Merchants face a multitude of challenges that can impact their operations, customer satisfaction and ultimately, their bottom lines. Recently at MRC Barcelona, I hosted a panel with Matteo Gamba from Wayfair and Laura Alda from Meta exploring the biggest payment challenges facing merchants today. 

The discussion highlighted some of the payment challenges that merchants are facing, including fee transparency, APMs and what needs to be weighed when deciding on building something in-house vs outsourcing. The insights from the panel provided a clear view of the challenges businesses encounter, which were complimented by a real-time Slido poll of the audience.

The persistent threat of fraud   

Fraud continues to be a major concern for merchants globally, with 50% of the audience citing fraud as their main challenge faced today. As the world has shifted to a digital existence, the avenues for fraud multiply as quickly as the solutions to prevent them. Merchants must continually evolve their defences to outpace sophisticated fraud schemes that threaten to undermine their operations and erode customer trust. 

Implementing cutting-edge fraud prevention solutions can help anticipate and mitigate these risks more effectively, but relying on AI and machine learning alone won’t solve the problem. The consensus is that in the fight against fraud, human-machine collaboration delivers the best results. 

Outsourcing or building in-house

A common dilemma highlighted during our panel was whether to handle payment solutions in-house or outsource to specialised providers. Many merchants find themselves weighing the benefits of control and customisation against the time, expertise, and resources required for building their own systems.

Building in-house offers greater customisation and control over payment infrastructure, allowing businesses to tailor solutions precisely to their needs. However, the high upfront costs and continuous maintenance can be challenging. It's crucial to have the right team and resources to ensure long-term stability and scalability.

On the other hand, outsourcing provides quicker deployment and access to specialised expertise. Established providers often offer a wealth of pre-built tools and integrations that help businesses launch faster while maintaining flexibility. However, this option may result in reduced customisation and control over specific features and adjustments.

Merchants should carefully evaluate their long-term strategic goals, budget, and technical capabilities when deciding between these two approaches. A thoughtful assessment can help determine whether building or outsourcing is the best route to optimising payment operations while ensuring business continuity and customer satisfaction.

High transaction fees and cost management

Linked closely with the challenge of managing costs effectively, high transaction fees were identified by 25% of our poll participants as a significant burden. Every percentage point in fees impacts the bottom line, making fee transparency not just a preference but a necessity for survival and competitiveness.

To handle fees effectively, merchants should demand transparent pricing from their payment processors. The Interchange ++ model provides a clear breakdown of costs and helps identify where fees originate. Starting with a simple fee matrix allows merchants to grasp their payment costs upfront and understand how to allocate their resources better.

Another way to manage fees better is by partnering with local acquires that offer better local transaction fees. While having multiple local acquires can be a big lift from an integration point of view, this is crucial to keep costs down for businesses as they expand internationally. 

The role of APMs

As companies are increasingly doing business across borders, understanding and integrating alternative payment methods becomes critical. APMs need to be tailored to each market's preferences, which can vary dramatically between regions. 

For instance, while credit cards dominate in the U.S., e-wallets like Alipay and WeChat Pay are preferred in China, and direct bank transfers are common in Europe. Adapting to these preferences not only enhances customer experience but also boosts market penetration and conversion rates.

Data management and utilisation

Tied with high fees, the challenge of managing and leveraging large volumes of data effectively also received 25% of votes in our live panel poll. Today, data is a critical asset that can drive strategic decisions and improve customer experiences. However, managing this data—ensuring its accuracy, security, and compliance with increasingly stringent laws—poses a significant challenge. Effective data management can provide actionable insights, enhance customer targeting, and optimise payment processes, thereby transforming challenges into opportunities for growth.

The insights gathered from the panel underscore the complexity of the payment challenges today. Merchants must adopt comprehensive strategies that address these issues in a holistic manner. This involves not only deploying advanced technological solutions but also fostering a culture that is agile, data-driven, and customer-centric. For merchants looking to overcome these challenges, payments simply can not be an afterthought.