What business leaders typically get wrong about payments
Payments are as old as commerce itself, so it’s no surprise some business leaders consistently think of payments as a function that is necessary but doesn’t add much value beyond facilitating transactions with customers. For many business leaders, a payments system represents a cost – for example, the investment in the simple commerce system they use to process payments.
That’s what business leaders typically get wrong about payments — 73% know digital payments are fundamental to business growth, and they understand digital processing capabilities are necessary to avoid lost revenue via the 41% or higher cart abandonment rates, but they regard their commerce system as cost rather than a strategic asset. Many do this because they’re unaware of the possibilities embedded payments bring to the table. Modern payments systems have evolved massively over the past decade, and their functionality and potential to drive revenue have changed too.
Embedded payments happen seamlessly to deliver a great customer experience. So, instead of thinking of payments simplistically – instead of thinking of them solely as a way to process payments – business leaders should instead view payments as a strategic asset that can generate value. Have you been getting payments wrong? Read on to find out how you can turn a business necessity into a growth driver.
Leading in payments instead of following the crowd
Digital payments were gaining ground before 2020, with plenty of people using apps and digital wallets to pay for goods. But the pandemic drove greater acceptance among consumers by super-changing online shopping and providing options to those seeking contactless transactions. As the world emerges from the pandemic, those buying habits are proving sticky.
If you’re in the market for a commerce solution for your business, it’s important to keep in mind every system includes payments, but there is a wide range of capabilities in payments technology from simple handoffs to embedded payments. An embedded payments approach offers more than a simple way to process transactions. It enhances the experience with nearly invisible transactions that can drive loyalty and increase repeat business.
Another factor to keep in mind is competitors are already leveraging payments technology to differentiate themselves in the marketplace. Offering a modern payments experience while competitors are still using traditional processes is a way to lead on payments instead of following the crowd, and that can translate into a competitive advantage for your business.
Transforming payments into a strategic asset
So, why should you think of embedded payments as a strategic asset? The real-world effects of implementing embedded payments will depend on your business, but using embedded payments technology helps drive revenue growth. Removing the friction from buying reduces cart abandonment, and a seamless payments experience increases loyalty.
In some arrangements, an embedded payments partnership can directly provide a new revenue stream. For example, some partnerships feature revenue sharing based on payments volume. An embedded payments strategy can also improve market penetration by allowing your business to offer more favorable rates or charges than your competitors do, which can also improve your revenue picture.
Proof points on embedded payments
Millions of consumers have experienced the convenience of digital payments, including Apple Wallet and Google Pay. Whether at home shopping on an ecommerce site that stores their payment credentials, paying for groceries with a tap, or scanning a QR code to order and pay for an item, embedded payments make transactions effortless. Increasingly, consumers find the requirement to enter their financial data too burdensome to continue the transaction.
Embedded payments help organisations of all types overcome that hurdle. Current use cases for embedded payments include nonprofit organisations allowing donors to contribute to a worthy cause at the moment a message inspires a donation. So, instead of asking donors to remember to log onto a site and enter credit card information, an embedded payments approach removes the friction from the donation process.
Rideshare apps like Uber and Lyft were early adopters of the embedded payments approach, and that’s one of the factors enabling those companies to completely upend the personal transportation industry. They were among the first movers to make payments happen behind the scenes with no data input (beyond a tip for the driver) required.
Getting payments right
Business leaders who recognise payments are evolving and realise they don’t have to follow the crowd to conduct digital payments can gain a significant advantage with an optimal payments strategy. For example, today many integrated software vendors provide embedded payments that merchants can use to add to the payment options they already offer.
There are many paths to transforming payments into a strategic asset via embedded payments, but it’s key to remember payments are always evolving, and customer expectations shift along with that evolution. So, it’s a good idea to explore a payments strategy that is future-proof, adaptable to meet emerging options and consumer demand as it shifts.
With that in mind, remember there’s a first-mover effect. Businesses delivering a friction-free commerce experience can lock in customer loyalty and gain a lasting edge over competitors. Many business leaders don’t understand embedded payments’ potential as a strategic asset today. So, if maximising payments to the fullest extent hasn’t been at the top of your list of business strategies, you might be unknowingly accruing missed opportunities by viewing payments as a cost – and failing to strategically look beyond a single transaction is a short hop, skip and a jump to losing more money across every transaction.
About the author:
Mark Bishopp is SVP – Head of Embedded Payments/Finance & Partnerships at Fortis