An online marketplace is an e-commerce platform that brings together buyers and sellers to conduct transactions. It provides a virtual space where buyers can browse and purchase products or services from multiple vendors while sellers can offer their goods or services to a broader audience.
2022 saw an extraordinary value of $3.25 trillion in goods globally sold on top online marketplaces, predominantly from third-party sellers. Online marketplaces must search for new solutions to refine their operations and remain competitive and successful. Therefore, payment optimisation is a critical area for online marketplaces.
We will explore why payment optimisation is essential for online marketplaces and how it can help them overcome various challenges. Moreover, we will discuss the benefits of optimising payment processes, such as enhanced customer experience, reduced costs, and increased revenue.
The African perspective
Jumia is the leading online marketplace In Africa, boasting an impressive 23 million monthly visits as of 2021. Data released by Statista place Takealot.com, a South African website, close behind at 10.5 million visitors each month. Souq, an Egyptian online retailer, comes in third with 10 million visits per month. Again, these figures demonstrate the sheer scale of the e-commerce sector in Africa.
As online shopping grows in popularity, businesses rapidly adapt to meet the demand for digital sales channels. By offering flexible payment options, e-commerce platforms have revolutionised how people shop. This has made it easier for businesses to reach new customers and broader markets. As a result, many traditional brick-and-mortar stores are now incorporating e-commerce strategies into their business models to remain competitive in the digital marketplace.
The GSMA mobile economy forecasts that Sub-Saharan Africa will have 613 million mobile subscribers by 2025, corresponding to 50% of the population. Furthermore, the region is estimated to have 413 million 5G connections over this timeframe. This impressive growth will generate an exceptional economic value of 154 $ billion. Overall, the widespread usage of mobile phones in Africa has been a driving force behind the rapid growth of online marketplaces.
Challenges in payment optimisation
Optimising digital payments for an online marketplace can be complex and challenging. One of the biggest challenges is ensuring compliance with ever-changing regulations and industry standards. Another challenge is managing the numerous payment methods needed to cater to a diverse customer base. The challenges include cross-border transactions, varying payment processing times, and different currencies. Maintaining security and fraud prevention measures can also be challenging, as marketplaces must protect sensitive payment information from potential hacks and breaches. Finally, integrating payment systems with other market aspects, such as inventory management and shipping logistics, can require significant technical expertise and resources. Successfully navigating these challenges is essential for any online marketplace looking to optimise its payments and stay competitive.
How to optimise payments for your online marketplace
Optimising digital payments for marketplaces involves improving the payment process to enhance the user experience, increase efficiency, and reduce transaction costs. The ultimate goal is to ensure seamless and hassle-free payment transactions that benefit all parties involved in the marketplace ecosystem. There are various ways to optimise digital payments for marketplaces which include:
Optimise for mobile payments
With the prevalence of mobile payments, optimising online marketplace payments has become increasingly critical. As projected e-commerce revenue in Africa for 2027 is set to reach 67.78 billion U.S. dollars. Therefore, businesses must prioritise easy-to-use, secure, and reliable mobile payment options to remain competitive and capture a share of this growth. Implementing one-click payments on mobile sites, or utilising a phone-optimized hosted payment page are all viable solutions to streamline the payment process.
Reviewing Payment acceptance rates
Reviewing payment acceptance rates for your business involves analysing the percentage of payments you receive that are successfully processed and accepted by your payment processor. This metric is important because it gives you insight into potential issues with your payment system, such as declined transactions, failed authorisations, or fraud attempts. By monitoring your payment acceptance rates, you can identify areas for improvement and improve the overall customer experience.
Integrate acquirers for better payment solutions.
Utilising acquirers for payment solutions can provide several benefits for buyers and sellers in an online marketplace. Firstly, acquirers allow for a seamless payment process by accepting various local payment methods, such as bank transfers, credit/debit cards, and mobile payments. Secondly, they offer competitive pricing and lower transaction fees than international payment providers, resulting in cost savings for both parties. Lastly, local acquirers provide better security and fraud prevention measures due to their familiarity with local regulations and customer behaviour.
Stay informed about new participants.
Staying informed about new participants like fintech companies can be invaluable. With new entrants comes new technology, improved services, and increased competition. Keeping up to date with the latest players in the field can provide marketplaces with a competitive edge. This allows them to optimise their payment processes, reduce costs, and improve user experience. By staying informed, marketplaces can identify potential partnerships and adopt innovative payment solutions, and enhance their overall value proposition.
Benefits of online marketplace optimisation
The benefits of optimising digital payments for marketplaces include the following:
- Reducing operational costs: By optimising digital payments, marketplaces can significantly reduce operating costs associated with transaction fees, chargebacks, and fraud.
- Increasing revenue: Optimized digital payments can increase marketplaces’ revenue by providing a seamless payment experience for buyers, which can encourage repeat business and improve customer loyalty.
- Improving customer satisfaction: A streamlined digital payment process can improve customer satisfaction by reducing payment-related errors, providing real-time payment confirmation, and enhancing overall user experience.
In conclusion, optimising digital payments for an online marketplace can provide numerous benefits. Some of the benefits include improved user experience, reduced costs, enhanced security, and increased revenue. However, the process can also present various challenges that businesses must manage effectively to achieve success. By staying informed about new entrants and the latest trends in the industry, marketplaces can improve their payment systems. Additionally, partnering with experts in the field, such as Cellulant, can provide marketplaces with the expertise to optimise their payments.
To understand more about how online marketplaces can navigate the complex world of payment optimisation, We are hosting a webinar titled: “Driving down operational costs for marketplaces through optimisation of digital payments.” The webinar will explore the benefits of payment optimisation, marketplaces’ challenges, and best practices for success. Attendees will also have the opportunity to hear from industry experts and gain insights into the latest trends and innovations in the field. The webinar provides a valuable chance for marketplaces looking to enhance their payment processes and stay ahead of the competition. Register here