Payment Optimization: Not just a trend but a true revenue accelerator

‍‍In 2024, more businesses will turn to payment optimization to accelerate their revenue. Payment optimization is the process of streamlining and improving payment systems to ensure efficient, cost-effective, and secure transactions. This process includes selecting the best payment methods, reducing processing fees, maximizing conversion rate, and enhancing the overall payment experience. Declined payments, checkout complexity, security concerns, and a lack of personalized and localized payment options are all common reasons for cart abandonment. Our research found that 70% of all drop-offs happen after the customer enters the checkout flow and $260 billion in annually lost sales are recoverable through payment optimization.  

False declines have also emerged as a serious payments-related revenue drain in eCommerce, costing $443 billion every year and far outweighing the cost of true fraud.  Furthermore, the decline of legitimate transactions can often cause irreparable damage to a business’s reputation, with consumers choosing to shop elsewhere in future.

Payment optimization emerges as a critical solution to these challenges. By implementing an integrated payment system, businesses can consolidate their transactions across various channels, simplifying the management process. Additionally, sophisticated payment platforms are equipped to handle the complexities of international regulations, providing businesses with the necessary tools to compliantly expand their operations globally. In essence, payment optimization not only streamlines the transaction process for consumers, but also strategically positions businesses for sustainable growth. That’s why in a world where transaction efficiency is not just desired but required, the choice of payment processor becomes crucial. Payment optimization done right takes a holistic approach, implementing a range of tools at each stage to improve the payment journey and ultimately increase approval rates and accelerate revenue. These stages include: 

Stage 1: Intelligent Messaging

Pre-Transaction Optimization tools are designed with strategic foresight and integrating advanced rules to enrich and augment each transaction message.   For example, transaction compliance can be complex and lead to declined transactions if not properly addressed. Having a partner with the technology and expertise to navigate the nuances of transaction messaging and compliance can increase authorization rates and improve customer experience. 

Stage 2: Smart Routing

Smart routing can help reduce declines and transactions costs by selecting the optimal path for each transaction.  An acquirer-agnostic solution that can route based on multiple factors like transaction amount, currency, payment method and type can provide limitless possibilities to optimize acceptance rates, transaction costs, chargebacks, and risk.  As critical as the technology is the need for expert, human-led support to ensure you get the maximum revenue benefit.   

Stage 3: Intelligent Re-Try

Intelligent Re-try tools can reclaim declined transactions; increasing authorization rates and revenue.   For example, a Decline Recovery tool automatically resubmits declined transactions using custom rules tailored to your business. Empowered by insightful analytics, this technology can help capture every possible transaction for ultimate conversion success and increased revenue. 

Stage 4: Monitoring and Control

Analytical tools such as real-time reports, processing comparisons, and case management are pivotal in enabling businesses to identify opportunities for increasing revenue and minimizing lost sales. By providing instant insights into consumer behaviors, businesses can tailor their checkout journeys more effectively, enhancing customer trust and retention. Additionally, effective case management not only ensures efficient dispute resolution and reduced chargebacks, but also bolsters customer satisfaction and loyalty.  

Looking to the future...

Over the next decade, the landscape of payment optimization is expected to undergo significant transformations, driven by advancements in technology and shifting consumer preferences. One of the foremost developments will be the increasing integration of artificial intelligence (AI) and machine learning algorithms. These technologies will enable more sophisticated analysis of payment data, leading to highly personalized and efficient payment experiences for both businesses and consumers. Additionally, the rise of blockchain technology is poised to revolutionize payment systems by offering enhanced security and transparency, particularly in cross-border transactions, which could dramatically reduce the time and cost associated with international payments.

The trend towards a cashless society is expected to accelerate, with digital and mobile payments becoming even more prevalent. This shift will require businesses to adopt more agile and integrated payment systems to cater to the evolving preferences of their customers. Payment optimization solutions will not only need to be efficient and cost-effective but also robust in terms of security and compliance, as businesses navigate a complex web of global financial regulations and heightened concerns over data breaches.  

Ultimately, the future of payment optimization lies in its ability to adapt to these technological advancements and changing market dynamics, offering seamless, secure, and cost-effective payment experiences that meet the needs of a rapidly evolving digital economy.