How Access Worldpay simplifies APM integration

Alternative Payment Methods (APMs) are now an essential way to reach new markets and consumers. However, their rapid growth has led to a fragmented, complicated environment that is difficult and costly for merchants to enter. New services from Access Worldpay aim to shield merchants from this complexity and make integrating APMs much quicker and easier.

What are APMs?

In simple terms, APMs refer to any payment method that isn’t a prepaid, debit or credit card, such as VISA or MasterCard. There are hundreds of different APMs globally and they’re all slightly different to each other, but generally they fit into one of these five categories:

  1. Bank Transfer e.g. iDeal – consumers approve transactions via existing online banking.
  2. Direct Debit e.g. SEPA DD, ACH – consumers instruct banks to release funds at pre-agreed dates, often for scheduled payments such as subscriptions.
  3. eWallet e.g. PayPal, Alipay – these store personal data and funds which can be used for online transactions; they often work with Mobile Wallets such as Apple Pay.
  4. Buy Now Pay Later (BNPL) e.g. Klarna – the fastest growing category, where customers pay for goods after delivery. Payment information doesn’t need to be shared with the merchant, and payments can be made in instalments. Particularly popular in retail and with younger consumers.
  5. Post-pay and cash-on-delivery e.g. Boleto, Konbini – consumers buy online and pay later at a store or outlet, or on delivery. This delay makes these APMs unsuitable for perishable goods and time-sensitive products (e.g. travel tickets) and their use is declining in favour of eWallets and BNPL.

Use of APMs has increased exponentially, particularly among certain groups of consumers, because they provide:

  • choice – consumers choose how to pay and when;
  • flexibility – consumers can decide how much to pay at any given stage;
  • convenience – particularly in areas where credit or debit cards are less common; and
  • comfort – consumers can decide how much personal information to provide.

Why do APMs matter?

They matter because they’re so popular. This may not be immediately obvious in countries such as the USA or the UK, where over 80% of eCommerce payments are made with a credit or debit card. However, eCommerce looks very different elsewhere. For example:

  • In the Netherlands, only 8% of eCommerce transactions use credit cards; by contrast, 60% take place through iDeal and a further 20% use Mobile Wallets or BNPL.
  • In Indonesia, around 25% of consumers use bank transfer products and one in six use cash-on-delivery products.

Age matters, too. For example, 26% of the world’s population fall into Generation Z (born 1997-2012). These consumers are keen adopters of APMs, particularly Wallets and BNPL.

As a result, offering APMs has become essential for any merchant who wants to:

  • expand into new countries;
  • compete for new customers;
  • maximize customer experience;
  • improve checkout conversion rates; and/or
  • increase customer retention.

What’s the catch?

The problem is the huge number of APM products, which has resulted in an extremely fragmented landscape. Around the world, there are currently more than 400 different APMs and no two are the same. Even two Bank Transfer APMs will offer different user experiences and involve separate user journeys. Likewise, every APM integrates in its own way, often with little regard for how previous APM products have been built.

Such fragmentation makes integrating APMs into payments systems an extremely complex, time-consuming and even intimidating process for merchants who want to attract new consumers or enter new markets.

What’s our solution?

When the problem is complexity, the solution must offer simplicity. Access Worldpay’s APM vision is to shield merchants from the complex, fragmented global payments space and make accessing all of Worldpay’s APM capabilities a simple, straightforward and consistent experience.

We’re doing this by placing different APMs into one of three ‘integration groups’, depending on the merchant experience they provide. All APMs within a specific group provide a similar merchant experience, even if the product type is very different. The three groups are:

  1. Pay Direct: similar to a card payment where the payment is processed directly through Access Worldpay, the merchant sends a payment instrument and a payment result is returned in line with the APM’s timeframe. Sample APM: ACH using bank details.
  2. Action to Pay (coming soon): this group covers payment methods that include some actionable data (such as a redirect URL or QR code) that the merchant must handle or pass to the consumer in the payment flow. The payment is completed by the APM provider and isn’t processed via Access Worldpay. Sample APMs: PayPal or iDeal.
  3. Enroll and Pay (coming soon): a two-stage transaction involving some kind of enrolment or consumer authentication (e.g. a fingerprint or one-time PIN) before payment is made. Sample APMs: Alipay or SEPA DD.

Why this approach?

Categorizing APMs in this way makes each of the three groups self-contained and internally consistent. It doesn’t matter that the product types or user journeys vary across different APIs within each group. The key consideration is that they offer a similar merchant experience. By focusing on this, our approach offers consistency, which in turn brings lots of advantages to our merchant customers:

  • It makes merchant payment journeys less confusing – within each group we use consistent language and terminology.
  • It’s easier for your own IT teams to support different APMs within a group.
  • It removes the burden of managing lots of complicated APM integrations.
  • It lets you add new APMs to an existing group easily, quickly and cheaply.
  • Our in-house testing suites mean that when you go live, you’ll go live with confidence.

What’s coming next?

The next stage of making APM integration easier for merchants is to add a payment discovery feature. Covering both APMs and credit cards, this API will help you ensure that you’re offering the right payment options for specific countries and regions. Clickhereto find out more.

We hope that we’ve helped explain APMs, their benefits and challenges, and how Access Worldpay can make it much easier to integrate them into your own systems.

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