Thinking Differently about Payments

If you took a simple concept, invested millions in marketing, distribution, design, and operations, a product would emerge that may be impressive. But if the payments element isn’t right – the inflection point of a customer’s journey, all of those investments are squandered. It all falls apart.

Technology’s growing influence on organizational finances is fascinating. In the case of payments technology, a foundational element of a digital transformation process, business agility is the result. But many older organizations see payments as a cost centre or regard it as an after-thought. Digital natives don’t do this, they see payments as a differentiator, they refine transactional flows like an oil refinery does crude.

From Cost Centre to Payments Lever

Traditional enterprises need to reimagine the role of payments from a cost centre to something like a lever, that could be pulled to optimize their customer’s experience and overall business growth. Digital natives understand this and take a strategic approach. They think about payments differently – as a growth catalyst for the business. They align their payments infrastructure to customer experiences, to growth strategies, innovations and their overall ability to compete.

In a Voice of the Enterprise study produced by 451 Research, 68% of enterprises less than 10 years old see payments as a highly strategic area of focus for their organization that drives significant competitive differentiation. For organizations 25 years plus however, it drops to 40%.

Unlike many older organizations who are hesitant to change something that isn’t broken, digital natives take the reins obsessing over payments flow, rates and basis points on authorization. They use an orchestration platform that allows for routing between payment service providers (PSPs) to gain real time data for decision making which further optimizes approval rates. Essentially, they eke out every point of friction in the transaction process.

Getting to Payments Lever Status

For older businesses looking to expand into new markets or shifting business models or meeting new customer needs, success can be amplified through optimized payments. Consider starting off with small innovations like adding digital wallet options to make the checkout flow more seamless, integrating locally relevant payment options in the markets served, or streamlining payment forms to take out excess friction.

In the background, begin crafting larger strategic business cases to determine how siloed payments infrastructure should be aligned with business needs to ultimately get CFO buy-in and effect real change. From there, QA and test for new payments architecture and emerging solutions like faster payments, buy now pay later, click-n-collect, instalment payments, or virtual currencies as examples.

Modernizing for Rich Payment Data

The inefficiencies exposed by the pandemic will drive long overdue technical efficiencies into the future and data-driven strategies will play a big role. Payments data is one of the richest data there is to understand what customer needs are and like privacy or security in a software build, the payments element should be considered upfront.

But for many, these innovations will require a changed mindset that will take time to achieve. It might make sense to hire a payment strategy specialist with deep insights into the different methods available to help guide or accelerate the journey.

Like many things in the wake of technology, payments has been democratized and new thinking is needed beyond controlling costs to realize benefits. Agile businesses understand this and the impact it has on customer lifetime value and for those customers to continue visiting into the future. Traditional organizations looking to gain business agility, would do well to learn this.