E-commerce: A merchant’s perspective on innovative solutions in payments

Abstract

As online purchasing grows in volume and the use of cash continues to decline, the need for efficient and effective digital payment methods not only increases but also diversifies. Simply put, payment services and their providers must take into account the specific constraints or conditions that are relevant to merchants’ primary business processes. This paper analyses such key requirements for the design of successful payment interaction flows and the impact on payments products and infrastructure. It does so through a summary of relevant external trends in retail commerce and financial services and a basic analysis of the economics of payments. Further opportunities and challenges from the revised Payment Services Directive (PSD2) and ‘access-to-the-account’ are considered, especially regarding the stipulations on strong customer authentication and transaction authorisation.