In the past, payment departments were often seen as a cost center, rather than a strategic driver of business growth. This perception started to shift when businesses realized that payments are a key customer touch point – especially in the digital world. So, as they strived to better connect with their customers, increase sales and retain their loyalty, payment experiences became integral to overall customer journeys. Suddenly, there was value in becoming proactive when it came to payments.
After all, increased payment conversions drive revenue. Even a 1% increase in payments accepted translates to a 1% increase in revenue – and this can have significant impact on any business, regardless of size, location or vertical. Where once the focus was purely on accepting payments globally, business owners are now looking to strategically optimize payments to drive conversions and increase their bottom line. And payment providers are poised to help them along this journey.
The world of global payments processing is complex, making the task of turning payments into a profit center no mean feat. Therefore, the payment provider role has evolved from ‘service provider’ to ‘strategic partner’. Merchants are starting to work in partnership with their payment providers to help them optimize performance.
It all boils down to increasing acceptance rates through constant payment optimization. Let’s break this down further:
1. Payment customization
Each business is unique so it’s paramount that their payment flow is suited to their requirements. The unique nature of a merchant can be influenced by business model but also by regulation in the countries they operate in. A digital goods business such as Netflix or Spotify will rely heavily on subscription-based billing, while a gaming operator or urban mobility company will need to be able to process microtransactions via mobile devices. Traditional eCommerce businesses selling online will need to offer all the most relevant payment methods for their target market and these can include everything from Mobile Wallets, like GooglePay and ApplePay, to buy now pay later methods such as Klarna or ClearPay. Regulation can be different depending on country or region too. All these intricacies point to sophisticated needs when it comes to offering optimal customer-centric payment experiences – and they make the case for customization.
We’ve spoken at length about customization in a previous blog. Payment customization is about adapting the customer facing payment experience and back-end set-up to the needs of the merchant. One size fits all payment solutions are a thing of the past, as merchant needs can vary, depending on multiple factors such as their business model, size and even the vertical they operate in. Merchants often already have an existing stack they want to build over, and they need custom solutions that can integrate seamlessly, as opposed to the walled garden solutions some providers impose on their customers.
2. Customer choice
Giving customers flexibility when making payments ensures that merchants don’t miss out on any opportunities to convert sales. Whether it’s through offering the right payment methods customers are familiar with or more sophisticated features. Cart abandonment for example is a significant concern for any business trading online. While there are a variety of reasons that lead to a customer not completing a transaction, some of them being outside of a merchant’s control, it’s important to acknowledge and recognize the instances where transactions can be saved. Implementing partial payment or decline recovery features for example can go a long way in increasing acceptance rates while providing the customer choice. Whether that be by enabling them to select an alternative payment method or partially pay for their purchase.