There can be no denying that marketplaces are all the rage. Our latest report – published in conjunction with RetailX – shows just how they have grown to dominate many European ecommerce markets.
Separate research out this week also indicates that they are now the preferred option for many shoppers in the UK and Germany as they look for choice, fast delivery and bargain prices in the run up to Christmas.
However, the influence of marketplaces on ecommerce could well yet extend even further than just shifting shopping behaviour, they could also be part of a powerful move to shake up other aspects of retail, not least payments.
The news this week that Amazon is to drop Visa Credit Cards as a payment option because it is charged too much to process these transactions on the face of it looks like Amazon throwing its weight about and looking to embarrass Visa into lowering its fees.
And that could be exactly what is happening, but also it could be that Amazon has a point. Research by retail payments advisory firm CMSPI, in conjunction with the British Retail Consortium (BRC) and its members, reveals the huge impact of fee changes, which have risen up to 475% in some cases.
The BRC in fact calculates that card charges like this are costing UK retailers £100,000 a day.
Now, much of this has been down to increased complexity in handling cross-border payments brought about by Brexit, however it is indicative of the fact that payments are expensive. The rise of ecommerce over the pandemic has seen many more consumers go online to shop than ever before – and each of those payments is now a nice little earner for the banks, card companies and payment processors.
Of course, someone has to pay for payments to be processed – retailers don’t want the cost of having to run their own payment departments to do this – but have costs run out of control? Should, with so many more transactions running through the system, card companies and processors be cutting prices?
Siamac Rezaiezadeh, Director of Product Marketing at leading fintech in bank-to-bank payments GoCardless, believes that Amazon’s decision is the first step towards removing cards altogether. He says: “Amazon’s decision marks a turning point in the modern economy; it’s the moment retailers decided they’ve had enough of being stung by the high fees charged by the card industry, simply for the privilege of collecting a payment. This move will prompt other merchants to explore alternative payment options and represents a tailwind for the adoption of newer methods.”
He would say that, he wants a cardless, open-banking world, but he has a point. Amazon’s move, while likely to just lead to Visa lowering its costs, could also be the start of merchants fighting back, looking for more efficient ways of taking payments.
Direct carrier billing – where charges are put on the mobile phone bill of the shopper – direct bank transfers and payment schemes such as those run by Klarna all offer some different ways to look at payments. Could it be that, should Amazon’s move go all the way to a full ban on Visa on its platform, that we may see other merchants start to look more seriously at different ways to take payments?