After the holidays, Wirecard eyes opportunity in e-commerce returns
The boom in e-commerce—boosted by mobile devices—is spawning a record number of returns and associated shipping and payment hassles.
UPS, for example, is getting "reverse logistics" help from Optoro to handle the estimated 800 million package returns the shipping company expects this holiday season. Wirecard is now exploring ways to streamline the payments side of e-commerce returns.
“E-commerce retailers are getting help from aggregators that help facilitate the packaging, shipping and logistics of returned goods, and we see opportunities to use our digital technology to help solve payouts for some e-commerce returns, too,” said Deirdre Ives, managing director of Wirecard North America.
Retailers typically refund consumers’ money from goods sold in stores or online through the same account used for the purchase. This works in most cases, but in some instances—including when consumers want to be repaid more quickly or returns are delayed—it creates hassles that Wirecard wants to help merchants solve.
“Our technology digitizes the payout process, creating a smooth, quick way to get funds back to customers in special circumstances that are becoming more common as e-commerce drives more and more returns,” Ives said.
Wirecard is currently in discussions with several companies interested in leveraging its digital payments services for e-commerce returns, building on an existing business handling other types of refunds from corporations to consumers.
The U.S.-based division of Germany's Wirecard aims to build the service on an existing business where it processes refunds on behalf of utility companies, telecoms and cable providers, according to Ives.
“We’ve built a very brisk business in the last few years handling refunds corporations owe consumers for services, and we see an opportunity to extend that to e-commerce returns, too,” she said.
For several service providers, Wirecard has taken over the responsibility of delivering any security deposits or funds due to customers via ACH or prepaid cards, simplifying organizations’ requirements when a customer relationship ends.
“The minute the customer disconnects, the company gives us their last customer contact file and we take it from there, tracking the customer down wherever they may have moved, to deliver the payment,” Ives said.
The service saves costs and hassles for corporations that are obligated by law to return funds to consumers and spend tens of thousands of dollars pursuing customers that have moved, or allocating unclaimed funds to state escheatment accounts.
“Trying to get money back to customers that are moving or busy or hard to reach is very time-consuming and costly, and corporations are looking for help with this part of the payments process,” Ives said.
Wirecard typically contacts the customer first via email, offering several options for customers to claim payments. Mailing a prepaid Mastercard is the most common choice, Ives said.
Wirecard built the service from an existing business Citi had with certain telecom and utility customers before Wirecard acquired Citi’s prepaid card business in 2016, Ives said.
“We saw how Citi had solved this pain point for some customers, and we started to talk to customers outside of Citi’s network to expand it, and we’ve seen brisk growth,” she said.
Wirecard did not share the names of utilities whose refunds it’s handling, for competitive reasons, but Ives said the business is seeing strong growth.
E-commerce returns are a different business case than returning funds to utility customers, but Ives said the rising number of returned goods, particularly with complex transactions and higher-ticket goods, has many overlaps.
“We’ve closely studied consumer behavior around getting payments for returns, and the urgency of getting funds and sending them to the right recipient is a big deal for customers and for corporations that want that last contact with the customer to be a positive one,” she said.