By Brandon Banks
For ambitious business owners and executives, building a comprehensive payment strategy is essential to maintaining steady growth and achieving success. However, having an effective payments program isn’t solely about what measures you take today, it is just as much about preparing for the future.
Today’s digital payments landscape is multifaceted and dynamic. Payment processing is continuously evolving to meet every technological innovation and shift in consumer behavior. Too many payment strategies overlook an essential component of long-term success: optionality.
Optionality allows businesses to pivot, adapt, and continue thriving, regardless of how the payment landscape changes. This article deep-dives into the importance of optionality and provides insights on how to integrate it into your payment strategy.
Expanding Options for Global Payment Connectivity
In an era of increasing globalization, businesses are transcending borders and reaching customers worldwide. However, cross-border transactions can introduce complexities, such as high costs and increased decline rates. The remedy to these challenges lies in diversifying your global payment connectivity options.
A robust strategy will offer a wide variety of connectivity options. By working with payment providers who have a robust international network, you can bypass many barriers to cross-border payments. For example, a report by Mckinsey shows that local acquirers can reduce cross-border fees by up to 15% and increase acceptance rates by almost 10% in certain markets. Optionality in your payment connectivity allows you to leverage such opportunities, optimizing costs and enhancing customer satisfaction.
Flexibility in Processor and Gateway Choices
Payment processors and gateways are the heart of your payment ecosystem, and their effectiveness can directly impact your bottom line. Each processor and gateway offers unique benefits, which could align differently with your business model, your risk profile, and your customer’s needs.
A rigid payment strategy can limit you to a few providers who might not perfectly align with your needs, leading to higher fees, inadequate service, or missed opportunities for growth. On the other hand, a strategy that integrates optionality can afford the flexibility to switch between processors or gateways as your needs evolve.
Embracing a Variety of Payment Methods
The digital revolution has sparked an explosion of payment methods. From digital wallets and credit cards to cryptocurrencies, the way consumers pay for goods and services is continuously evolving. The WorldPay Global Payments Report 2022 revealed that digital wallets accounted for 48.6% of global e-commerce payment methods, indicating their growing popularity.
Without optionality, your payment strategy might not accommodate new payment methods in a timely manner. This could potentially lead to lost business and a diminished customer experience. Alternatively, a strategy that embraces optionality can enable you to pivot quickly, adopting new payment methods that your customers prefer, thereby driving customer satisfaction and sales.
Consequences of a Rigid Payment Strategy
A payment strategy without optionality can inhibit your growth and competitiveness. As your business expands, your payment needs will change. If you’re locked into a particular technology, processor, or payment method, these changes could negatively impact your customer experience, leading to higher costs and lower approval rates.
For instance, if your business expands internationally, a lack of local payment methods could deter potential customers. A rigid payment strategy could also mean missed opportunities for leveraging new technologies or optimizing costs through better partnerships.
Nurturing Optionality: Best Practices and Technologies
Adopting a payment strategy rich in optionality requires a combination of strategic planning and leveraging the right technologies. Look for payment platforms that support a wide range of processors, gateways, and payment methods. A platform that provides access to a global network of acquirers can dramatically increase your optionality.
Consider partners who offer flexible contracts or pay-as-you-go pricing, allowing you to adjust your partnerships as your needs change. Additionally, it’s crucial to invest in data analytics tools. Data-driven insights can provide a clear understanding of payment performance, help identify bottlenecks, and guide strategic decisions.
Optionality is a cornerstone of a robust, future-conscious payment strategy. It empowers merchants with the ability to adapt and pivot in an ever-evolving landscape, optimizing their operations, reducing costs, and delivering an exceptional customer experience. While it requires strategic planning and a keen understanding of the payments ecosystem, the benefits of incorporating optionality into your payment strategy are well worth the effort.
For companies looking to leverage optionality, Nexio provides an array of deep specialties in payments technology and adaptable solutions designed specifically with merchants in mind. Learn more about how Nexio’s solutions can help empower your business today — contact us for a free consultation today!