See why payment analytics are the cornerstone of any strategy to optimize online payments.
Operating an online business in multiple markets can be a challenge, especially when it comes to optimizing revenue and reducing costs. When your company is new to a given market, it’s hard to have an eye on all of the places you may be spending too much in expenses – and leaving valuable margin on the table.
In few areas is this more true than when it comes to payments. Small differences in transaction costs or approval rates can make a big difference when it comes to the viability of your e-commerce store. But with payment processing taking place largely behind-the-scenes, it’s hard to grasp this impact without seeing it – especially when it comes to hundreds or even thousands of individual transactions across multiple markets.
Enter payment analytics. If you as a merchant don’t have a full overview of how your payment performance is impacting revenue and profits, you should consider the value that this can potentially bring to your business.
How exactly do payment analytics work? Which types of payment analytics are the most important? And what can merchants do to implement high quality payment analytics?
Read on to learn more about payment analytics and how to integrate them into your online business.
What can you gain with payment analytics?
Integrating payment analytics into your online business
Why are payment analytics so important? Consider the following example. By looking at analytics in South America, you may notice low conversion rates due to a large group of buyers who are unbanked. In doing so you may discover that this population of consumers requires more alternative payment methods in order to make purchases online. By implementing a more complete portfolio of payment methods, your business will eventually reach more people online.
Understanding your buyers’ preferences, market behavior and specific payment methods per market – all of these are key points provided by payment analytics.
What are some of the other key benefits of leveraging data from payment analytics?
Online merchants know the importance of having multiple data sources that – when brought together – paint a complete picture of the customer.
This has become an article of faith when it comes to customer acquisition and online marketing. Payment analytics simply applies the same thinking when it comes to optimizing transactions.
But payment analytics can also be useful when it comes to understanding customer behavior. For example, by combining payment data sets to get a full 360º view, merchants can understand their customers’ buying patterns and use this information to identify and reach out to first-time shoppers or those moving between channels.
Sometimes comprehensive data analytics opens the door to other insights – for example, when a shopper is likely to enroll in your loyalty program or what triggered that decision. It can also be useful for merchants to gauge the demand for Buy Now, Pay Later (BNPL) payment methods and other trends such as QR codes, loyalty-integrated payments, and Pay by Link (PBL).
To do this successfully, merchants need to consider a few things:
All are important when it comes to getting the most out of payment analytics.
Payment processing data can show you which payment methods your customers use most often to make purchases. While some regions are more card-friendly, others might favor local or alternative payment methods. You might use this information to tailor your local payment strategy to offer a wider range of payment method options at checkout.
The ability to accept payments across multiple banks in multiple locations worldwide allows e-commerce retailers to process local payment types and optimize conversion rates. That’s the value of a global payment solution.
But payment analysis and reporting can help you go a step further by reconciling data from multiple accounts as well as multiple currencies. If you’re operating on a global scale, you want to ensure you’re maximizing your payment conversions and minimizing cost. Based on the data in your payment analytics, you can develop a plan to expand your reach and support international customers better.
If you’re a company that operates internationally, fraud alerts could be triggered when customers buy an item from your store using a credit card issued in their home country.
For example – suppose you’re a US-based retailer accepting a payments in the United States from a card issued in Europe. In that case, the issuing banks might look at the transaction history of the card owner, see that they live in Europe and do not typically shop outside of Europe, and decline the payment.
A good payment analytics solution, built into a platform with the right payment optimization capabilities, would flag this issue and help you to change the routing configuration if necessary in order to get the payment accepted.
Merchants should be mindful of chargeback rates, which can give a lot of insight into customer interactions. To help better understand chargebacks, payment processors have started offering chargeback management tools.
Using information from various data sets, merchants can leverage payment analytics to get a more well-rounded view of the customer experience – and take steps to reduce chargebacks.
Using historical data to analyze past trends and predict future outcomes are key components of being successful when it comes to doing business online. Thanks to real-time payment data, merchants can assess their situation and make informed decisions faster.
For example, if sales in one region are low due to competitive activity, merchants who may have been hesitant to offer discounts might create a special offer to entice shoppers for that specific region.
It’s critical for merchants to have analytic tools in place that allow them to customize intuitive dashboards and make relevant business decisions based on payment data.
Bear in mind that when evaluating which data to collect and visualize, different departments will want to see different things. Insights about consumers are most relevant to marketers who can see which demographics are buying which items or which stores are more profitable. This will help the relevant teams to refine their advertising campaigns and improve overall conversion rates.
Shoppers increasingly make purchases online and rely on reviews when deciding what products to buy. Online review platforms have made it easier than ever for customers to share feedback. If customers are unhappy about their shopping or payments experience, they may leave a negative review.
Looking at payment analytics data, merchants can identify problems with their payment systems before they affect customers. For example, you can discover erroneous payments or false decline activity and handle it before customers complain or take their business elsewhere.
In this way, analytics can act as a kind of “early warning system” helping merchants to stay ahead of potentially unforeseen problems with transaction flow. By setting up trend triggers to provide alerts when issues happen, businesses can take quick action to ensure a frictionless payment experience and continually happy customers.
A good payment solutions provider should offer both the analytic tools to understand where payments can be optimized, as well as the functional capabilities to take advantage of these insights.
As part of PayU payment orchestration, our global payment platform, we offer a simple, unified analytics dashboard that provides a real-time view of all of your global payments. This straightforward analytics panel allows merchants to create pre-configured and custom reports based on business needs, making reporting easier and more powerful than ever before.
From building cross-provider reports, comparing provider performance, and segmenting transactions by business unit to tracking payment approval rates by card country, currency, and bank – PayU’s analytics dashboard gives merchants the right information to optimize any global payment.
Whether it has to do with meeting regulatory requirements or simply reporting to company-level stakeholders about payment-related insights and overall e-commerce performance, merchants may need to take a look at statements, transfer transactions, and further information as circumstances require. PayU’s analytics dashboard provides access to both standard reports as well as customized reporting criteria in order to help your business monitor and report on payment activity.
Merchants can review the details of payments they have received, most frequently used payment methods, and more. Moreover, they can learn the status of the transfers requested for funds collected in their account and get insights into their movement.
Traditionally, the payments reconciliation process is about financial reconciliation – making sure that any transactions that have been run are in agreement with corresponding bank statements. And yet, most retailers will tell you that successful payments reconciliation is about much more than just financial reconciliation.
Maximizing the payment approval rate has a clear impact on enhancing a shopper’s experience. The checkout process needs to be flawless – especially when it comes to preventing falsely declined payments.
An estimated $430 billion in e-commerce revenue is lost globally each year due to false declines. And the number of false declines are on the rise, increasing more than 20% since 2018.
By reconciling attempted payments with incoming revenue, you can get a full overview of how much money you may be leaving on the table due to false declines. At the same time, a good analytics platform can help you identify ways to retry false declines, maximize transaction approval rates, and acquire more customers that might have otherwise been lost due to a cumbersome payment approval process.
Payment analytics support merchants in managing costs and reaching a bigger global customer base. False declines, fraud and chargebacks can be devastating. Understanding how they impact your bottom line is essential for the growth of every e-commerce business.
In addition to providing invaluable insight into how your products perform across different regions, payment analytics also show how different payment types and currencies contribute to your revenue and ultimately how they affect your business performance. Having those insights at your fingertips allows you to craft smarter sales strategies.
The more payment data is available to merchants, the more possible it is to map out customer journeys, identify trends, and problem-solve issues that may be affecting your business in unforeseen ways. As your e-commerce business expands into new frontiers, payment analytics are an essential part of mapping out a successful journey.