Banknotes from different nations, symbolizing local / alternative payment methods

Why Shooting For Alternative Payment Methods Is Half the Game

We don’t choose our favorite football club – it chooses us. The same is true for our preferred payment method. Worldwide, around 200 different payment methods exist, cautiously estimated. Every single one has its fans. And that’s not surprising: Our local payment culture influences which payment methods (or payment service providers) we prefer. Factors such as perceived payment trends, word-to-mouth, and genuine economic and regulatory conditions all shape our preference for one payment team or the other.

For every company aiming for a new market, it’s crucial to understand the local payment customs inside out. And that’s just the preliminary: Integrating local payment methods and providers can be complex and costly on the technical side. This article will help companies without a payment software background navigate the playing field. How to set up a custom payment system that simplifies payment method integration?

The article details: 

  • The benefits and challenges of local payment methods 
  • Why a custom payment system makes alternative payment method integration easier
  • How to set up a global payment system with CoreWallet, featuring an orchestration layer for local payment methods 

Let’s begin… 

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A computer besides a wallet, symbolizing payment gateways, online payment and ewallets

E-Wallets or Payment Gateways – A Comparison

When we compare e-wallets or payment gateways to payment with card or cash, we often evaluate the former as more convenient. That might be a bit of an overstatement, really. Holding your credit card in front of a card reader does not exactly sound like much work, does it?

No, what really makes modern digital payment methods so powerful is their feature-richness and flexibility. For example, you can simply conduct cross-border payments or transfer tiny amounts of money with digital payment methods. And even if you are bound to our own four walls (for some reason), you can pay for goods and commodities with just a few clicks. 

But payment does not equal payment. Behind the scenes of your checkout page, in the technical profundities of the software, it makes a huge difference whether the payment happens via an e-wallet balance or a digital bank or credit card transfer, facilitated by a payment gateway. 

Payment Gateways vs. E-Wallets? Not Quite!

However, make no mistake and don’t take “Payment gateways or e-wallets” literally. The two are not exact opposites: You need PGs to process a transaction no matter what. The real question is: How exactly does using e-wallets vs. regular payment providers influence the payment process, especially regarding user experience? 

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A software developer working on coding a payment gateway

How to Develop a Payment Gateway – in 4 Stages

Online marketplaces are complex systems. This complexity is reflected in the Payment Gateway needed for such platforms.

As a marketplace owner, you always have the option to integrate payment systems, offered by external Payment Service Providers. Depending on your business strategy, that might suffice. But using an off-the-shelf PSP will also limit your opportunities. You can’t evolve your marketplace to your preferences if the PSP doesn’t move along with you:

  • You want to offer payment methods, according to customer demand? The PSP must support them.
  • You want to scale up your business and move to new markets? The PSP must be set up to handle higher transaction numbers and adapt quickly to local financial regulations.
  • You want to enable customers to pay via a prepaid e-money balance and securely store their payment instruments? The PSP must offer an electronic wallet.
  • And so on…

Thus, ambitious marketplace owners might decide to build a custom Payment Gateway and remain in control over payments. As the company behind CoreWallet, the flexible software foundation for payment and e-wallet applications, we are familiar with creating Payment Gateways. It’s important to approach the development process with a clear plan. To help you master the technical challenges, we have compiled the common stages of such a Payment Gateway project for you.

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A hand holding lollipos, which stand for loyalty programs

How You Build a Wallet-Based Loyalty Program And Profit 

One of the key drivers of growth and profitability is customer retention. You may be converting a nice piece of your traffic into sales. But you need a healthy customer retention rate, i.e. your ability to keep a paying customer over a period of time. Else, you will be spending more money over time on acquiring new customers.

The cost of acquiring a new customer is high. According to Harvard Business Review that cost can amount to 5 to 25 times more than it takes to retain a customer. That is why you will see a lot of businesses have implemented a loyalty program to entice people to return and increase retention.

But what would a higher retention rate mean for merchants? According to Bain & Company, a 5% increase in retention rates can raise profits by more than 25%. By having a loyalty program in place, you end up spending less while simultaneously increasing your profits by targeting your existing customers.

With this article, we want to help you build a thriving business as a merchant or marketplace platform owner by granting customers the incentive of loyalty points. We outline how you can integrate a loyalty program into a payment system built with CoreWallet. The article will answer the questions: 

  • What is a loyalty program?
  • What types of loyalty programs exist?
  • How to set up a point-based loyalty program for your business – on the technical side?
  • Why will you benefit from implementing your loyalty program with CoreWallet?   
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A picture displaying a watch and coins, symbolizing buy now pay later payments

How to Build Your Own BNPL Solution

What’s a good way to yield top money on your e-commerce or service platform nowadays? It’s to have your customers not pay you immediately. Thus, Buy Now, Pay Later has become the fastest-growing segment in consumer finance. Shoppers want to have it. Merchants want them to have it. And BNPL providers like Klarna (B2C), Afterpay (B2C) or Biller (B2B) are eager to provide it. But what exactly makes Buy Now, Pay Later so popular? And should your business strive for its own BNPL solution?

In this article, we detail… 

  • What the core advantages of Buy Now, Pay Later are
  • What the 3 major challenges are, when you build your own Buy Now Pay Later solution
  • How to overcome those challenges with the CoreWallet framework 

Now, to question 1…

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A credit card used for payment on an online platform

How Online Card-Based Payments Function

On today’s online platforms, we face an extensive choice of (digital) payment methods, some of them fairly non-traditional (like blockchain-based payments), some having been around for a while (like credit card, direct debit, vouchers and gift codes). In some countries, payment methods that bridge the online and offline spheres of web shopping remain popular, too, such as cash-on-delivery. In others, BNPL and e-wallet-based payment flows are popular. This article will take a deep look into one specific form of online payment, though:

Card-Based Online Payments

These include all manners of payment cards such as Credit Cards, Debit Cards and Prepaid Cards. They may exist in purely digital form or have a physical equivalent. In any case, local banks issue the cards and they operate on the rails of international or domestic Payment Card Schemes.

In the following paragraphs, we will focus on credit card-based payment systems, presenting their basic flows and involved parties (like issuer, acquirer and so on). This article will examine in detail:

And go! 

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A shopping card to which a banknote is attached via paperclip, symbolizing Embedded Finance

Embedded Finance – What It Means (For Banks and Tech Firms)

Traditional banking houses no longer hold the monopoly on offering financial services. Instead, companies whose core business initially laid outside the financial sphere have adopted what’s called Embedded Finance. This means that they offer financial services as add-ons and parts of the regular user journey on their platforms. 

Originally, financial services were embedded in online shopping or service platforms. Yet companies in other application areas adopt this practice, too. Thus, nowadays we arrive at a big list of different finance-embedding enterprises including: 

  • E-Tailers
  • Online marketplaces
  • Comparison portals
  • BigTech companies
  • Logistic and transportation firms
  • Car manufacturers
  • Social media giants
  • And many more…

What all these diverse companies have in common is their aptitude for digitization. They already deliver on the tech front, mostly; the fin just has to follow. And even as most such companies only started to develop their financial service (or finserv) portfolio, they have vital advantages over competitors:

  • A widely known branding that many customers are familiar with from their everyday purchases.
  • A streamlined user journey, into which the financial services can be embedded easily.
  • An affinity towards innovation and digital transformation – many of them have already shaken up their own areas of operation and are well known for it. 

This mixture allows those new finserv players to quickly scale and activate a broad customer base when compared to cold-starting fintech companies. 

But what is Embedded Finance exactly? And should banks or fintech companies care? 

Examination underway… 

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A hand holding a smartphone over a point-of-sale device, symbolizing the choice of a Payment Service Provider

Payment Service Providers: How to Find One For Your Business

Let’s spill the beans: You are in the e-commerce business for profit. Not solely for the profit perhaps. But it’s clear that you want to make money. And that means you must figure out how to get paid for the goods and services you offer online. The “how” is crucial: The choice of the Payment Service Provider you want to trust with processing your transactions with customers will resonate in every nook and cranny of your day-to-day operations. If payment doesn’t work, you won’t sell anything.  

That’s true all the more if you are operating in multiple countries or across borders – preferences in Payment Service Providers (also called PSPs, Payment Solution Providers and sometimes Merchant Service Providers) fluctuate among nations and demographics. 

Here’s the good thing: Whatever your business requires, there will be a Payment Service Provider with the right capabilities. That friendly online encyclopedia counts around 900 different Payment Service Providers worldwide, 300 of which cater to Europe and North America. 

Now, you can see why the good thing is the bad thing at the same time. With so many options, how could you track down the best Payment Service Provider – the one that fits your business model and your market? 

That’s the challenge this article is here to help you with. In the following paragraphs we will provide: 

  • A short definition of Payment Service Providers
  • A compilation of decision points and criteria, which will help you determine what kind of payment your business needs
  • A plan B to fall back on when none of the options offered by a single Payment Service Provider appeals to you. 

Let’s see if we can narrow down your options. 

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A picture of the "chance" square on a Monopoly board, symbolizing the opportunities of re-built payment systems

Why You Should Change Your Legacy Payment System

You have a big problem with your payment system. 

At least that’s why we suppose you read this article. 

Maybe your business just started, but the payment system you integrated already struggles to meet customer expectations. Or you run an established platform, but your legacy system has grown into an inflexible and costly monolith of different providers.

If you work with a particular provider like PayPal or have integrated a variety of individual acquirers or PSPs, you cannot excess full control over your payment. For example, feature updates, security or transaction limits and fees lie outside your agency. 

However, perhaps your transaction system runs just fine, it is functional and flexible. But have you utilized its full potential yet? Have you thought about adding e-money wallet functionalities to enable P2P transactions, loyalty point systems or quick refunds? 

Whatever of the above is the case, this article is for you. It will discuss how you can turn your legacy system into a version that better suits your needs. By finding a proper payment solution provider and adding payment orchestration and e-wallet functionalities, you will be able to take back control. 

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An assemblage of violins, symbolizing payment orchestration

What Is Payment Orchestration (And Why Have It)?

Payment Orchestration describes the process of integrating and handling different payment service providers, acquirers and banks on a single, unified software layer. The Payment Orchestration software executes the complete payment processing, from validation to routing to settlement. 

The Payment Orchestration Layer / POL (or Payment Orchestration Platform / POP, respectively) bundles user and merchant accounts, acquirers, payment providers, fraud detection services, etc. to initiate, validate, route and process transactions involving those parties. In addition, it handles payment processes such as reconciliation, billing and settlement, payouts and reporting. 

Thus, a Payment Orchestration Layer acts as the entry point and core of a payment system. This approach differs tremendously from separately integrated PSPs. E-commerce platforms and online service providers don’t need to integrate every PSP and every acquirer separately. Instead, they can consume the unified API of the payment orchestration layer, benefiting from a reduced integration complexity. Moreover, a POL simplifies the maintenance and further development of the system for platform owners and for merchants. In the same vein, it eases the interaction with 3rd party service providers.

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