EXCLUSIVE: “Online Payments: A Never-Ending Story” – Nexi in ‘The Fintech Magazine’

The next chapter in the development of e-commerce is being written by system operators, independent software vendors, design agencies and payment specialists such as Nexi, working in partnership to create the best online experience for merchants and customers. We brought together just some of them to look at how the story is unfolding in the DACH region

When Europe’s bookshops pulled down the shutters against the Covid pandemic, a new chapter was forced upon German arthouse publisher Taschen.

As 2020 began, the firm sold 80 per cent of its titles in physical stores, and 20 per cent online. By the time the disease had subsided, the split was 50-50. Customer behaviours, changed by lockdowns that had driven a surge in e-commerce, were by now embedded. And it was clear to the business that, as a result, it desperately needed a more capable content management system, online shop system, and more effective payment methods, says Taschen’s digital and online sales chief Gaëlle Mehanna.

“During the pandemic, we had a massive online boom,” she explains. “We examined customer behaviour, looking at heat maps, user journeys online, drop-off points and landing page conversion rates.

“We noticed what was really important was the checkout experience. People want it to be frictionless, fast and secure. We sell books ranging in price from €15 to €50,000 and we need payment methods that cater to both ends. While credit card payments work for a €50 transaction, someone paying higher amounts wants a bank transfer, a direct debit or the ability to pay in instalments. And different markets have different preferred payment methods.”

In late 2022, Taschen decided it needed to supercharge its e-commerce development to create an integrated e-com, in-store and telephone order business, currently available in five languages

“Our new system has allowed us to plug in Nexi’s Checkout, which means we can offer additional payment methods,” says Mehanna. Taschen quickly saw a 20 per cent lift in year-on-year revenue growth, six per higher average order value and 12 per cent uplift in total orders.

The Taschen story is one typical for established firms in the Germany, Austria and Switzerland (DACH) region where partnerships between technology providers are the solution to meeting niche customer needs. Alongside Mehanna we spoke to leaders from payment provider Nexi Group, e-commerce platform Shopware, front end web designer Makaira and digital marketing agency Brandpfeil to discuss the current payments picture.

While the adoption of e-commerce has exploded, so too has the range of payment options that can be bolted onto an online checkout – which can be to the detriment of sales success. Too much choice can baffle the shopper and complicate a web page and online checkout, says Nexi head of product success Jamal Febo.

“The German market is very fragmented in terms of payment methods and there is an oversupply of options. Does a retailer need all of them? That’s a big no”

Jamal Febo, Nexi

He argues that adding such complexity is like waiting in a long queue at a physical shop till, raising the same risk that shoppers will simply give up and go elsewhere.

Febo says: “Waiting is annoying for customers. If the checkout process is complex, with lots of questions being asked and too many options being made available, customers may switch from being driven by emotion and adopt a rational position. That could mean they cancel and leave the checkout.”

The assertion is backed up by research.

Nexi, which bills itself as ‘The European Paytech’ due to its reach across the continent, publishes annual e-commerce reports, based on weekly surveys of European shoppers, and it repeatedly finds that convenience is by far the number one reason consumers shop online in the first place. To that end, Febo says online checkouts need to provide the payment options that customers want, and what is popular varies from region to region. Furthermore, an online retailer should consider how particular payments work in terms of technical integration, how fees are charged, and their accounting and log-in processes.

“In the German market, you will find that it is very fragmented in terms of payment methods and there is an oversupply of options,” Febo says. “Does a retailer need all of them? That’s a big no. Retailers should ensure they prioritise simplicity when managing payment methods. For example, we can offer several payment methods within one contract and that can simplify a client’s accounting process.”

Shopping online is for everyone

Nexi’s recently published e-commerce reports for Germany and Austria reveal annual e-commerce transaction value growth of 10 per cent and 13 per cent respectively in 2023.

In both countries, 89 per cent of adults aged from 18 to 79 made web purchases each month and older people were almost as prolific online as young people – for example 92 per cent of German 18 to 29-year-olds were internet shoppers compared to 87 per cent of people aged from 65 to 79.

“We examined customer behaviour, looking at heat maps, user journeys online, drop-off points and landing page conversion rates. What was really important was the checkout experience “

Gaëlle Mehanna, Taschen

What people of both countries bought online was similar, too – Austria’s most popular physical-item purchases were clothes, electrical appliances and groceries, while in Germany the top three were clothes, appliances and shoes. But, despite their shared language and culture, online payment preferences differ markedly between DACH countries, which underlines the need for a tailored approach by merchants.

In Germany, 47 per cent of people used e-wallets (PayPal is especially popular), followed by invoice (37 per cent), credit cards (26 per cent), direct debit (25 per cent), bank transfer (19 per cent), debit card (13 per cent), mobile payment wallets (11 per cent) and instalments (nine per cent).

In Austria, credit cards were king, at 40 per cent, followed by invoice (35 per cent), e-wallets (33 per cent), bank transfer (27 per cent), debit card (21 per cent), direct debit (18 per cent), mobile payment wallet (11 per cent) and instalments six per cent.

Nexi’s 2022 report for Switzerland shows in that year 60 per cent of online transactions involved a credit card, followed by invoices at 42 per cent and e-wallets at 29 per cent.

Power of partnerships

Looking further afield in Europe, mobile payment options are popular in Nordic countries, while Croatians favour credit and debit cards and the Greeks still cling to cash. Such complexity across the European Economic Area means partnerships between software providers are vital to give the necessary breadth in payment solutions for merchants selling in more than one country

On its website, Nexi makes it plain that it aims to join forces with ‘e-commerce and digital agencies, shop system providers, developers or associations’ to grow revenue from its payment solutions. The firm works closely with German e-commerce platform provider Shopware, for example, which differentiates itself by being open and not mandating what payment systems its merchants select.

Shopware’s EMEA general manager Alexey Pronin says Nexi’s presence in multiple geographies allows his business to be a ‘one-stop shop’ for merchants that want to grow beyond the DACH region.

“Payment methods should be matched to the customer”

Jan Meissner, Brandpfeil

“E-commerce is not new anymore and businesses clearly need to differentiate themselves,” he explains. “Germany is a developed market and what we see among our customer base is that many of them are looking to expand into new areas.

“This is why at Shopware we are also expanding internationally as a business, which makes it important to identify partners such as Nexi in the payment space.

“Partnerships are definitely the multiplier of success and speed when it comes to entering new markets. In the modern e-commerce world, you cannot be a one-stop shop, producing all the solutions your merchants need on your own.

“You need to collaborate with other parties that are niche and experts in a particular dimension. Being open to partnerships is one of our core principles and we have more than 1,600 in different geographies and categories.”

Shopware, based in the German town of Schoppingen, near the Dutch border, provides open-source tools and powers online shopping for around 100,000 mid-sized and large businesses – many of them established firms that have had to navigate a switch to digital sales.

“Partnerships are definitely the multiplier of success and speed when it comes to entering new markets”

Alexey Pronin, Shopware

It is particularly focussed on the mid-market segment which, it argues, is ripe for development since many of its e-commerce platform rivals have moved upmarket to develop enterprise-class solutions for big firms. Meanwhile, platforms such as Shopify cater for new shops and small businesses.

Alongside continued growth in B2C retail, Pronin says it’s witnessing a strong growth in online B2B commerce and the development of digital systems to make dealmaking more efficient – such as digital sales rooms. A digital sales room is a secure online location where sales reps and buyers can converse and access the content they need to trade. They are typically organised into microsites and provide access to the technical information needed by buyers, plus access to stakeholders via communication systems.

Pronin says: “The digital sales room means B2B sellers don’t have to travel so regularly to visit customers. It can be done online and, as a result, the sales cycle is run in the most efficient way. Payments is playing a substantial role in the development of sales rooms. Enabling this shift in B2B towards greater efficiency is an important angle for us and providing modern payment technologies is part of it.”

A pick-and-mix approach

The Shopware e-commerce platform is ‘headless’ – i.e. the front and back ends are decoupled so one can run without the other. That also means a merchant could specify a Shopware back end with, for instance, a front-end shop designed by a specialist provider such as Mannheim-based Makaira, then plug in a payments system powered by Nexi.

Publisher Taschen specified a Makaira customer management system during its recent web shop revamp.

Makaira business development manager Lars Denzer echoes Febo’s assertion that the payment options provided by merchants must suit what is popular in a particular country. And he stresses the need for speed.

“An online shop needs a lot of performance – the first page should load in less than one second, ideally within 0.6 of a second,” he says. “A title page must stand out, and products listed within subpages should be well described and logically organised.

“It’s good to include high-quality pictures, clearly display availability, price, delivery times and provide information about payment methods.”

Moving onto the checkout experience, Denzer underlines the growing importance of so-called turbo checkouts used by e-commerce giants such as Amazon and eBay, which facilitate one-click purchases.

“An online shop needs a lot of performance – the first page should load in less than one second, ideally within 0.6 of a second”

Lars Denzer, Makaira

He says: “Because of the integration of Nexi into our system at Makaira, our sellers can use the Nexi turbo checkout. The checkout can be offered directly below the product on the page. Obviously, it’s fast, the customer is done in one click and it increases conversion rates.”

Jan Meissner of Hamburg online marketing agency Brandpfeil says that once a customer has reached the payment stage, the biggest part of their online journey should be over and a site must provide a ‘technically faultless, high-performance solution which will not lead to a payment cancellation caused by technical issues’.

He explains: “Payment methods should be matched to the customer with the necessary support provided. It should be our job as a marketing agency to stay abreast of development by payment providers so we can always offer advice that is up to date.”

Denzer adds that during his 26-year career in e-commerce he has witnessed major changes each decade, and the most recent seismic shift has centred around social media. He says: “At first we had online shop software, then marketplaces, then search engine optimisation and search engine advertising – technically, everything was built on the previous innovation.

“In the last two to three years, though, sellers have been able to start from the ground up and strongly establish themselves using social media. Instagram and TikTok are tools that can provide significant reach for sellers but many bigger retailers have not understood this – smaller and newer retailers are more familiar with the medium.”

Returning to Mehanna at Taschen, the bookseller knows it must evolve its digital services to meet customer expectations.

“As publishers, it’s important that customers have a tactile experience with a book, which we can’t offer them online,” she explains. “But we can offer them content that makes them feel close to the book. Meanwhile, the key to our checkout is making it as fast as possible. With the rise of Apple Pay, PayPal Express, Google Pay, it’s really become about one-click payments.

“Also we must recognise that different markets have different preferred payment methods. We must learn about these different behaviours and make sure we have the right payment methods to offer.”

This article was published in The Fintech Magazine Issue 32, Page 28-30