Why the Details Matter + The Big Transaction

Payments is a unique competency that every company needs to develop in order to grow revenue, deliver good service, and keep customers happy—especially when selling online. It is one of the most critical touch points which allow customers to fulfill their intent to buy your product or service and establish a relationship with you or any company. Payments is unique because doing it effectively means that you have to execute well on both technical decisions—what partners, APIs, and payment methods to use—as well as commercial decisions like how to price, what currencies to offer, what payment methods to offer, and what questions to ask of buyers. That’s why we’re excited to participate in a conference dedicated to payments engineering—The Big Transaction, November 4-5th, 2021—and to learn from others across the industry.

If you’re an engineer, the details matter. If you’re a payments engineer, those details matter even more: what you implement in your payments stack can have a huge impact on how successful your business is and how strong of a relationship you can build with your customers. Payments get implemented by setting a large number of fields on each request. Each of those fields can be important; some are straightforward and some come with complex usage rules.

At The Big Transaction, Pagos is hosting a panel of experts to dive into the details on topics throughout the payments lifecycle. One of my favorites is an often overlooked one: adding multi-currency to your payments experience. This can have an impact on your approval rates and your revenue. Consider what 10-20% more in sales could mean to you.

Multi-currency is the process of making more currencies available to your buyers while continuing to take settlement in your preferred operating currency. For example, let’s say you are selling in the US, Australia, and the UK. Offering more currencies would mean that for your buyers from Australia and the United Kingdom you’d offer Australian Dollars and British Pounds, respectively. This doesn’t mean you need to actually take payment in those currencies, only that your buyers can pay in them. This way your customers know the exact price they’re paying instead of trying to figure out the conversion rate from your currency to theirs. In short, this is both an experience change and a payment processing change—setting a new value on a transaction message, and making changes to your UI. 

There is no shortage of posts and guides that describe both how, and perhaps more importantly, why you want to do this if you are selling in more than one country. To take one example, BigCommerce customers using a variety of payment processors saw increases of 20% in their cross border sales. And companies as varied as FastSpring and Fiserv share how adding the ability for multiple currencies can address common “conversion” killers: make non-local buyers more comfortable (so much easier to do the mental math of buying in your own currency) and reduce their bank fees (many banks charge customers for any transactions that aren’t in their local currency.)

Looking at your payments data can help surface the opportunity and track it when you make changes. When you are selling in more than one country it is easy to look at only the top-level approval rate for your business. If you are doing well it may look something like this:

For a business selling globally, this isn’t too bad—above 80% when buyers from multiple countries are involved is quite good. 

Now let’s take a look at Average Order Value and Turnover to see if it is growing well.

Also not bad and with a positive trend. But these singular metrics, only viewed in aggregate, are hiding a lot of information that can be really valuable in optimizing and fine-tuning your business. It’s worth digging into the details of how this business improved its turnover, average order value, and approval rate. I’m going to work backwards to illustrate how details can drive optimization.

First, if you aren’t monitoring where your buyers are coming from, you should do that. Here’s an example of where the buyers are located for this hypothetical business:

We can see from the chart above that buyers—based on their payment history—are shopping on our site from the United States, the United Kingdom, and Australia. The associated weekly approval rates are shown for each country, and are ~90% in the US, 81% in the UK and 78% in Australia.    

What share of the total share of transactions does each country account for? Let’s take a look: 

Once we start to break things down at this level, we see that each country is contributing about 1/3rd of the total volume, and that this has remained consistent over the last week.

Given that the approval rate has improved—80% on 10/12 to 83% on 10/13, or a 3 percentage point increase—let’s look at how these countries performed over time and which are best performing (from an approval rate perspective).

When looking at each country’s approval rate, we can see that approval rate performance improved in Australia from 73% on 12/October to ~80% on 18/October. In the UK we see an improvement from 78% to 82% over the same time frame. The US approval rate looks pretty much unchanged. What did we do for our Australian and UK buyers that had a positive impact?

As you might have guessed by the theme of this post, we added local currency processing to address a few of the key blockers to increasing approved transactions: present pricing in the buyers’ currency (Australian Dollar and British Pound in this case), eliminate or reduce FX fees, and transact in the local currency so that the issuers are more comfortable with the transaction. 

Here’s what such a change might look like in the details. This hypothetical merchant has added the two currencies and we see that the number of transactions has grown from when it was introduced on October 14th.    

Not only that, it looks like the latest approval rate data for each currency is stable when placed side by side, which is a great sign that things aren’t really a fluke but that our processing setup at both the country level and the currency level is working.

In both of these cases this means that nearly 60% of the volume (two-thirds of the total is UK and Australian buyers) has improved over the past 7 days, while the volume has also increased.   This is what a “20% increase in cross-border volume” can look like for your business. Are you able to track it?

While it’s hard to know whether the 5% - 7% points improvement was due only to currencies being added, the point here is that the details in your payments data can help lead the way in both implementing changes and tracking them over time.

In this example we take our top line metrics and break it down by country and currency after the fact, but you can get started by looking at these details to see if such improvements are possible and what they might mean to your business. So many factors influence buyer behavior and approval rates and are important sources of insight; looking at currency, country, and transaction flags is just the beginning.

I’m excited to dig further into the details of payments topics like this and more with a panel of experts at The Big Transaction on November 5th. Join us and other payments engineers in a two day single-stream conference online.