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4 keys to evaluating payment service providers for digital media

By Abhishek Dadoo

Few¢ents

Singapore

Seamless payments have been a game changer for e-commerce players selling physical goods. There is a lot of literature on the advantages of one-click checkout with a pre-stored credit card or with a pre-stored balance in digital wallets.

For publishers and creators selling digital goods, the key elements for evaluation of payment service providers are largely the same. These are:

  • Compliance with payment regulations.
  • Global coverage of local payment methods.
  • Easy implementation for publishers and creators.
  • Easy checkout journey.
A seamless and legally compliant digital payment process is essential for news publishers.
A seamless and legally compliant digital payment process is essential for news publishers.

Before we dive further into any of the topics above, it’s important to note that with digital goods, fulfillment (access to gated content) happens in real time. Hence, there is additional complexity around managing digital rights that digital goods payments service providers must handle. In the context of this article, we will park this topic.

Compliance with payment regulations

For digital goods payments, there are two options: recurring subscriptions or one-time payment per content.

Recurring subscriptions have been around for some time so the compliance requirements are better understood. For example, for storing credit card information, the payments service provider should be PCI compliant.

Also, the payments service provider should comply with the recurring payments guidelines of the country of the user. For example, the Reserve Bank of India issued specific guidelines for recurring payments on 31 March 2021. When accepting recurring payments mandate from cardholders, the payments service provider is required to comply with such guidelines in every user market.

Pay-per-content, on the other hand, does not work with cards. The high fixed transaction cost renders cards as an ineffective payment method for small payments. Hence, pay-per-content must be routed through a digital wallet, either with a pre-stored balance or with post-paid functionality.

In both cases, the ability to issue payment accounts falls under the purview of the payments act of the domicile country of the digital wallet service provider. It is important for publishers and creators to understand the payment regulator’s requirements. Not doing so puts you at risk of invalidating the trust and stored monetary value of users who pay for your content with the specific digital wallet.

For example, India requires RBI clearance before an Indian provider can offer digital wallet-based services. In Singapore, MAS allows digital wallet service providers to operate within certain thresholds before which the service provider is required to become licensed as an account issuer. The U.S. Department of the Treasury requires digital wallet service providers to first register as a money services business (MSB) and then procure money transmitter licenses in each state the service provider operates in.

Global coverage of local payment methods

Most digital publishers cater to global audiences and diasporas residing across geographies. For English content, we found audiences typically are fragmented in large proportions across the United States, Canada, United Kingdom, India, and Australia. Similar multi-geography audience exists for content in other languages such as Spanish and Arabic.

Payment methods need to be localised, otherwise, people won’t buy. Alternative payment methods such as digital wallets are well known in emerging markets. However, our research shows that even in developed markets, there is a strong preference to pay via banks or digital wallets, especially when the user transacts with a merchant or digital publisher for the first time.

The prevalence of payment aggregators such as Google Pay, Apple Pay, Rapyd, Adyen, and Stripe is testament to the importance of bundling local payment methods under one hood.

For digital publishers and creators, dealing with untapped global audiences of never-subscribers, it is ever more important to consider service providers who aggregate payment methods across the globe.

Easy implementation for publishers and creators

Large publishers are broiled with multiple initiatives competing for technology resources. Mid-sized publishers have outsourced their technology teams in most cases. Individual creators are limited by the inflexibility of their creator platform or content management system.

Hence, the payments service must be easy to implement, otherwise it will be difficult to get buy-in from the technology team. Once implemented, there must be detailed controls and analytics for business teams to optimise the payments service and monitor its performance.

Easy checkout journey

Payments service providers invest extensively in optimising their APIs and user interface. A fraction of a second improvement in latency can yield a multi-fold increase in conversions. From the choice of colours and language in hosted checkout pages to the placement of the one-click checkout buttons, every small change has a role to play in the users’ checkout experience.

An overlooked aspect of evaluation is the level of detail at which the checkout funnel is tracked by the payments service provider. Granular analytics helps with precise optimisation of the user checkout experience and converts user intent into significantly higher transactions.

Let’s not boil the ocean

As with any vendor evaluation process, it’s easy to get into analysis paralysis. Easy implementation and an easy checkout journey are table stakes for every payments service provider. So, regulatory compliance and global coverage remain the two most important criteria that any publisher or creator should evaluate upfront.

About Abhishek Dadoo

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