Dismissing payments simply as a cost center will put any merchant at a significant disadvantage today. The reach and impact of payments has broadened extensively in recent years, transforming from just a function to be performed into a feature to be delivered. Payments now have direct input into the customer experience, geographic expansion and overall business performance. Indeed, many of the fastest-growing merchants and marketplaces around the world can draw a direct link between their success and their payments strategy.
Creating a differentiated payments strategy is fast becoming a key business priority, and our research suggests that the highest-performing merchants have made payments a core area of focus. According to our Voice of the Enterprise: Customer Experience & Commerce, Merchant Study 2021, 91% of digitally advanced merchants view payments as a highly strategic area of focus for their business. These merchants are orienting their goals in payments around business outcomes and are pursuing strategies that drive quantifiable ROI. Ultimately, they have three key payments priorities:
The market is quickly waking up to the fact that payments can be a driver of topline revenue growth. This can be realized across multiple fronts. Aligning with geographically relevant payment partners and onboarding local payment methods can provide a shot in the arm for the success of any cross-border commerce initiative. Similarly, integrating alternative payment methods (e.g., digital wallets, buy now pay later), harnessing account updater services and implementing transaction retry logic can have a dramatic impact on conversion and transaction approval rates.
Elevate the customer experience
Payments arise at the most pivotal moment of the shopping journey – when a shopper is about to transition to a buyer – meaning the consequences of friction are substantial. The sources of checkout friction include processor downtime, limited payment options, laborious checkout forms and false positive transaction declines, among many others. Consider that US shoppers abandoned $16.3bn in purchases due to false declines and $20.1bn due to limited payment options during the past 12 months, according to our estimates.
While cost reduction has always been top of mind for payments teams, the opportunity today goes far beyond negotiating for lower processing rates. Many levers are available for merchants, such as least-cost routing and payment orchestration tools, to optimize the direct and indirect costs associated with payment acceptance. Aligning with strong payments partners can help merchants create operational efficiencies and refocus on their core business.
Simply put, best-in-class merchants have embedded payments into their competitive strategies and are actively implementing processes to optimize their payments flows. The rationale for doing so is simple; few areas of a merchant’s business provide near-term gains from optimization as significant as payments. To execute, merchants’ ‘ask’ of the payments industry should evolve from “Help me accept and process payments” to “Help me improve my business.”