ecommerce Delivery Framework: Outlining an Architecture for Successful Web and Mobile Stores

ecommerce Delivery Framework: Outlining an Architecture for Successful Web and Mobile Stores

2 ECOMMERCE DELIVERY FRAMEWORK: OUTLINING AN ARCHITECTURE FOR SUCCESSFUL WEB AND MOBILE STORES Abstract As ecommerce grows in popularity in the Asia Pacific region, more merchants are seeking to add robust payment capabilities to their websites. System integrators wishing to help their clients tap into this growing demand will need to be familiar with the end-to-end ecommerce journey in order to execute a successful implementation; which includes the management of customer experience, commerce, payment and data. This paper outlines a reference model for a typical customer journey, and proposes the key considerations and approaches needed to implement a successful ecommerce solution, with a focus on the payment process. Introduction: An untapped ecommerce opportunity The Internet and growing popularity of ecommerce have transformed the way we purchase goods and services. Today, of the 2.4 billion users plugged into the World Wide Web, 44.8 percent are located in the Asia Pacific region 1. According to a Forrester report, annual growth rates in the mature ecommerce markets of Japan, South Korea and Australia will run at 11-12 percent over the next five years. In the rapidly growing markets of China and India, these growth rates will be 25 percent and 57 percent respectively 2, as retailers and merchants look towards integrating robust payment facilities into their online stores. As a key enabler of the digital commerce ecosystem, system integrators (SIs) bring together the components needed to help clients make a successful transition to a full-fledged ecommerce platform. As a starting point, SIs will need to have a comprehensive understanding of each step of the end-customer journey starting from the instant a customer clicks on the shopping cart, to the moment the order is delivered. In addition, SIs need to be aware that ecommerce activities are not just limited to the website itself. Good planning and design will need to take into account the fact that ecommerce implementations: Must be able to scale and integrate easily to accommodate more touch-points and sales channels in the future, such as social networking platforms and mobile devices Are not merely defined by the ability to accept payments online, but also includes the customer shopping experience; data processing, storage, management and analysis; as well as integration with fulfilment systems Must deliver a frictionless, trustworthy experience to mitigate consumer concerns regarding privacy and security of their financial and personal data Did you know? With the proliferation of mobile devices, mobile commerce or mcommerce looks set to occupy a significant percentage of ecommerce activity in the next few years. SIs planning mobile commerce implementations have several options: Create an alternative website that translates into a mobile storefront Distribute the merchant s products on an existing specialist or mobile commerce platform (such as etsy.com) via web services and APIs Build mobile storefront capabilities directly on top of the existing storefront

3 ECOMMERCE DELIVERY FRAMEWORK: OUTLINING AN ARCHITECTURE FOR SUCCESSFUL WEB AND MOBILE STORES From shopping cart to delivery a reference architecture that outlines the order and payment journey EXPERIENCE MGMT COMMERCE MGMT PAYMENT MGMT Mobile Accept Web MARKET Secure Customer Customer Interface TV Kiosk Call Centre Enterprise Layer SELL SERVICE Payment Infrastructure Screen Capture Reconcile/ Settlement Network Interface Payment Platform IVR DELIVER POS PCI DSS Compliance DATA MGMT Data CUSTOMER PRODUCT INVENTORY ORDER ALERT REPORTING The consumers order and payment journey begins from the moment they browse the merchant s online catalogue, add products to their virtual shopping cart, and eventually proceed to payment and fulfilment. For each of these stages in the customer journey, SIs will need to consider how existing component systems need to be integrated to fulfil the order, transact the payment, dispatch the delivery, and update the back-end inventory in a seamless and secure manner. The components involved can be mapped into four main pillars: Customer experience management No longer limited to browsing an online store using a web browser, the increasingly digitised consumer has multiple channels at his/her disposal when shopping online. These can include mobile devices, phone, interactive voice response (IVR) and more. In addition, the customer is highly adept at switching between channels and their related devices to access the products they want. To ensure a seamless customer experience, SIs will need to consider the integration of information and function across these various channels such as maintaining a single consistent user profile per customer, and ensuring continuity of shopping sessions across interfaces. Regardless of the channel, the SI s approach should be to support the end consumer s demand for a seamless, convenient and secure experience across all fronts. Commerce management The choice of commerce platform determines how the store s goods and/or services are brought to market, and how orders are captured and processed. SIs need to develop solutions that are integrated with the merchant s Enterprise Resource Planning (ERP) platform and other core systems covering customer relationship management (CRM), warehousing, production, accounting and finance. These core systems need to communicate seamlessly with each other to facilitate the delivery of the purchase to the customer. Payment management Once payment is initiated, the transaction data needs to be transferred to payment management systems for verification and processing. An SI must ensure that an ecommerce solution delivers an efficient payment execution that is atomic (completes entirely, or not at all) and secure prerequisites for any online financial transaction. We will take a deeper look at the core considerations for payment management in the following section, which includes payment acceptance, gateways, processors, and security and fraud management.

4 ECOMMERCE DELIVERY FRAMEWORK: OUTLINING AN ARCHITECTURE FOR SUCCESSFUL WEB AND MOBILE STORES Data management The underlying data layer provides the classification, update and storage of key data pertaining to customers, product inventory and transactions; and to provide analytical and reporting capabilities needed to support vital decision making processes. The SI will need to consider the feasibility of storing sensitive payment data such as credit card details within the merchant organisation (which may require significant upfront investment to mitigate risk), or to utilise tokenisation or secure acceptance services that off-load the regulatory restrictions for storing payment information. By thinking holistically about the processes and systems that need to be in place to manage data and its flow, SIs can deliver an ecommerce solution that strikes the right balance between convenience and security. Payment management: Providing a seamless payment experience For both the merchant and the customer, the payment stage represents a crucial step in an ecommerce transaction. For the customer, clicking on the pay button symbolises the commitment to complete the transaction; for the merchant, it is where the revenue is recognised. To convert clicks into revenue, merchants need to ensure a smooth online experience for the customer from order, to payment, to delivery. As such, SIs will need to consider the following components that make up the overall ecommerce platform: Payment acceptance refers to the different types of payments that need to be supported by the merchant. Obviously, accepting the most popular forms of payment methods improves the ecommerce platform, but may also increase complexity and cost, since SIs need to consider the total number of merchant bank accounts needed. SIs should also suggest the most suitable payment types according to regional preferences. Payment acceptance processes will be influenced by local regulatory requirements: for instance, SIs may need to establish a local corporate presence and a local banking relationship, depending on the payment types offered and the payment service provider used. SIs will also need to be mindful if the payment solution can or should accept other types of payments. Maximising sales in a specific country requires an understanding of how customers prefer to pay for their purchases online, as payment preferences differ worldwide. Examples of different forms of payment acceptance include credit cards, electronic cheques, gift cards, bank transfers and debit cards, and online payment methods or digital wallets such as PayPal. A payment gateway is also needed to transfer payment details from the merchant s system to a destination network or a destination payment platform. Payment gateways often act as the middlemen between merchants and their sponsoring bank, and securely transfers payment and processed information between the customer, the merchant, and the payment processor. The key considerations for payment gateways include the speed at which transactions are processed, as well as the reliability of the gateway to handle a high volume of connections. SIs should also ensure that the payment gateway provides reliable email and phone technical support from local or remote offices to resolve technical issues, or when system modification requests are raised. Next, a payment processor needs to be considered. Payment processors are entities (usually a third-party organisation) in the payment network that handles the posting of transactions for authorisation and capture, as well as clearing and settlement to consumer and merchant bank accounts. Selecting the right payment processing platform is a key consideration for SIs, as processor platforms ensure smooth handling of the transactions and connections to the payment networks. For example, a payment processor that offers regional or global coverage needs to be capable of understanding different country-specific laws and regulations on payment processing. This will allow merchants to easily scale and expand to other markets or countries. CyberSource Decision Manager CyberSource Decision Manager is a fraud management tool that helps automate and streamline fraud management. Merchant transactions are compared to a fraud detection model based on over 60 billion transactions processed by Visa and CyberSource annually. The solution also provides a business-user rule management console that gives access to 260 popular global validation tests and services. In addition, Decision Manager provides a highly customisable case management system, and provides comprehensive reporting and analytics for added visibility into rule creation, reviewer and overall fraud management process performance. With the inclusion of this data, SIs will be better able to pinpoint opportunities and make improvements to enhance the merchant s ecommerce efficiency.

5 ECOMMERCE DELIVERY FRAMEWORK: OUTLINING AN ARCHITECTURE FOR SUCCESSFUL WEB AND MOBILE STORES page 4 Payment management: Providing a seamless payment experience continued SIs will need to consider how merchant settlement is performed by the payment processor, as this can impact the time taken for merchants to be paid. The choice of payment processors would also determine the payment networks and payment types that can be supported, as well as the ease with which the payment processor can transact with financial institutions. Payment security and fraud management involves the security protocols and tools that help safeguard payment information to and from a merchant s website and its payment gateway. SIs need to pay attention to tracking and securing payment data across an organisation s full order lifecycle, covering payment acceptance, fulfilment, financial reconciliation and transaction record storage. SIs must also consider compliance to industry data security standards such as Payment Card Industry Data Security Standards (PCI DSS). Given this requirement, SIs can choose to develop systems capable of retaining sensitive data within their own systems, or utilise tokenisation, or PCI DSS-compliant hosted solutions such as Hosted Order Pages to simplify the management of payment data. Hosted solutions allow the payment to carry out seamlessly, without burdening the merchant with the responsibility of storing confidential payment data. To curb fraud losses and protect cardholders from unauthorised use of their accounts, merchants should also deploy fraud management systems. Having fraud management systems in place is vital, as the added expense of chargebacks, unrecoverable transfers, unnecessary shipping costs and human resources to cater to disputes can add up. What s more, without proper fraud management, chargeback rates can be higher than acceptable to the merchant bank s acceptable threshold resulting in the merchant losing its merchant account. In addition, the merchant s reputation with customers will take a massive hit. CyberSource and ESET North America Challenge: ESET, a developer of highperforming security solutions noticed their ecommerce sales growing faster than what its in-house fraud management solution could handle. With limited automated risk assessment, about 90 percent of the orders were manually reviewed, staff overtime was the norm, and chargebacks went unmanaged. Solution: CyberSource delivered automated fraud screening strategies and on-going performance management through the CyberSource Decision Manager fraud management platform. Results: Without adding staff, ESET increased revenue by accepting more orders quickly while lowering its chargeback rate. ESET also increased automated screening by 840 percent, lowered the order rejection rate by 81 percent, and reduced the chargeback rate by 91 percent 3. Conclusion The entire end-customer payment journey consists of multiple parts, of which payment plays the most prominent role in successfully monetising online platforms. SIs must cast extra scrutiny into each component in payment management, in order to help merchants successfully transform their websites into ecommerce portals, as well as deliver a seamless transactional experience for both merchant and customer. References 1 Internet World Stats, http://internetworldstats.com/stats3.htm#asia 2 Forrester, Asia Pacific Online Retail Forecast, 2011 To 2016: A Look at Growth in Five Markets with a Focus on China, Japan, and Austalia, April 2012. 3 CyberSource, ESET Automates Fraud Detection, 2012, http://www.cybersource.com/resources/collateral/resource_center/case_studies/ ESET_CaseStudy.pdf

About CyberSource CyberSource, a wholly-owned subsidiary of Visa Inc., is a payment management company. Over 370,000 businesses worldwide use CyberSource and Authorize.Net brand solutions to process online payments, streamline fraud management, and simplify payment security. The company is headquartered in San Francisco and maintains offices throughout the world, with regional headquarters in Singapore (Asia Pacific), Tokyo (Japan), Miami/Sao Paulo (Latin America and the Caribbean), and Reading, U.K. (Europe/Middle East/Africa). CyberSource operates in Europe under agreement with Visa Europe. For more information, please visit www.cybersource.com NORTH AMERICA (US & CANADA) CyberSource Corporation HQ Phone: 650-432-7350 Toll Free: 1-800-530-9095 Email: sales@cybersource.com Website: www.cybersource.com EMEA (EUROPE, MIDDLE EAST & AFRICA) CyberSource EMEA Phone: +44 (0)118 990 7300 Email: uk@cybersource.com Website: www.cybersource.com/emea CyberSource Visa Middle East FZ-LLC Phone: +971 4 457 7200 Website: www.cybersource.com/mea LATIN AMERICA & CARIBBEAN CyberSource Miami Phone: +1 (305) 328 1998 Email: lac@cybersource.com Website: www.cybersource.com/lac CyberSource Mexico Phone: + (52-55) 5387 4185 Email: mexico@cybersource.com Website: www.cybersource.com.mx CyberSource Brazil Phone: +55-11 2102-0088 Email: brasil@cybersource.com Website: www.cybersource.com/brasil ASIA PACIFIC Asia Pacific CYBS Singapore Pte Ltd Phone: 800-6363-083 (Singapore) Phone: 1-800-816-575 (Malaysia) Phone: 1-800-8-756-8388 (Philippines Globe) Phone: 1-800-10-802-7222 (Philippines PLDT) Email: ap_enquiries@cybersource.com Website: www.cybersource.com/asiapacific CyberSource KK (Japan) Phone: +81 3 3548 9873 Email: sales@cybersource.co.jp Website: www.cybersource.co.jp CYBS Greater China Phone: +86 21 6109 5141 / +86 21 6109 5100 Email: gc_enquiries@cybersource.com Website: www.cybersource.com/cn CyberSource Australia & New Zealand Phone: 1-800-076-566 (Australia) Phone: 0800-443-080 (New Zealand) Email: anz_enquiries@cybersource.com Website: www.cybersource.com/anz 2013 CyberSource Corporation, a Visa company. All rights reserved.