Request to Pay (RTP): Added value for the e-commerce customer experience?

Every day, many customers browse online shops and add a variety of items to their shopping carts to buy and pay for them. The last step of the customer journey, the checkout process, is a very sensitive point in online shopping. At this point, the customer expects suitable payment options that are as simple and intuitive as possible. Therefore, one of the most important tasks of the online retailer is to always offer the customer a variety of payment options. 

According to a study by EHI Retail Institute, the payment methods purchase on account, Paypal and direct debit were the biggest sales drivers in the German e-commerce market in 2019. For example, their share was almost three quarters of total turnover (purchase on account 32.8%, Paypal 20.2%, direct debit 18.3%) (source: https://www.ehi.org/de/studien/online-payment-2020/). With the purchase on account payment method, the online retailer sends the ordered goods and an invoice to the customer before payment. The customer can check out quickly and is only asked to pay the invoice to the online retailer within a certain payment period. In addition, the customer has until the payment due date to decide whether to really keep and pay for the goods. The Paypal payment method also scores points with its fast checkout process. The customer only has to sign in with his registered e-mail address and can complete the purchase. The third method of payment, direct debit, is a well-known and popular method. The customer gives the online retailer permission to withdraw the invoice amount from his bank account. No further steps are required.

So why are these payment methods so popular? All three have similar characteristics: They offer intuitive handling, the possibility of a quick checkout process, a payment overview and a wide acceptance by retailers. 

However, in the status quo, the process of these payment methods ends with the completion of the payment. Additional information such as billing, warranty notes and shipping information (tracking number) are made available to the customer via the retailer portal or via e-mail communication afterwards. 

In the end, today's online shopping process often lacks a consolidated overview of the payment details for the ordered goods as well as the invoice, the warranty and the shipping information.

Can Request to Pay be the missing puzzle piece for a successful user experience in e-commerce?

A glance at the concept of the Request to Pay process reveals the possibilities of a holistic ordering process in the banking ecosystem. The following process can be initiated using RTP: 

Figure: RTP process (source: own image)

After the customer has confirmed the order in the retailer's online shop, an electronic payment request in form of an RTP data record is initiated by the retailer. This data record is automatically sent to the customer's financial institution and then to the customer (debtor). Payment information such as invoices and shipping information can be initially attached to the RTP data record or made available to the customer via an attached link at a later point in time.
The RTP process provides the customer with flexible options to complete their payment after receiving the payment request:

• Accept now and pay now 
• For example, when purchasing a movie in an online video store that is to be consumed directly
• Accept now and pay later 
•  For example, when purchasing shoes to be tried on first
• Accept later and pay later 
• For example, when the goods are shipped before payment data is provided. The first retailers are currently piloting the shipment of goods (e.g. clothing) to the customer without the customer having to provide payment data. Only after a certain period of time does the retailer ask for data and payment via a payment request.

If the customer accepts the payment request upon receipt and pays directly with an (instant) payments order, the customer bank sends a direct payment confirmation to the retailer bank. The retailer (payment recipient) receives a confirmation of receipt from the retailer bank. This completes the process from the payment request to the payment.
This "pure" payment process does not offer the consumer a significant added value compared to the three payment methods listed above. However, if the payment process in the banking app is supplemented with payment information such as invoices, warranty slip and shipping information, the banking ecosystem becomes the central repository of online orders and creates a new customer experience.

In addition, if the Request to Pay process is to become a successful payment process in e-commerce, the following factors must be interconnected:

1. Comprehensive (retailer) acceptance of electronic payment requests and payments
2. Integration of the entire process into the existing banking ecosystem (banking app)
3. Creation of options for partial payments as well as payments at a later date
4. Possibility of reverse processing, for example, in case of cancellation or parcel loss
5. Extension of the payment transaction to include the overview of purchases supplemented, for example, by invoice history, shipping numbers and warranty slips

Taking these factors into account, and in connection with instant payments, Request to Pay can be the puzzle piece that is still missing for a successful user experience in today's e-commerce. In this context, the following applies: for successful implementation, a holistic and customer-centred approach is required.
 

Author: Philipp Schröder