June 22, 2023

Top 5 Challenges for Payment Providers in 2023

Payment providers look to respond to significant industry transformations while continuing to provide a number of benefits to both online customers and e-commerce businesses.

# Insights

Online payment systems provide a number of benefits to both online customers and e-commerce businesses. Ultimately, they help to create a seamless payment process for customers while allowing merchants to service global customers and accept online payments across multiple currencies.

In recent times, the payment processing landscape has undergone significant transformations driven by technological advancements and changing consumer expectations. The current payment processing environment is incredibly dynamic, with new trends and innovations continuing to emerge, shaping the conditions for online payment service providers. Recent developments include the adoption of blockchain technology, the integration of artificial intelligence in fraud prevention, the rise in popularity of next-gen payment methods, like digital wallets and the exploration of central bank digital currencies (CBDCs).

With the situation constantly changing, let's take a deep dive into the five main challenges currently facing online payment processing services.

1. Security and fraud prevention

As online payment services become increasingly popular, so does the risk of security breaches and fraudulent online transactions. To combat this, payment providers and payment processors will need to continually invest in improving their security measures and fraud prevention technologies to ensure that their platforms are secure and reliable. From verifying customer information to detecting fraudulent users and activity, it's essential for payment gateway providers to constantly evolve as the threat landscape changes.

2. Regulatory compliance

Payment providers operate in a heavily regulated industry, with numerous laws and regulations governing their operations. Compliance with these regulations can be time-consuming and costly, but failure to comply can result in significant penalties, not to mention the potential damage to their reputation if they get caught out. Any business that processes payment information, including payment providers and payment gateways, should be PCI-compliant and follow the Payment Card Industry Data Security Standard (PCI DSS).

3. Competition from non-traditional players

The rise of fintech startups and big tech companies has disrupted the traditional payments landscape. Payment providers will need to adapt to the changing market dynamics and compete with these new players who continue to offer innovative products and services.

Further to this, new technologies, like blockchain, artificial intelligence and biometrics, are changing the way providers process transactions. Payment providers need to stay up-to-date with these emerging technologies and leverage them to enhance their products and services.

4. Consumer expectations

Consumers today demand fast, convenient and seamless payment processing solutions. Payment providers must offer user-friendly interfaces, intuitive checkout processes and a range of payment options to keep up with these changing expectations and continue to meet these demands.

In particular, manual processes, like identity verification during the customer onboarding process, can lead to customer drop-off. However, with modern identity solutions, payment providers can optimise their onboarding experience, helping to increase revenue, reduce costs and grow their customer base. Using advanced technology, like machine learning, artificial intelligence and biometrics can help to automate the customer identity verification process, leading to a better, more streamlined user experience.

5. International expansion

With the growth of e-commerce and cross-border transactions, payment providers will need to expand their operations globally to meet the needs of customers around the world. However, global expansion brings its own set of challenges, including regulatory compliance, cultural differences and currency conversion, not to mention the operational complexity that comes with relying on multiple identity verification providers.

In order to accept global payments, many online payment processing services have to use several different identity verification vendors when looking to provide payment solutions in other countries or international markets. These verification vendors often use different APIs or integrations which can cause operational complexity for online payment processing services, making it challenging to scale globally. However, Data Zoo's single, global integration makes it simple to launch into new countries with coverage of over one hundred countries. Plus, you can easily add more features as you grow without having to undertake additional development work.

While payment providers are currently facing a range of challenges in today's rapidly changing digital economy, those that are able to innovate and adapt to the changing landscape will be well-positioned for success in the years ahead.

At Data Zoo, we help payment providers to optimise their customer verification process while keeping customer data safe and secure. From leveraging real-time verification to minimising user error and automating error handling, get in touch to learn more about what we can do to help you stay ahead of the pack.

Data Zoo makes it easy to onboard and verify customers quickly

Get in touch to see what Data Zoo can do for you.