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What you need to know about payments in e-commerce

THERE are three core segments in e-commerce: marketplace, payments, and logistics. Of the three, payment is the most sensitive segment for the obvious reason that it handles your customer’s money and therefore, by extension, affects your bottom line.

With that in mind, how do you figure out the types of payments you should accept and how to integrate that into your new online store? What kind of security would you need? And what about compliance with local regulations and standards?

For e-commerce startups in need of such guidance, talk to a payment gateway provider.

Payment gateways help merchants collect payments from customers and allows merchants to accept payments from more than one source. Whether credit cards, internet banking accounts, or e-wallets; attempting to integrate everything on your own can soon turn costly, if not confusing.

But with many such players in the industry, it can get overwhelming, especially if you’re new to the e-commerce landscape and are just getting your business off the ground.

Lim Kok Hing, Executive Director of Southeast Asian payment gateway provider iPay88, advises businesses to look at the reliability and reputation of a company.

Lim Kok Hing, Executive Director of iPay88.

Lim Kok Hing, Executive Director of iPay88. Source: iPay88

“You’d want the service to be reliable. You don’t want the service to be intermittently down, or if you have a problem no one is able to address and resolve your issues in a reasonable time,” he said.

“For online payment, a lot of security features are needed to perform every transaction. The reputation of a company to maintain that is very important.”

Some companies, Lim pointed out, may be slow in implementing updates to comply with certain regulatory changes.

He acknowledged it may not be easy for merchants to keep track of these changes themselves, so the general rule of thumb when selecting a payment provider is “the company has been around in the market for a long time, and you hear more good stuff about them”.

Payment gateways are highly regulated industries; every country has its own rules and compliance standards, and governmental organizations generally do a due diligence to ensure that a provider adequately fulfills these standards and is secure. The systems are normally certified by an independent auditor.

However, while instituting and enforcing these rules are important, regulators are also cautious to draw a balance between strict rules and encouraging innovation.

The nascent digital currency sector, for example, is one such area where regulators are particularly cautious about. Lim noted that most are staying on neutral grounds when it comes to cryptocurrency, despite it being the hot topic in the payments space at the moment.

“Regulators don’t want to kill innovation but also don’t know how to endorse it as a form of payment. With cryptocurrency, users are not identified. That can be good or bad.

“Besides that, the currency, at the moment, is still far too volatile to make it a viable payment method,” he said.

Payments aside, Lim also urged e-commerce businesses to think about their digital marketing strategy and user experience – especially mobile – considering how the mobile device is the online consumer’s gateway to the internet. According to a study by Google and Temasek, more than 90 percent of Southeast Asia’s internet users are on smartphones.

“User experience is important. A layout that looks good on desktop may not be suitable for mobile,” Lim said.

“It’s also important to think about how you reach out to customers. Internet marketing experts can advise you on how to get more traffic, and to reach out to the right group of customers,” he added.

“These are additional investments, and it’s very much up to merchant to consider.”