Author: Arash Singh

Payments are at the heart of any business, no matter the size or industry. That’s why choosing the right payments system can safeguard your business, now and well into the future.

You may already know you need a completely new payments system, especially if your current one is obviously outdated. Maybe you’re using standalone solutions that don’t quite gel in the way you need them to. Or perhaps you tolerate your current system, but wonder if something better is worth exploring.

Getting your new payments system right can drive business growth, boost profits, and keep your business ahead of the competition. But you’re not sure if you’re definitely ready to invest in something new. So what’s the answer?

The Potential Risks of Keeping Outdated Legacy Systems

Upgrading an outdated payments system can be great for your business.. Conversely, continuing to use your legacy systems has serious potential drawbacks This includes:

Gaps in Payment Security

Legacy systems are unlikely to be as well-supported or up-to-date in terms of security requirements as current payments systems. The rapid acceleration of payments technology adoption—mostly caused by the pandemic and consumer demand—has given rise to digital fraud. Legacy systems don’t have the sophistication to manage surging payment volumes while keeping PII (personally identifiable information) secure. 

Legacy System Maintenance Costs

Though new technology seems like it might be costly, maintaining legacy systems may cost you more in the long-run. According to Financial Times, banks and insurance companies need to devote 75% of their IT budgets to preserving their legacy systems. Your specific payments system may be similarly weighing down your overall technology budget.

Ultimately, the older a system gets, the costlier it’ll be to maintain, on top of the dwindling number of experts that can use them.

Longer Processing Times

It’s not just the financial cost you’re risking with legacy systems. Clunky, outdated systems take employees longer to use. And if you’re using separate solutions, it’s even more work to connect the dots. For merchants looking to maintain a healthy cash flow, slow legacy systems can cause roadblocks and customer dissatisfaction.

Ask yourself, “is our current payments system the best we can get?” No matter your industry, consumer demands for faster payments have skyrocketed in recent times, and keeping up with those demands relies heavily on up-to-date systems and processes to make every customer touchpoint with your business simple and painless.

Try out a New Payments System Before Making the Switch?

Getting the right payments system—one that matches your business needs—will have a positive impact on your business (and your profits). But how do you know that the system you’re eyeing up actually delivers? 

Making the wrong choice could be at best costly and at worst, catastrophic, so testing out or demoing a system is the safest option. You need a system that fits seamlessly into your business, is easy to use, and works well for your stakeholders. 

And while something may look like it checks all your boxes, you won’t know for sure until you actually try it. Getting hands-on helps you get a feel for exactly how a system works, and how it works specifically for your business.

Having a proper in-depth conversation with experts in the payments industry (not just software salespeople—though that’s not to say they can’t be both), helps you communicate your needs and find out how a system can solve your business’s unique challenges. This conversation should be a combination of knowing and communicating what you need, and receiving clear  payments solution recommendations.

What About Payment Gateway Emulators?

Another option that helps advance your payments processes without the need to reprogram your existing applications is a payment gateway emulator.  Using advanced technology, gateway emulators translate your current gateway’s API to the provider’s API for seamless transactions. They’re an advanced and cost-effective way of test driving a new system, giving you insight into whether making the switch completely is right for your business.  

Technology advancements give businesses such an abundance of different options, but with all of that choice can come uncertainty. Which payments system is right for your business? Which one will solve all of your issues? 

If you’re considering making a switch, but don’t want to risk having to back-track and start again if it’s not the right choice, test driving any potential new technology, software, or system is important.   

By trying out a new payments system before committing ting, you can learn its features and benefits, and figure out if it’s really the right one for you. 

Want to work with a payments expert before making the switch? Get in touch with PayFrame today to set up a demo, or have a discussion with one of our PayFrame payments specialists.

Luckily, adopting a flexible payments system is easy and has real impact on your business results.

Why Payments Technology is a Must-Have

For many businesses, payments processes are low-priority, a necessary evil, even. But the opposite is true. Your payment system is mission-critical. Your future customers will approach your businesses with the expectation that you’ll accept their payment method, no matter what it is. Of course, the pandemic accelerated the need for robust payment acceptance, but these trends were actually in motion well before 2020. 

Fiat Cash is No Longer King

Consumers used cash only for 26 percent of transactions in 2019, down from 30 percent in 2017. On top of that, cash is mostly used for small purchases, representing roughly 10 percent of transactions over $25. Since COVID, contactless cards and touchless payment methods are within reach of being today’s primary method of payment.  The surge is expected to continue.

In fact, over two trillion transactions representing US$48 trillion are forecasted to shift from cash to cards and digital payments by 2030, making it a requirement for businesses to adopt a modern payments system.

The (Digital) Times They Are A-Changin’ 
A Payments Storm Has Arrived

Though the world is still in the technology age, today’s industries are experiencing another step forward in how technology will augment how business is conducted. This is more than a disruption. In the wake of the pandemic, it’s estimated that a half-decade’s worth of payments innovation has taken place in just over a year, with no pullback in sight.

Demographic data also sheds some light on where payments are headed.  At this time, 72 percent of all mobile payments are made by millennials or Gen Z, and since half of the American population are millennials or younger, businesses must begin gearing up for the incoming wave of tech-comfortable shoppers, on top of the adults higher in age already comfortable with modern payment technology.

Let Payments Open the Door to New Revenue

Now that you understand the magnitude of modern payments technology, you can capitalize on the opportunities for greater revenue. Here’s how.

Optimize Your Digital Commerce Channel for Customers and Vendors

If your customers can’t conveniently pay you, they are much less likely to. Therefore, it’s important to provide your customers with easy payment options. How do most customers transact business with your organization? Are you confident that the payment channels they use are convenient? The average order placed on a desktop computer is 42% higher than an order placed on mobile, so be sure that you’re well acquainted with your customer’s checkout experience and preferences.

Even if you operate a mostly brick-and-mortar business, keep in mind that most shoppers prefer the convenience of online shopping, due to the ease of online purchases, and returns. In fact, if you can add an eCommerce element effectively—even to your brick-and-mortar business—you can attract and  delight more customers. 

Unified Commerce Initiatives

Instead of settling for a disjointed set of IT programs, use an integrated or mostly-integrated process. This means combining your e-commerce, m-commerce (mobile commerce) capabilities with your background processes like inventory management, billing, and (in some cases) customer relationship management.

If your commerce structure is a hodge podge of tools and systems, you may be operating on incomplete data, which makes your business management decisions less timely. If your business is equipped with accurate, timely data, you’ll be able to plan effectively and make better forecasts.

Understand Your Customers Better with Helpful Data Insights

In the technology age, data is its own currency. Fortunately, if you use digital payments, you will be able to capture data on your customers behaviors, website traffic, and more. 

Spot trends, and drill down on key details specific to your business, giving you the intel you need to generate more revenue by improving your customers’  experience.

For example, suppose that you find out that 40% of your customers visit your site via mobile phone. This critical insight could inspire you to optimize your website for mobile users, making enhancements like adding smaller images (faster loading), buttons instead of links, or an otherwise streamlined experience. In this case, the data gave you actionable customer information, gleaned from watching customer behavior.

An effective payments platform should be able to provide key customer analytics on an easily accessible dashboard, giving you valuable insights to improve your customer experience. This data can also be a big help for your salesforce.

Prepare for Post-Pandemic Success

As you know, businesses today need to be more adaptable than ever.  To ensure that your business will be able to continue generating revenue and serving all of your customers in the “new normal,” it’s paramount that you remain open to change. One of the most important enhancements you can make for your business is to shift away from your legacy systems, into the right payments technology platform. PayFrame can help you do that.

The global economy was shaken by COVID-19, and the pandemic’s impact brought significant challenges and uncertainty for virtually every industry. Many industries struggled to adapt to new ways of working, and the dramatic shift in customer expectations didn’t help.

One area that remained at the heart of commerce throughout the pandemic was payments. Nearly any business that touched a payment system was tasked with finding and adopting new ways to transact business safely while still delighting customers. And, while economies are attempting to reopen and return to some semblance of the way they were, many of these payments and commerce trends that were sparked by the pandemic are here to stay.

Cashless Transaction Capability

One of the biggest changes in consumer habits brought about by the pandemic was how people shop. With various degrees of national and local lockdowns, and social distancing measures to be adhered to, more and more people switched to shopping mainly, if not wholly, online. Online sales figures soared throughout the pandemic and continue to rise as consumers got used to the convenience and safety of shopping from their couches.

Even when in-person sales occurred during the height of the pandemic, both customers and merchants preferred contactless, cashless payments. Many merchants were reluctant to take cash, and health and safety-conscious customers were happy to oblige.

Despite the advancements in payment technology over the past few years, not all consumers were ready for touchless or cashless transactions. But the pandemic has fast-tracked changes in payment habits and adoption at a remarkable rate, including a move away from cash. 

Flexible eCommerce

With the surge in online shopping instigated by the pandemic, it’s no wonder that consumers are expecting more from their ecommerce experiences. Companies that can effectively deliver flexible payment options will win over more customers.

Buy online, pick up in-store (BOPIS) 

Retailers had to develop omnichannel sales strategies when physical stores had to remain closed. BOPIS offered the best of both worlds, the convenience of online shopping, and the ability to avoid crowds. for consumers and sales for retailers. Shoppers in the U.S. spent over $70 billion in click-and-collect purchases last year, and this volume is expected to grow annually around 18% growth through 2024.

Buy now, pay later (BNPL)

BNPL financing had already been around for a few years prior to the pandemic, but its adoption accelerated during the pandemic. As an interest-free alternative to credit, BNPL became an increasingly popular payment option in a time of financial upheaval.

Modernized Card Issuance

The pandemic strongly tested the existing card infrastructure, and it was clear there was room for improvement.

Tokenization

If the recent economic lockdowns have made one thing clear in terms of customer experience: consumers want to continue benefiting from the ease and convenience that merchants offer. The ability to make fast, easy, one-click payments without entering card details again and again, and while keeping their card details secure, is something that will turn one-time shoppers into loyal customers.  

Payment switch

A system that connects multiple Payment Service Providers and acquirers in order to authorize payment transactions (with the added benefit of merchant-driven rules), a payment switch is flexible, scalable, and helps merchants speed up transactions.

White Label Card Options

Whether it’s a stimulus payment, individual refund, or any other forms of payment, individuals now need to be compensated quickly and safely. Previously, checks and ACH payments seemed sufficient, but offering brandable, prepaid cards can be cheaper, and easier to track. The U.S. Economic Impact Payment (EIP) card, for example, is a VISA-branded debit card issued to more than 4 million recipients for pandemic relief. Businesses can leverage the same capabilities and create their own branded card and easily create a better customer experience.

Better Middleware

COVID-19 also drove growth in payment  middleware technology, with many companies having to scramble to restructure significant portions of their business models to accommodate changes in consumer behavior.

Fraud prevention

The need for digital transformation triggered by the pandemic meant merchants needed to focus on having an online presence, something that was easier for consumers and kept many businesses afloat during the crisis, but also meant a significant spike in fraud cases. Fraud monitoring and prevention based on Artificial Intelligence (AI) and Machine Learning (ML) is fast becoming essential, no longer just a ‘nice to have’. It offers faster, more accurate decision-making, and is able to handle higher volumes of data.

Front end

With businesses competing to provide the best customer experience (CX), middleware that offers a sleeker, better User Interface (UI) is a significant differentiator. 

Driving Significant Innovation

While the payments ecosystem certainly felt the negative impact of the global pandemic, we’ve also seen significant change in terms of the speed of technology implementation. Consumers increased the pressure on merchants and payment providers to up their game and improve CX, driving change and innovation. We may have COVID-19 to thank for the acceleration of these trends, but they’re not going anywhere any time soon as the economy reopens.

In a climate where digital transformation has heightened expectations around sending and receiving money, the adoption of real-time payments is of real value to businesses looking to thrive and grow.

Technology innovation is a significant driver for change across all industries. Businesses have to keep up with new technologies, systems, and standards to satisfy their customers. While consumers have always leaned towards speed and convenience, the increasing global adoption of real-time payments across the world has supercharged expectations. People want to be able to buy goods, pay bills, and transfer money with immediate settlement. The pandemic accelerated the move away from cash and towards digital payment technologies, and real-time payments offer everyone involved in the payment process what they want.

The Benefits of Real-Time Payments Adoption

Here are five reasons your business needs to get on board with real-time payments:

1. Greater Visibility of Payments

Real-time payments offer greater visibility of transactions being both sent and received, which can give you an edge in the marketplace. The instant settlement and view of day-to-day financial transactions makes cash management faster and more efficient, as well as alerting you to any potential issues as soon as possible.

2. Better Cash Flow Management

If you’re used to waiting days for the settlement of transactions as your merchant account provider processes them, real-time payments will have an instant and powerful impact on your cash flow. The uncomfortable fact is that poor cash flow management is the most common reason for small businesses failing. And with the stresses of the pandemic adding even more pressure on  liquidity, cash flow has become an even hotter topic. 

48% of small businesses say that just one missed payment could be the end for them. Real-time payments that settle instantly could make a world of difference. It’s not only the immediacy of customer payments—transactions that are irreversible and viewable in real time also encourage a more predictable, stable cash flow.The same goes for making payments to suppliers.

3. Increased Revenue

The adoption of real-time payments is without doubt a revenue driver, firstly because better cash flow management gives more clarity over your overall financial position. With a more accurate view, you’re able to make more informed business decisions, which can boost your revenue.  

Offering your customers another fast, convenient payment option alone is likely to encourage spending. When you add to that time/cost benefits of real-time payments to your business, you’ll be able to work more on innovation to produce newer, higher value offerings.

4. Stronger Contractor Relationships

Paying your employees, contractors, or gig workers using real-time payments means there’s no lengthy wait for their money, which can be the case with other payment methods. The truth is, people want to get paid for the work they’ve done as soon as possible, especially now when we’re all so used to the speed and efficiency of the digital world.

5. Stronger Customer Relationships

Being able to consistently meet your customers’ needs helps you improve on existing customer relationships, and confidently attract and engage new customers. So what is it that makes real-time payments so attractive to customers? Today’s consumer is used to being able to do almost everything online and in real time—they don’t want to have to do more than a couple of clicks to get things done.

Refunds are another significant touchpoint where real-time payments save the day. Having to wait three to five (or more) business days for their money to hit their bank account or credit card is, at best, a frustration, and, at worst, something that can cause financial hardship. With many customers having to budget carefully, having to wait for refunds can lead to stress and overdraft fees or high-cost, short-term credit.

And bear in mind the aforementioned benefits we’ve covered here. The more smoothly your business is running, the more you can concentrate on delighting your customers.

Adopting Real-Time Payments Technology

If you’re still on the fence about whether real-time payments adoption is right for your business, be aware that your competition may have already decided! The transaction volume of real-payments in the US alone is expected to reach $4.2 billion by 2024 (from $734 million in 2019) at a compound annual growth rate (CAGR) of 42.1%. And this may only be the tip of the iceberg.

As with any new technology, it’s natural to have concerns about adoption. But with consumer expectations higher than ever, the question is whether businesses can afford to “wait and see”. The future of payments is in options that are faster, more efficient, and more secure. PayFrame’s real-time payments system fits smoothly into your existing processes, and you’ll benefit from our expert team supporting your transition every step of the way.