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THE GATEKEEPERS OF ONLINE PAYMENTS

With the rise in online shopping worldwide, consumers are on the lookout for payment gateways they can trust. Here are some strategies that a few Southeast Asian payment gateway startups are using to grab a piece of the online pie.

With online transactions becoming more and more the norm these days, consumers need to be reassured that their money is going where it’s supposed to and nowhere else. Unfortunately, the pitfalls of doing monetary transactions online have also risen. For instance, in 2014, there were numerous reports in Malaysia of consumers being charged for items they did not buy with their credit cards. Online security — or the lack thereof — is something that consumers are still concerned about, even now that many payment gateway systems are getting more and more secure and sophisticated. And unless they’re PayPal, payment gateway startups will find it hard to get consumers and merchants to place their trust in their services.

Payment gateways need to function as a gatekeeper in storing and retrieving confidential consumers details.

Gaining Trust

What will make a potential customer take that last step and do an online transaction? For many, it’s a question of trust — and convenience. A survey of 3,500 online shoppers worldwide by Worldpay found that one-quarter of respondents cited a sense of security as the most important factor when considering whether to buy goods online, while 46 per cent of people felt more reassured of payment security just from payment authentication and digital certificate logos displayed on an e-tailer’s homepage.

For iPay88 and Veritrans, two emerging payment gateways in Southeast Asia, the focus has been about winning merchants’ trust, while DragonPay has alternative methods of payment that suit local needs.

iPay88 is a Malaysia-based company that hosts a secure payment site where purchases can be made using all valid credit and debits cards, and online bank transfers. They believe that in providing comprehensive payment services, more merchants will be attracted to work with them. “We believe we have an advantage over PayPal, which is merely an e-wallet provider, while we’re a full payment gateway provider and systems integrator. Think of us as a one-stop shop,” says Lim Kok Hing, the founder of iPay88, in an interview with Digital News Asia.

Based in Indonesia, Veritrans is an online payment platform that creates services to attract merchants as well. It provides a fraud detection system at no additional cost, and are linked to the credit card payment systems of prominent banks like CIMB and BNI. It also helps merchants with limited experience in PHP or .NET coding, which is required in order to process online transactions. Veritrans created VT-Link, which offers a WordPress plugin that generates a link for customers to proceed to the payment site, after they enter some details about their intended purchase.

However, one problem that Veritrans faces is that 80 per cent of Indonesians do not have bank accounts, and less than five per cent of the population own credit cards. Thus, the reach of the products is limited for the moment.

The situation is similar in the Philippines, which is still a cash-based economy as majority of the people still feel more secure handling cash. With credit card ownership at about five per cent, while only about 25 per cent of the population possesses a bank account, DragonPay found an alternative way for cash-wielding consumers to shop online. Customers who buy items online can pay for their items in cash using over-the-counter banking services at local banks, ATMs or payment centres in supermarkets, department stores, courier centres and remittance centres. They can also purchase a prepaid card, available in over 10,000 stores around the country as a stored-value card that can be used to purchase items online from participating e-tailers.

The success of DragonPay’s model is that it found ways around the constraints of online payments by utilitising a system that Filipinos are accustomed to. However, as credit cards and online banking gain traction in the Philippines, DragonPay needs to keep its payment services relevant.

Consumers often use the payment method they believe is trustworthy and convenient. They are likely to trust brands and merchants that they are familiar with rather than a little-known payment gateway. Thus, targeting online merchants has been successful in the case of Veritrans and iPay88. On the other hand, DragonPay leveraged local knowledge and formulated a strategy that worked best for Philippines’ cash economy. However, this strategy may not work as well if applied to other countries. As more consumers shop online, payment gateways need to win the trust of both customers and merchants.

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