Simplifying Payment Processing in a Shifting Global Economy

Adding the ability to process payments on your site has become incredibly easy. However, security, compliance, transaction fees, and regional and platform regulations can be complicated. Getting something wrong can result in significant costs and penalties, such as development time, processing fees, or legal penalties.

In this session, speakers provide insight into the world of payments, including tips for securely transacting and avoiding compliance and regulatory issues, tools for expanding to new regions, and options for selling products that may be forbidden by your financial institution or commerce platform.

Speakers: 

• Sajal Agrawal, VP, Product at WP Engine
• Daniel Chatelain, Founder & Managing Director at BayPay Forum
• Enid Jimenez, Director, Engineering at WP Engine

Session Slides:

Transcript: 

SAJAL AGRAWAL: Welcome to our DE{CODE} session Simplifying Payment Processing in a Shifting Global Economy. My name is Sajal Agrawal, and I’m VP of Product for e-commerce at WP Engine.

Payment is core to any e-commerce site and while checkout and payments may seem simple for consumers, behind the scenes our merchants and agencies are dealing with a lot of complexity.

Our goal with this session is to provide an overview of the e-commerce market, the tools for improving online checkout and experiences, how to reduce transaction fees and expand into new regions. I will first set a bit of context by providing an overview of WP Engine’s e-commerce solutions before handing it over to Daniel Chatelain to talk about the e-commerce landscape, followed by Enid Jimenez to talk about WP Engine’s checkout and payment solutions.

As always, during the session, feel free to comment in the chat.

WP Engine started providing e-commerce solutions two years ago and has grown to become one of the select few to be recommended by WooCommerce. Our vision is to make WooCommerce– sorry, to make WordPress a great place to manage your content while running an e-commerce store. But the truth is that currently, it’s not. Customers continue to experience pain points with WooCommerce, including optimizing shopping plugins and themes, scaling performance of the order’s database as your businesses grow, PCI compliance, and the cost-effectiveness for your clients.

We hear customers saying that they would love to see us make life easier with WooCommerce just like we do for WordPress. So our first objective is to make Woo better by being the most effective and efficient solution for customers to build and maintain WooCommerce stores on WordPress.

We also hear customers saying that they are looking into Headless because their clients are asking for it. So our second objective is to be the leading storefront platform, flexible and modern, connecting WordPress with the most relevant commerce engines, whether it be WooCommerce or commerce engines like BigCommerce or Shopify.

Our third objective is to provide best of breed commerce solutions that are both easy to build and maintain so that our customers can focus on delivering the most engaging digital storefronts.

With features like Smart Plugin Manager, Genesis Pro, EverCache for Woo, Live Cart, Instant Store Search, and now payments with Stripe Connect, WP Engine e-commerce speeds up development and simplifies maintenance for customers with a platform that improves store performance, increases conversions, and gives you more time to focus on your business.

Today, we are deep diving into payments. As you’ll hear, while payments are easy for consumers, they are hard for merchants as security, compliance, transaction fees, and regional and platform regulations can be complicated. Getting something wrong can result in significant costs and penalties, such as development time, processing fees, or even legal penalties. In this session, we’ll provide insight into the world of payments and learn more about WP Engine’s new payment feature called Stripe Connect.

I’ll turn it over to Daniel to give us a window into the world of payments now.

DANIEL CHATELAIN: Thank you, Sajal, and thank you WP Engine for your invitation to speak today about commerce and payments.

My name is Daniel Chatelain. I’m based out of San Francisco. I am a serial entrepreneur, and I have worked on many aspects of payments, from acquiring, card issuance, and fraud. I am mentoring at Plug and Play 500 startups and Berkeley venture capital. I am also doing consulting to help companies manage innovation and create new products or disruptive strategies.

Talking about innovation, how has it been on your side, setting up new stores for your customers in the last three years? I’m sure you had a lot of success with COVID pushing every shop to open an online store.

Well, I have some good news for you. The trend is far from ending and the needs will continue to grow as competition intensifies. Having the best and fastest user experience will make a huge difference as competitor stores are just a click away.

After this short presentation, I want you to get more opportunities to succeed in your business. So to give you some perspective, here are a few numbers for you.

What you see on this chart is the global e-commerce volume. The data comes from the investment division of Credit Suisse. As you can see, the market is growing nicely every year, between 12% and 14%. There is plenty of business to be done in this area, from new stores that have to be created or existing stores that need to be upgraded to improve the conversion rates or increase sales.

If you haven’t looked into it yet, try to understand composable commerce, which represents a huge opportunity for developers. I think there is a session during this conference about it.

To realize this volume, you need to accept payments. When the internet started, it was simpler because consumers had a few choices. You could use only credit or debit cards. To make it more secure, Visa started developing a secure protocol. But it’s really with Verisign that was able to issue certificates and show that a website was secure and that you were communicating with a real owner of the website that people started giving their credit card numbers over the internet.

In parallel, PayPal helped merchants on eBay get paid because traditional payment providers weren’t able to serve these new categories of merchants. PayPal made it easier and provided a sense of security. 25 years later, consumers payments have evolved and you have many more choices today.

Merchants today are faced with many challenges, but one of them is particularly important. If you don’t propose the right payment method to the right customer, you lose the sale. Simple.

I’m sure you have all seen the rise of BNPL, or Buy Now Pay Later, that was pioneered by companies like Affirm, SoFi, or Afterpay, now part of Block. If you have a high-priced ticket item and are not proposing a BNPL option, you are certainly taking a risk on your conversion rate.

I don’t know if you are aware, but we have today over 43 different payment methods available in the US only, and over 240 worldwide. For the US market, credit and debit card are still the dominant ways to pay, but you can see more and more wallets like Apple Pay, Google Wallet, Venmo, Square Cash.

Some businesses may have to rely on cash, even online, to sell their goods. If you are in the CBD market, many card acquirers will reject the transaction as is not yet legal at the federal level.

Start integrating these different payment methods and you will see your revenue grow if you are a merchant, or your customers thanking you if you are a developer or an agency. In short, you have to understand what are the right payment methods for the potential customers of your merchants. That will depend on their business or their target market.

Another aspect of commerce is compliance. You have many requirements on this front, like GDPR, General Data Protection Regulation, in Europe, or CCPA, California Consumer Privacy Act, in California. But I will stick to payment compliance and PCI DSS in particular.

There is a lot of misunderstanding around PCI compliance. Let me get it straight and simple. It only applies to the card data information that is provided by the customer to the payment provider.

You don’t want to store any of this data on your system or your system will be in scope and you will have to audit every part of your system that touches or stores this card data. Quick example, if you accept payments by email, your whole email system is in scope, so auditing this can be very, very expensive.

In short, again, you should rely on your payment provider to manipulate this type of data so they are in scope and not you or your merchant. PCI applies to card payment and not the other payment methods, like Venmo, PayPal, etc.

So coming back to our numbers, nice growth in general but what is not this obvious to capture in the growth of e-commerce is the growth rate of the cross-border volume. When you have an online presence, if you have the right products, anyone can buy from you if you allow it. You can see this trend clearly when we look at this chart again. The growth rate of cross-border payment is above 20% per year. It’s growing 25% to 60% faster than the average growth of the e-commerce market.

Now, moving to international trade is not for everyone. You will see some sites that don’t accept to sell to international customers. I will give you an example between two regions, Europe and the US. A merchant in Europe is almost guaranteed to receive the customer payment if he or she uses an additional layer of security called 3-D Secure.

With 3-D Secure, the consumer receives an additional request to enter the code that is provided by the card issuer at the time of the transaction that is available only for this transaction. Entering the right code, we let the issuer know that the transaction is originated by the right cardholder and that they can accept the payment. The merchant at this stage will be paid by the bank. The liability shifted from the merchant to the bank because of 3-D Secure.

We don’t have 3-D Secure in the US, or, to be more precise, it is here, but there is no incentive for merchants as there is no liability shift if the merchant wanted to use 3-D Secure, which is not implemented, by the way, by every issuer.

So if we take our previous example of a European merchant, the transaction can be seen as approved, but there is no guarantee that the merchant will be paid because, in this case, the liability is on the merchant, not the bank. As you can imagine, what seems like the same payment method has very different attributes depending on where the card is being issued. This is just an example of what we can see on this chart, that payment methods depend heavily on which country or region the purchase is coming from.

Now that you have a better understanding of why integrating payment method is very important for the success of an e-commerce strategy, I would like to ask a few questions to Enid Jimenez, who is Director of Engineering at WP Engine. Maybe, Enid, you can introduce yourself so people know what you are working on.

ENID JIMENEZ: Thank you for having me, Daniel. I’m Enid, Director of Engineering for e-commerce solutions. I’m delighted to have the opportunity to talk today about the things that we’re doing in the checkout and payment fronts.

DANIEL CHATELAIN: Thank you, Enid. So during my presentation, I introduced a certain number of challenges associated with the evolution of e-commerce. Maybe you can help me and all the developers and agencies connected today understand what WP Engine is doing to make life easier for them.

ENID JIMENEZ: One of the things that I think it’s super important for everybody to understand is that the ultimate goal of an online store is to transact. And for every sale, there’s always a checkout and a form of payment behind it. So checkout and payments are must-haves for every single store and the experience must be performant, reliable, secure, flexible, and customizable.

We have found out that the process to set up and manage these for multiple providers is complex. You have to work with multiple vendors, plugins, multiple APIs, keys, credentials. You’re going to have different business relationships that you need to manage. Some providers are going to have limitations that you need to work around. And like you said, Daniel, there’s going to be local regulations to comply with.

We have talked to developers and have learned from research that the developers need to simplify the merchant engagement during the build phase. They also don’t want to have to have the credentials to create a client account with a payment provider and the developers need an easy mechanism to test the transactions before launching a store.

The merchants are demanding multiple payment options. So near term what we’re doing is remove the friction of setting up Stripe, which is the most widely used payment provider, while making the onboarding process more secure and making testing simple. Our goal is to speed up building so that stores can transact sooner.

We’re driving towards releasing Stripe Connect very, very soon, and I invite anyone interested in learning more to email paymentsbeta@wpengine.com. When we introduce Stripe Connect very soon, the developers will have the ability to invite the merchants to set up their own Stripe accounts or to connect an existing account without having to exchange credentials or API keys. So it’s going to be more secure.

The developers are also going to have the ability to test payments functionality before a store goes live. And when they’re ready to go live, they’re going to have a simple toggle to turn off test mode.

And the merchants are going to be able to log in into their Stripe dashboard to view and manage the transactions and while they’re doing that, none of this operational activity affects the store performance.

When we look at the long-term future, we will provide more payment options with simplicity, and we aim to increase conversions. Merchants and buyers are demanding multiple payment options and you talked about that. And as we noted, it gets complex very, very quick and it gets expensive to build.

So we’re going to make the build and the setup process for multiple providers frictionless, and we’re also going to provide new functionality by having the ability to automatically route rejected transactions to a provider who’s able to complete them. So in summary, this is what we’re doing. Very, very soon we’re going to be releasing Stripe Connect, and in the future we’re going to be focused on providing options with simplicity.

DANIEL CHATELAIN: Thank you, Enid. So I’m very glad to hear that you’re taking payments very seriously. So we talked about cross-border payments. Do you have any plans to help developers and agencies in this area?

ENID JIMENEZ: Yes, absolutely. And like you said, I think it’s super important that everybody understands that not all regions are the same. Some are going to have certain players, other are going to have specific regulations that you need to comply with.

Let me give you a couple of examples. Ideal is a payment system that is used in the Netherlands for online banking. They claim more than 54% of the Dutch online payments. Therefore, the buyers in the Dutch market have expectations around Ideal.

You might have local regulations to comply with. In India, for example, if you’re using a unified payment interface, you must use a local bank. Therefore, like you noted earlier, the ability to integrate with ease, best of breed providers for specific regions is super important. And merchants need to present the right payment method to consumers to increase their probability of the transaction completing.

So we’re going to make this simple. Our goal in the future is to provide options with simplicity.

DANIEL CHATELAIN: Very good. So not only domestic payments, but cross-border payments as well. So life will be easier for developers.

My third question is about compliance. What are you doing to limit or even eliminate the need for merchants to be PCI compliant and get audited with all the costs associated with an audit?

ENID JIMENEZ: Well, security matters, and it’s something that we constantly keep on top of mind. Like we’ve talked about a little bit earlier, for merchants, keeping that buyer’s payment information is paramount. You’ve got to keep that information secure.

We know credit card companies are going to levy stiff fines for merchants who are not compliant with the PCI regulations. Reputations can be severely damaged. A data breach can lead to a catastrophic loss of sales, claims, and all kinds of headaches.

So we have found out that many hosts are not compliant, and many times the merchants don’t know if they’re complying or not. So we will focus on reducing the noncompliance risk and the headaches by providing a simple but highly customizable PCI compliant hosted checkout solution. It will be one secure and customizable experience for various payment providers.

I want to note that not only are we paying attention to ease of build and risk reduction, but we’re also paying attention to the ability to customize the checkout experience. And some of you might be wondering, well, why is that? Well, it is important because the merchants need that ability to customize that experience to engage the buyers and ultimately drive them to transact.

DANIEL CHATELAIN: OK, very good. So the merchant will save a lot of money on one side and then they will be more performant on the other. So that’s very good.

So we know that if an online store is not responding right away, the merchant has a great chance of losing this customer. Do you have any solution to prevent that from happening?

ENID JIMENEZ: Yeah, that’s a great question. But let me give you some interesting stats. I don’t know if people here know, but about 70% to 80% of the online shopping carts are abandoned. Those are purchases that are not completing, and that’s big money that is being left on the table.

There are many reasons for cart abandonment, but there’s one that will always stands out, and that is performance. About 75% of the carts are abandoned due to poor performance. Therefore, it’s super, super important for an online store.

On the performance front, we currently have three solutions in our offering– EverCache for WooCommerce, LiveCard, and Instant Store Search. EverCache for WooCommerce is available to everyone in our e-commerce offerings. EverCache for WooCommerce loads 90% more cached pages, and in turn, it’s giving buyers a better shopping experience because the cached pages load two times faster. We automatically enable these for the new stores, but if you have an existing store and you haven’t enabled EverCache for WooCommerce, you have to.

LiveCard gives you a faster and more stable shopping cart without having to give up dynamic cart functionality. It protects the store from losing sales during high traffic events by allowing more concurrent shoppers without dropping the connection, and allows you to present the shoppers a real-time dynamic cart without sacrificing performance.

And our search solution, Instant Store Search, is powered by ElasticPress and lets you have an Amazon style search experience without impacting server performance as search queries are offloaded.

So in summary, we have three performance solutions that are centric around commerce, and they’re available in all of our offerings.

DANIEL CHATELAIN: Thank you very much, Enid. So I have many more questions for you, but I think we’re limited on time and I would like to let Sajal give the closing statement for this session. So thanks again.

SAJAL AGRAWAL: Thank you, Daniel. Thank you, Enid, for that great information. So many great takeaways. Here are three takeaways that I noted.

Number one, customers who integrate with the most relevant payment methods will see their clients’ revenues grow.

The second takeaway, there was a lot of misunderstandings around PCI compliance, and you should rely on your payment provider to manipulate card data so that they are in scope and not you or your clients.

The third key takeaway that I took was there’s a need to simplify the build phase of a store, and WP Engine Stripe Connect will remove frictions associated with client and merchant engagement, security, and testing. Stripe Connect will be released soon and is currently in beta. You can join the beta by emailing paymentsbeta@wpengine.com. Going forward, the solution will evolve to include cross-border payments and a PCI compliant hosted checkout solution that reduces cart abandonment.

Thank you all for attending, and we hope to see you in another DE{CODE} session.