Carmen Caballero manages digital payments for Nespresso across 39 markets and channels, including e-commerce, retail and customer service.
In the course of a discussion with Willem Wellinghoff, Chief Compliance Officer at Ecommpay, she explained how Nestlé determines which local payment method to prioritise.
“We normally take data from three different sources. One would be our payment processor, the one that we have chosen in that market and another would be global payment reports that the processors normally do every year. The third source of data is the local market.”
The next consideration is pricing – the business case needs to be positive and the company takes into account the lifetime value of a consumer if there is a specific local method that is likely to provide exposure to a different customer base.
According to Caballero, payment partners have to be like an extension of the in-house team with the local knowledge to succeed in a particular market and the ability to talk to issuers.
“If you couldn’t find just one partner that could process in all the countries that we needed to process payments in, you start building all those capabilities in-house. Now there are all these fantastic orchestrators and if I was starting over in a company that was going to expand geographically, I would seriously consider payments orchestration if time to market was of the essence.”
One of the key considerations for any international business is when (or if) to leverage these capabilities within their existing payment infrastructure.
“You might consider an orchestrator for long-tail markets that are very complex and where you need to offer many different local payment methods. Maybe with just one provider you cannot offer in ten or 15 markets as you will need to do so many different integrations, so I would consider an orchestrator for that part.”
Caballero acknowledges that many large enterprises will have probably already built that orchestration layer in-house. “However, if time to market is a priority I would definitely go with an orchestrator. By the time that you build one of these platforms, you could easily have spent at least a year.”
The discussion also covered issues arising from variations in regulation and scheme mandates from country to country, specifically around 3D Secure or 3DS.
Caballero observed that when Nestlé started doing 3DS the UK was not an issue, but that other European markets were a concern in terms of conversion rates. The dilemma facing any company in this scenario is trying to balance the merits of providing high value customers with a frictionless experience against the potential liability.
Nestlé’s approach was to use 3D Secure exemptions (which allow merchants to bypass the additional strong customer authentication step for certain transactions) as much as possible.
“For example, this year we had to change something in France because the French issuers decided they didn’t want to send all the 3D Secure data in the authorisation request, but rather in the authentication request.”
In Japan, 3D Secure became mandatory for all e-commerce businesses by the end of March. However, the exemption process in that market works differently so companies need to work with their payments processor to get added onto a whitelist and fill in a checklist stating that they are filtering fraudulent transactions.
