2 PAYMENT METHOD PROFILES: DIGITAL WALLETS
Supply Chain Structure One of the simplest ways for a merchant to enable digital wallets is to onboard the payment type through their existing acquirer relationships. Yet, many enterprise businesses have the option to enable digital wallets via a direct integration with the wallet provider’s API. This solution works well for merchants who have the resource and interest in bespoke integrations but is often more labor and time intensive than integrating via an existing acquiring partner, which can be simple and improve speed-to-market. The acquirer integration route will still involve mapping out the user experience and investing the tech and engineering resources to update the checkout page or POS environment. For direct integration, partners will often have to 1) conduct an engineering review across both business teams; 2) align on which data will be shared between parties (also part of contracting); and 3) discuss implementation timelines. There are trade-offs with each type of integration, but for many very large merchants, having a direct business relationship with digital wallet providers to negotiate on cost, liability, and service level performance may be important. When a merchant turns on acceptance with a digital wallet provider, they agree to accept that customer- facing brand in their checkout environment. The wallet provider manages their own supply chain relationships for acquiring services and with industry providers, such as banks and card networks who support funding methods stored inside the wallet. Merchant Cost Considerations Digital wallet merchant fees generally depend on how the merchant integrates with the digital wallet solution. If the merchant enables a payment solution via their acquirer they will likely pay per transaction processor fees along with any wallet transaction fees. If a merchant negotiates directly with a wallet provider on acceptance, they may negotiate directly on pricing and acceptance terms, including liability framework. For in-store payments, the type of point-of-sale experience a merchant deploys will impact cost. A merchant could be updating existing POS equipment or potentially be enabling a new customer experience altogether (i.e., QR code scan, palm scan, etc.) that may require new hardware, software, testing, and deployment. Lastly, retention of protected debit routing optionality is an important consideration for debit cards in wallet – as previously discussed – but the disintermediation of those back up payment methods from a direct payment on the website could result in higher costs due to bundled pricing for the merchant with digital wallet partner as compared to the opportunity to access lower cost debit networks on an individual card-by-card basis.
100
Powered by FlippingBook