E-commerce conversions accelerate worldwide, despite obstacles
A shift to online payments and digital technology across the globe occurred at warp speed during the coronavirus pandemic, but that trend doesn't magically solve payments challenges in various markets, nor does it render the fundamentals of customer service less meaningful.
"What normally would take decades, in terms of transition to digital and online and acceptance of mobile commerce, has now taken just weeks or months in pretty much every country around the world," said Mario Shiliashki, CEO of global payments organization for e-commerce fintech PayU.
Hoofddorp, Netherlands-based PayU is in a unique position to watch the digital transformation worldwide, as it focuses on e-commerce in what it considers high-growth markets in Latin America, Central and Eastern Europe, Russia, Turkey, Africa, Asia and India. PayU engages in e-commerce, lending at the point of sale and fintech investments as part of Naspers Group.
Prior to the COVID-19 pandemic, e-commerce in these markets was a smaller part of total retail spending than in the U.S. or U.K. and other developed markets, so PayU has been dealing with "a massive catch-up the past few months," Shiliashki said.
"We do everything in our power to help merchants in our communities, and the global merchants who serve consumers in those countries, to have the best consumer experience and that all payments can be made in the preferred method of the consumers," Shiliashki said.
Depending on the market, PayU can be navigating new e-commerce merchants through unfamiliar payment options such as bank transfers, digital cash payments, local or card schemes, installment products or buy-now-pay-later solutions.
During two weeks in April, when it was becoming clear that COVID-19 was going to change the face of physical retail for a long time, PayU saw more than 1,500 applicants in just two countries seeking online services. Shiliashki says that's about three to five times the volume the company could expect at any given time.
In providing a unified, single API for the local payments platform, PayU is helping merchants across its markets integrate into the network once and allowing PayU to handle the payment method integrations over time.
Different markets are approaching the digital onslaught in different manners, and PayU seeks to assure major challenges are not overlooked.
"Africa is a country with massive potential, but also quite a bit of financial exclusion," Shiliashki said. "Inclusion is a huge theme that every government in Africa drives."
Digitization of money in Africa, through mobile wallet innovation and bank-to-bank transfers, allows more consumers to participate with faster and more secure payments, Shiliashki added. "There has been a massive trend driven by regulators and companies that give consumers and businesses an avenue for growth."
The push for digital transactions and less use of cash in India has also been a key driver in e-commerce buildup, one that has PayU viewing India as a strong current and future market for its gateway services.
With the strong push for digital across the globe, it is important for providers not to fall into the trap that a conversion to digital technology means consumers and merchants can easily get rid of cash, said Tim Sloane, director of emerging technologies advisory services for Boston-based Mercator Advisory Group.
"We will see some oversights with the strong digital push, but there are some workarounds," Sloane said. "In many countries, you can buy something online and pick it up at the store, but pay with cash. It's just that there are some additional costs involved in making that happen."
In a country like Colombia, providers began pushing more digital money transfers and the government provided the incentive for merchants to move to e-commerce and boost the economy by, on designated days, dropping the value added tax on goods sold offline or online.
"For our business, we saw a seven-fold increase on those VAT-free days," Shiliashki said. "We are working closely with government authorities to drive these ventures and make sure we can meet support and scalability. So far, there have been no glitches for us."
Regardless of how merchants approach e-commerce and digital services, they still have to solve issues for consumers.
"They have to make sure there is human direction or the human touch where it is required," Shiliashki added. "Things that people expected before COVID remain or are even enhanced now, as it is even more vital to have the best digital payments service because people rely on it."
The issue for many merchants regarding online customer service support is whether they can afford the human touch, Mercator's Sloane said.
"Here in the U.S., companies have started to implement bots to answer questions for the consumer," he added. "You can always opt out and get a human being, but I don't know of any way you can address personal interaction with scale and do it cost effectively."