Product Management in Online Payments

BY Jock Busuttil ON JANUARY 21, 2014

We kicked off 2014 with January’s ProductTank London on product management in online payments.  An eager crowd mixing first-timers and regular attendees awaited our two guest speakers, Andy Young (@andyy) from Stripe and Yuval Samet (@yuvalsamet) from Klarna.

Product as a Competitive Advantage

Andy Young - Stripe
Andy Young – Stripe

First up was Andy Young (@andyy), who is responsible for “UK things” at Stripe, to talk about how product can be a competitive advantage.

He began with a quote from Y Combinator, the Silicon Valley seed funder, urging hackers and startups to make something people want.  And if you need to find a problem to solve, he said, why not start by focusing on one of your own?  The co-founders of Stripe, Patrick and John Collison, saw the ease of Apple’s App Store payments and asked themselves, why shouldn’t all online payments be as straightforward?

Many traditional payment providers had made their services “online” in only a cursory manner, by taking their paper registration process and converting the forms into PDFs on their websites.  But a product that’s only ten percent better is not a sustainable advantage, it’s all too easy for competitors to catch up.

Stripe's Growth
Stripe’s Growth

Stripe has no outbound sales team and so, to begin with, its growth was slow.  But its focus on the product was total; its sustainable competitive advantage was to disrupt the online payments market by delivering the best possible user experience with their payments API.  So Stripe rebuilt internet payments from scratch.  It streamlined the whole process for merchants with features such as automated underwriting and by distilling down PCI compliance down to just two checkboxes.  Even the API documentation is designed to be as usable as possible for developers.

Stripe bucks the trends in other ways too.  For a start, it has no dedicated product managers; instead each engineer takes on responsibility for managing their own product and is empowered to ship it out at will.  The engineering teams are not forced to standardise on any one development methodology, giving each the freedom to self-organise and choose how they want to work.

A flat organisational structure means decisions are taken by consensus, not handed down, and emails are entirely open – any member of the company can read anyone else’s email.  Stripe’s approach may be unconventional – and may not be right for every company – but it certainly works for them.

Parting Thoughts

  • Don’t be a slave to convention – make product process work for you
  • Care about user experience more than anything else
  • Usability is important for all aspects of the product, even the API documentation
  • Have focus: “be excellent at one thing to one group of people”

 “The Coolest Job in the World.  SERIOUSLY.”

Yuval Samet - Klarna
Yuval Samet – Klarna

Our second speaker was Yuval Samet (@yuvalsamet), Chief Product Officer at Klarna.  Yuval had flown all the way over from Sweden to London to share with us the key success factors that have enabled Klarna to grow to the point where it’s handling over thirty percent of Sweden’s e-commerce transactions.

Klarna’s story is different in some aspects to Stripe’s.  Its co-founders were not engineers, and it has plenty of dedicated product managers (cue cheer from audience).  However, like Stripe, their goal is also to streamline the checkout process.

For them, it’s all about enabling “James Bond” user experiences.  When 007 walks into an exclusive bar, the barman recognises him and pours his vodka martini (shaken not stirred, of course).  You don’t see Bond having to pull out his wallet to pay, he is automatically extended credit.

In much the same way, Klarna requests minimal information to identify a new  customer – email, zip code and national identity number only – and extends a line of credit automatically.  The user purchases the item and Klarna negotiates the payment between the consumer and the merchant.  Everyone can feel a little like James Bond, even if they’re only buying a cheese sandwich from the local deli.  The results are striking – a claimed thirty percent increase in conversion rate at the point of sale.

Success Factors

So how has Klarna achieved its success?  Yuval puts it down to the following four success factors:

  • CEO Sebastian Siemiatkowski is a product manager by nature, working closely with engineering during the product development process, and setting an example for the rest of the company to follow;
  • empowering Klarna’s product managers to be CEOs of their respective products (described as “one throat to choke” – yikes);
  • great emphasis on user experience design and testing, with the product managers advocating passionately for the customer; and
  • operating a dual-track Agile process, so that they can feed mature prototypes to the engineering team, rather than requirements documents.

Q&A on Online Payments

What does Klarna do to avoid fraudulent transactions?

Yuval: Klarna has a comprehensive risk operation, and algorithms to detect fraud – this is their special sauce.

Any advice for a company about to integrate payments for first time?

Andy: many modern APIs allow users to get going quickly, and to iterate and experiment – mistakes can be reworked easily.

How should online payments work for different countries?

Payments are hugely market dependent; what works in one country might not work in another.  People are willing to consume credit from different providers providing a balance simplicity and clarity.  In broad terms the checkout experience is consistent across countries, but the diversity of economies and cultures actually makes it a hyperlocal problem, so it can be beneficial to optimise the checkout experience for local requirements.

When thinking about user personas, remember that people have multiple personas when buying different things, rather than a set type of buying behaviour across varying areas, so you really need to understand what user experience you’re trying to enable, and find the right fit for them.

How big are the product teams at Stripe, can people move between them easily and how do they coordinate?

Andy: There are about eight or so people in each team, including the product owner.  People can move between teams easily and coordinate on different levels in Asana.  Product decisions are made by consensus; everyone listens to opinions, but opinions need to be backed by evidence.

And with that we concluded the talks at ProductTank London for another night.  Join us for the next meetup at 6.30pm on Wednesday 19th February (third Wednesday of each month as usual), this time on E-Commerce in Product Management.  Tickets will be made available soon.

Don’t forget about ProductCamp London on Saturday 8th February (free tickets now available), and save the date for this year’s Mind The Product Conference on Friday, September 12th.

You can also get in touch with us if you’re interested in speaking at or curating a ProductTank, writing for our blog on Mind The Product, or sponsoring our events.

Jock Busuttil

About

Jock Busuttil

Jock is a freelance head of product, author and startup mentor with over eighteen years' experience working in technology. He helps startups and larger organisations with digital transformation and to improve their product management practices, including Experian, BBC, University of Cambridge, and the UK's Ministry of Justice and Government Digital Service (GDS). He is the founder of Product People Limited, which provides product management consultancy and training. He is also the author of the popular book The Practitioner's Guide to Product Management and the blog I Manage Products.