At the end of 2015, the SMCP group – Sandro, Maje, Claudie Pierlot and De Fursac – decided to migrate its e-commerce platforms to a full-service PSP solution. Olivier Brou, SMCP’s Global Head of Treasury Financing and Digital Payments, outlines the foundations of the group’s unified digital payment strategy and the challenges it’s likely to face in the future.
– Can you briefly describe the organization of, and issues with, electronic payment within the SMCP group?
– SMCP is a global leader in the accessible luxury market, with a portfolio of four unique Parisian brands: Sandro, Maje, Claudie Pierlot and De Fursac. Operating in 41 countries, SMCP is a high-growth group that crossed the billion-euro-turnover threshold in 2018, and our turnover rose to €1.14 billion in 2019. The group includes a network of more than 1500 stores across the world and a strong digital presence in all of its key markets. Sandro and Maje were founded in 1984 and 1998 respectively, while Claudie Pierlot and De Fursac were acquired in 2009 and 2019 respectively.
Electronic payment is an important topic for a distribution group such as SMCP, which operates and charges directly at the vast majority of its outlets and e-commerce sites. Card payments account for more than 84% of our sales in countries in which a cash culture is still prevalent, such as in Germany, and close to 100% in countries like China.
Within our Treasury department, two people are in charge of electronic payments. Building an offer of payment methods adapted to the expectations and practices of customers in many locations around the world requires a specialized but versatile approach. We have an interest in harmonizing our offer, for obvious reasons of cost, and striking a balance so that the customer journey remains fluid at the time of payment. For online sales in particular, the payment method offer is built with the twin aims of integrating solutions with our e-commerce and fraud platform while meeting the expectations of our customers wherever they’re from in the world and taking into account the currencies they use.
– What is your blueprint for payment methods in your bricks and mortar stores?
– SMCP’s choice has always been to adopt comprehensive service solutions provided by Payment Service Providers (PSPs). Our approach is to serve our customers and offer them the simplest and smoothest paths and experiences possible with multiple payment options.
What is distinctive about PSPs is that they don’t just take on the contractual aspects with buyers in all of the countries where we want to operate, but they also deal with the technical aspects. They provide the merchants with access to a platform to manage their entire environment, from creating merchant accounts and managing accounting and transactional reporting data, to managing the payment terminal fleet remotely.
Our provider was selected after a call for tenders. We met with global firms, and others who were more regional or even purely national. We needed at least a regional partner, able to easily interface its solution with our e-commerce platforms and accounting tools. We were also looking for time savings and simplification.
In view of our international growth, we quickly chose a centralized electronic payment architecture in “full service” mode three years ago. We have since deployed it in France, 14 other European countries, the United States and Canada, and have started rolling it out in Asia – in Singapore and, soon, Hong Kong. In 2021, we’ll be rolling out our solution in Malaysia.
Ultimately, the only countries where it won’t be deployed are those in which local regulation makes such cash architectures impossible. Mainland China is a good example at the moment. Through our platform, we have all the flexibility we need to remotely propose and activate the global or local payment methods that our customers expect.
Our payment method base is always focused on the major card networks. In Europe, the local card schemes, Visa, Mastercard, American Express, WeChat Pay and Alipay schemes are the basic elements. Most recently, the COVID-19 health crisis has accelerated the need to provide payment solutions such as Wallet or Pay By Link, which do not require contact between people.
– What does the payment scheme for online sales look like?
– The migration from our e-commerce platforms to a full-service PSP solution has consisted of assessing the ability of each operator to accompany us over time and be responsive to our demands, taking into account the geographies where SMCP was present and going to develop. As such, we had a precise idea of our needs in terms of payment methods. We have therefore dedicated our efforts to finding a back office interface that’s as intuitive as possible and enables us to drive online sales, which accounted for almost 15% of our turnover in 2019.
Once we selected the partner, the rollout was achieved quite quickly country by country. It’s easier to integrate an area directly into the platform by managing a single go-live than to switch from one platform to another. However, in e-commerce, migration from one solution to another is a complex operation that includes multiple strands and where the go-live has to be perfect from day one.
– How do you deal with the problem of fraud for in-store sales?
We implement proven in-store procedures: strong authentication with PIN code entry for card payments, identity checking if necessary, and systematic authorization requests.
– How do you deal with the potential for fraud in online sales?
– Online fraud is managed through the risk management engine of our PSP, which is constantly configured and adjusted by our teams. For example, we analyze various themes, including the behavior of our customers.
This can be in terms of the frequency of customer purchases, the place of purchase as reflected in the location of IP addresses and whether they tie in with the delivery locations, the knowledge we have of the customer as to the contents of their shopping cart, and the purchase amount. Depending on the products selected in the cart, we can also activate additional controls.
These different elements will make up a score that may or may not trigger strong 3-D Secure authentication.
– What are the KPIs that you regularly monitor to assess the performance of your payment methods?
– We look at several indicators, ranging from tracking fraud and chargebacks (claims for refunds once the goods have been received) to analyzing transactions through the use of payment methods. Chargebacks are an area we pay particular attention to as this remains one of the main sources of fraud. We also analyze the mix of payment methods in the different geographical areas. This analysis is relevant to the extent that the average cart remains very consistent from market to market.
Overall, we believe that automatic screening by our payment service providers works very well. It’s always possible that a payment does not go through due to our strict fraud management procedures, but in the vast majority of cases it’s because the protection barriers activated have proved effective.
– Have you started work on 3DS V2 and exemption requests? Do you think this will significantly improve the acceptance rate?
3-D Secure authentication is something that has made a huge contribution to the fight against fraud. I don’t think for one second that a customer will abandon a purchase because they don’t want to enter their 3DS code. If someone doesn’t have their credit card to hand, they will at least have their smartphone.
As early as 2019, SMCP adapted its e-commerce sites to the evolution of the DSP 2 standard and 3DS V2. We are ready to implement it at the start of 2021. Next year we will, however, be very vigilant about transaction incidents in order to correlate them with fraud monitoring and avoid an increase in false positives, by which we mean transactions that are refused to genuine customers.
– What other major payment projects are taking place at SMCP?
– We’ll continue to roll out our electronic payment platform and we’re currently moving forward on a split payment offering. This project raises organizational issues related to in-store process management and workflow management on our platform and back-office interfaces. Some fintechs have rightly positioned themselves in this market, which has not changed hugely for some time. Split payments are credit transactions that are fairly binding on merchants and customers, but since the legislation has evolved, fintechs are in a good position to present solutions that are quick and easy to implement.
More generally, we’re going to lay the foundations of our Unified Commerce platform. This will really facilitate our ability to meet the demands from our customers.
Read our new Payments Report – Shifting to faster payments
Redbridge’s 2020 Payment Report is a source for trends and insights into today’s dynamic payments environment. This second edition presents how various stakeholders position themselves in the payments industry and explores topics related to innovative payments, instant payments, e-commerce and fraud mitigation.
Contributions from treasury practitioners, bankers, payment service providers and vendors are coupled with in-depth analysis from our treasury consultants.
Included in our review:
- Analysis: An overview on the future of payment
- Analysis: E-commerce, a strategy to maximize sales while limiting fraud
- Instant payment survey with banks, vendors and PSPs
As well as our interviews with:
- Michel Yvon, Decathlon
- Charles Lutran, Criteo
- Isabelle Olivier, SWIFT