In today’s highly competitive economic environment, businesses must implement resilient payment strategies that prioritize speed, efficiency, scalability, and reliability. Failing to establish this vital infrastructure can result in a diminished customer experience and jeopardize an organization’s competitive advantage and revenue.
According to a survey from U.S. Bank, conducted by FT Longitude, having a forward-looking payments approach—particularly to keep up with changing consumer behavior and ongoing data security challenges—is paramount for organizations to increase their resilience.
Remaining Agile in the Current Payments Landscape
Various factors force organizations to transform their operations, including changing consumer preferences, growing competition in their market, and economic uncertainty. One of the biggest challenges, however, is data security. Nearly half (47%) of respondents in the U.S. Bank survey said that data security and fraud management risks and controls were driving some transformation within their organization, and another 39% said those factors were driving significant transformation.
Data breaches are some of the costliest events organizations can experience. They can result in substantial losses for businesses, and the card brand networks and regulatory agencies have steep fines and assessments for organizations experiencing a breach event and those who remain non-compliant with the data security standards. That’s why having a payment security strategy is so crucial for organizations to not only tackle ongoing challenges but also deal with long-term issues. According to the U.S. Bank study, 25% of respondents said they have already successfully increased payment security within their organization, and a similar number (26%) said they’re in the process of implementing it.
How Organizations Are Remaining Resilient
There’s a lot to keep up with to ensure that a payments strategy is effective. An organization needs to think about the associated costs, consumer retention, and whether the process is efficient. On top of that, they have to make sure they’re keeping the fraudsters away. Even for large organizations that may have teams equipped to handle these factors, it can be trying at times. Taking a multi-pronged approach can work.
Cost Savings
Organizations can start by keeping payment acceptance costs low. Seven in 10 respondents said that doing so is necessary when it comes to managing expenses. Businesses need to first understand their current payment acceptance and processing fees. A reputable and knowledgeable payments processor can guide organizations through interchange optimization solutions by determining which transactions qualify for a lower interchange fee.
Customer Satisfaction
Offering customers their preferred payment method should be another approach organizations consider. Although an influx of payment methods has emerged recently—including the ability to pay for goods via a hand palm—making sure there are multiple options at the point of sale will keep customer satisfaction and loyalty up. Customers are naturally drawn to businesses that offer their preferred payment method and will choose to do their business elsewhere if their choice isn’t available. Indeed, 50% of financial leaders polled said they had received complaints within the past year related to poor customer payment experiences.
Driving Efficiency
When it comes to payments, efficiency and accuracy are paramount. Manual systems, which are still being used by many businesses, are now viewed as too risky, time-consuming, and costly. Nearly a third of respondents surveyed said it’s a current struggle, stating that their operational efficiency has gotten worse in the past year. What many should consider is automating their processes to ensure the function is less tedious. More than two-thirds (67%) of respondents said streamlining payment processes could eradicate human error and enhance accuracy.
A More Secure Approach
Finally, the key to resilience—as previously mentioned—is an organization’s commitment to payment data security. Roughly 60% of respondents said that the need for security “has never been so high.” A secure payments system can help fight ongoing fraud and also bestows trust among consumers and the suppliers that organizations work with. At a time when consumers are more aware of the effects of fraud, organizations must take the necessary steps to protect themselves and their customers’ payment data.
Challenges to Developing an Effective Payment Strategy
Creating an effective payment strategy sounds good on paper, but the reality is that its successful execution often proves elusive. Of the 250 financial professionals U.S. Bank surveyed, 28% said their payments strategy was “advanced” or “very advanced.” In contrast, 39% of respondents revealed that their current payment strategies were not advanced and there’s work to be done.
This is something being experienced across various industries, with certain sectors boasting more sophisticated payment strategies than others. Notably, the retail space has forged ahead with advanced payments systems, driven by the high transaction volume and fostering fast and efficient processes. This progress has spurred innovations such as mobile wallets, elevating the overall consumer shopping experience. In contrast, the healthcare industry lags behind in developing similarly advanced payment strategies.
Budget constraints are another hurdle. Although remaining agile means giving consumers more choice—72% of financial leaders said they were aware of the importance of giving consumers their preferred payment options at checkout—it also requires more resources and financial investment. Making sure various payment options are available means businesses will need to upgrade their current systems, implement new hardware, and, overall, take on a considerable cost that may not be within their budget.
Keeping up with rapid innovations, in addition to compliance and regulations, further complicates matters. Roughly two-thirds of respondents said they were having a difficult time keeping pace with new security technologies in payments.
Despite Challenges, the Benefits are Vast
Describing updating existing payment strategies as complex would be a considerable understatement. Balancing the integration of new payment solutions within current workflows, adhering to regulations, and mitigating risks, all while meeting customer expectations, presents such a formidable task that many businesses might contemplate giving up before they even begin.
But as outlined by the U.S. Bank research, those who stay the course are rewarded. Respondents who updated their payment strategies said their reputation improved by 60%, consumer satisfaction increased by 53%, employee productivity rose by 50%, and operational efficiency grew by 49%.
An effective payment strategy stands as the key to ensuring businesses not only survive but also thrive in today’s dynamic payments landscape. By streamlining processes, satisfying customers, and ensuring secure transactions, businesses position themselves optimally to scale and grow and remain resilient against potential economic storms on the horizon.
You can download the full report at https://paymentstrategy.usbank.com/
