Secure, although good at stopping fraud, is seen by manyas a conversion killer. However, in some markets, such as India and Russia, 3-D Secure has been shown to have a positive impact on conversion. Complexity like this requirers a proven fraud management solution with global risk expertise and real- time rules reporting.

MANAGING FRAUDULENT PURCHASES AND CHARGEBACKS IS NOT AN OPTION–IT’S ESSENTIAL 3

VOICE OF THE ACI CLIENT Crew Clothing, a luxury casual clothing brand in the U.K.

“ACI’s experienced team were able to quickly address our needs to deploy an effective fraud prevention solution in a very short time. The service we received from ACI during and since implementation has been diligent and proactive with valuable consultancy and tailored tools that successfully support our business efforts.”

ACI ReD Shield has dramatically reduced Crew’s chargeback rate of just 0.05%. After only three months, the deny rate on transactions had been reduced down to 12% and, with further analysis and rules adaptation, this level has now been further reduced to just 3%—with no associated increase in fraud levels.

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PAY

CHALLENGEWhat looks simple to a shopper—a straightforward and frictionless checkout process—is anything but easy to set up behind the scenes. Customers expect easy and secure online shopping and support it with repeat purchases, larger orders and loyalty to merchants.

SOLUTIONThere are many aspects that need to be considered in the checkout page, like offering trusted logos, preferred payment methods or efficient payment processes, but the payment form is the heart of the checkout process. Get it right and no one even notices it. Get it wrong and shoppers become uneasy and abandon their shopping cart. An ISO needs to consider two important aspects when delivering a good payment form. First, it must securely handle payment data, often through tokenization. Second, it should embed into online shops, avoiding offsite redirects and adhering to shops’ look and feel. Practically invisible to shoppers, embeddable payment forms play an important role in frictionless checkout processes and high conversion rates.

PROVIDING TOOLS TO INCREASE CHECKOUT CONVERSION 4

VOICE OF THE ACI CLIENT Cinemex holds 53% of the Mexico City movie theater market. “We set out to make it easy for our guests to go to our cinematographic rooms,” said Jesús Paz, finance director at Cinemex, “beginning with the ticket purchase through a fast and reliable transaction that they can make from their houses or offices, thus assuring their attendance to the openings we continuously have on our screens.” “We are experiencing income growth as a result of offering our guests efficient payment mechanisms with any debit or credit Visa, MC or AMEX card ... ,” Paz said, “and we are having important savings. We substantially decreased our guests’ waiting time. We give them better and faster service, we sell more and they return more frequently.”

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PSP

CHALLENGEGlobal eCommerce is growing rapidly and the volume of international payments can cause headaches if merchants demand a myriad of payment methods, reporting options, or fraud prevention tools.

SOLUTIONThe underlying payments technology an ISO delivers needs to enable adaptability in order to keep pace with a changing industry. ISOs can speed up time to market with rapid integration to open payment architecture and flexible, modular solutions via a unified RESTful API.

Also, by building upon an existing open payment infrastructure, ISOs overcome their

legacy systems, and developers are empowered to create their own value-added services, features, and applications with reduced development cost. ISOs can further reduce complexity and cost with a single integration point, ready made payment widgets and mobile SDKs. This provides merchants with a seamless payment journey through check out for customer satisfaction and increased transactions.

EMPOWERING MERCHANTS WITH INNOVATIVE, STATE-OF-THE-ART TECHNOLOGY 5

VOICE OF THE ACI CLIENTallpago – Latin America’s largest payment service provider empowered it’s global merchants with ACI to offer their solutions with regional payment methods to achieve 150% growth …

“We are able to achieve a consistently high growth rate in large part because of ACI‘s Up eCommerce Payments Solution. The solution’s reliability, flexibility and scalability give us the ability to quickly and easily offer payment options that merchants and customers want,” said Philipp Bock, CEO, allpago, …

“Our products and services, coupled with the UP eCommerce Payments solution, provide all variety of payments accepted in countries like Brazil, where our customers can customize their checkout experience based on location - significantly increasingly their revenues.”

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Mixing the right formula that raises an ISO above the crowded payment landscape requires a strategy that adapts to new market trends quickly. It requires a foundation comprised of a secure payment structure featuring multi-currency and crossborder functionalities as well as conversion and fraud prevention tools configured for each market and vertical.

ISOs should partner with a provider for what they need today and be positioned to expand quickly in the future. Gateway technology based on a single integration through an open API will be much faster and more cost-efficient than building from scratch. By taking advantage of an existing open payment infrastructure, ISOs overcome their legacy systems and developers are empowered to create their own value-added services, features, and applications. ISO’s should incorporate their design by using white label tools.

Also, real-time fraud management, customized to the requirements of merchants, is essential to power instant accept, challenge or deny decisions - helping to reduce chargebacks and ensure good sales are not left on the table. Innovation is at core of ACI and developing technology that drives success is our focus. Outsourcing to the ACI PAY.ON Payments Gateway and ACI ReD Shield fraud management solution enables ISOs to reach domestic and international markets faster and more securely. One single integration with a unified, RESTful API opens the door to a network of more than 350 payment methods, 160+ countries, all currencies, 25+ languages and a sophisticated fraud management suite with the largest global negative/positive database, real-time intelligence tools and certified fraud prevention analysts.

ISOs looking to grow sales with an end-to-end payment solution can leave the heavy lifting to ACI and benefit from the most advanced eCommerce payments solution with the easiest integration process.

OFFER THE PERFECT PAYMENTSFORMULA TAILORED TO INDIVIDUALMERCHANT NEEDS

VOICE OF AN ACI SOLUTION EXPERT“Legacy payment systems restrict rather than enable growth, and payment providers and merchants often find themselves stuck in payment silos that prevent them from successfully growing cross-border, or from offering anytime, anywhere payments. By consolidating all of our APIs into one RESTful API–the basis for all our white label gateway solutions–and by making integration more self-service, it enables our clients to board merchants faster and scale quickly.” Wolfgang Berner, Director, Product Global eCommerce

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ACI Worldwide, the Universal Payments (UP) company, powers electronic payments for more than 5,100 organizations around the world. More than 1,000 of the largest financial institutions and intermediaries, as well as thousands of global merchants, rely on ACI to execute $14 trillion each day in payments and securities. In addition, myriad organizations utilize our electronic bill presentment and payment services. Through our comprehensive suite of software solutions delivered on customers’ premises or through ACI’s private cloud, we provide real-time, immediate payments capabilities and enable the industry’s most complete omni-channel payments experience.

CONTACT US

Americas +1 402 390 7600Asia Pacific +65 6334 4843Europe, Middle East, Africa +44 (0) 1923 816393

ACI BUILDS INNOVATIVE PAYMENT TECHNOLOGIES THAT DRIVE SUCCESSACI’s UP eCommerce Payments solution delivers the ultimate in simplicity, global connectivity, and security. Through a single integration to a unified RESTful open API, merchants gain access to the largest global payment network. The industry-leading payment gateway technology enables merchants to build payment apps and features directly on the platform.

Find out more about the ACI UP eCommerce Payments solution for ISOs.

© Copyright ACI Worldwide, Inc. 2017ACI, ACI Worldwide, ACI Payment Systems, the ACI logo, ACI Universal Payments, UP, the UP logo, ReD, PAY.ON and all ACI product names are trademarks or registered trademarks of ACI Worldwide, Inc., or one of its subsidiaries, in the Unit ed States, other countries or both. Other parties’ trademarks referenced are the property of their respective owners.

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