by Roy Banks
The payment industry is ready for a revolution.
Historically, payment processing has been relegated to the background — viewed as a mundane, necessary function of commerce. Few have been able to recognize its true potential as a catalyst for business growth and customer satisfaction.
For too long the business world has only focused on what payment processing does (i.e. move money from one party to another). This narrow perspective has limited the possibilities for innovation and growth.
Recent technological advancements have illuminated the potential for payment processing to be a strategic asset. In order to embrace this potential, both businesses and payment processors need to shift their philosophy of payments.
The question is no longer “How can a business accept payments seamlessly and effectively?” but rather “How can payment processors inform and elevate business strategy?”
The Evolution of Payment Processing
The evolution the payment industry has experienced is truly remarkable. Keep in mind that commerce started with the barter system, where goods were directly exchanged for other goods. As societies developed and became more complex, cash (or currency) was introduced as a more efficient payment method.
The rise of technology in the 21st century enabled payments to become even easier and faster. The 1990s saw the rise of electronic transactions. With credit cards gaining popularity, businesses required systems to handle these new forms of payment.
Payment processors emerged as the solution, acting as the bridge between consumers, banks, and businesses. While payment processors play an essential role, they have largely remained behind the scenes.
As e-commerce became more popular in the 2000s, the demands on the payment industry grew more complex. Processors weren’t just facilitating payments anymore; they had to find solutions to increase security, prevent fraud, processing multiple currencies, and integrate with an ever increasing number of software platforms.
As technology continued to advance, we saw the rise of mobile wallets, contactless payments, cryptocurrencies, and more. However, the conversation surrounding payments remains largely centered around optimizing transaction efficiency and increasing convenience.
The true value of payment processing continues to be overlooked. It’s time for a shift in focus to deliver genuine value and innovative solutions.
The Need for a New Payment Processing Philosophy
Commerce and payments will continue to evolve. Our philosophy surrounding these principles must evolve with them. The future will belong to those who can anticipate change and adapt swiftly.
Payment processors can no longer afford to think of themselves as a mere service provider and must adopt the mindset of a strategic partner.
As emerging technologies like AI, blockchain, and IoT become more and more mainstream, the next chapter for payment processing will be about harnessing these innovations for business growth.
Businesses and processors must recognize that payments are not just transactions, but also a source of valuable data and insights. Payment processors are in a unique position to leverage transaction data and offer guidance on strategic business decisions that not only drive growth, but also enhance customer satisfaction.
Modern payment processors will no longer be judged merely by their technical efficacy but by their ability to drive tangible business growth. This requires understanding the unique challenges and aspirations of each business, and providing customizable solutions.
The Value of Payment Partnerships
To understand the value of this new payment philosophy, you need to understand that commerce is like a grand tapestry. Each transaction acts like a thread in the tapestry. However, it is crucial to remember that the tapestry’s value doesn’t lie in the individual threads, but in how they contribute to the bigger picture or pattern.
As businesses grow, they process more transactions, which leads to increased revenue for both the business and the processor. It is in a payment processor’s best interest to help the businesses they serve grow and develop.
Instead of focusing on transaction success rates and similar metrics, processors should become trusted advisors and partners, leveraging their data and insights to drive growth and innovation.
Eliminating Information Asymmetry
There’s a concept in the field of economics called information asymmetry. It refers to a situation where one party in a transaction or decision-making process has more or superior information than another. This often results in an imbalance of power, leading to a lack of fairness or distortion of behavior.
In the context of payment processing, information asymmetry has occurred due to a lack of transparency. The payment landscape is intricate and governed by a maze of regulations, technological shifts, and market dynamics. Payment infrastructure has been a black box for businesses and consumers alike.
Transactions are processed, fees are deducted, but the inner workings remain shrouded in mystery to anyone outside the payment industry. Payment providers should seek to diminish this asymmetry — not out of obligation, but from a standpoint of forming strategic partnerships.
Modern businesses are demanding more transparency. They want to know the ‘why’ behind a transaction fee, the ‘how’ of fraud prevention, and the ‘what’ of payment security protocols.
Processors should not just be service providers, they need to become educators. Sharing their expertise and data could revolutionize the way companies strategize and operate. Empowering businesses with the information ensures that decisions aren’t made in a vacuum.
Whether it’s understanding the intricacies of cross-border transactions, the potential of emerging payment technologies, or the strategies to optimize transaction success rates, the knowledge transfer is pivotal.
By arming businesses with this knowledge, payment processors stop being a service provider and become a strategic tool for growth. Businesses can make informed decisions, anticipate challenges, and leverage more opportunities — all because their payment partner has ensured they’re not left in the dark.
Moving Beyond Commoditization
The commoditization trap ensnares many industries, and payment processing is no exception.
To the average business owner or executive, many processors seem indistinguishable — offering similar transaction fees, integration capabilities, and security protocols. In order to stand out in a competitive and saturated market, processors need to stop selling a generic service and start offering a value-driven solution.
Commoditized services are transactional, easily replaceable, and compete primarily on price points. In contrast, value-driven solutions prioritize tangible business outcomes. It’s the difference between offering a one-size-fits-all payment gateway and a customized payment solution that aligns with a business’s specific needs, market dynamics, and growth aspirations.
Opting for commoditized services might seem cost-effective in the short run but can lead to lost opportunities, reduced flexibility, and stifled growth in the long haul.
In contrast, value-driven payment partners can provide the tools, insights, and strategies that can act as force multipliers for business growth.
Embracing Innovation and Adaptability
The pace of change in the world of commerce is relentless. Emerging technologies, evolving consumer behaviors, and shifting market dynamics ensure that what’s relevant today might be obsolete tomorrow. This presents both a challenge and an opportunity.
The key to navigating this ever-changing landscape lies in innovation and adaptability.
Neither payment processors or businesses can afford to be reactive. It’s crucial to stay on the forefront of technological and strategic innovation, especially where payments are concerned.
Whether it’s integrating AI-driven fraud detection mechanisms, harnessing the power of blockchain for transparent transactions, or adapting to the rise of new payment methods like cryptocurrencies, being ahead of the curve is non-negotiable.
Innovation alone isn’t enough. It must be coupled with adaptability. Payment processors and businesses must be agile and capable of pivoting their strategies based on market feedback, technological advancements, or regulatory shifts.
It’s this combination of foresight (through innovation) and responsiveness (through adaptability) that enables longevity in a hyper-competitive market.
Forging Genuine Partnerships
A genuine payment partnership requires shared goals and mutual growth. It requires understanding that the success of a business isn’t defined by transaction success rates alone, but by business growth, market expansion, customer satisfaction, and more. It needs to become the duty and the privilege of payment processors to contribute to this holistic success.
Businesses shouldn’t seek a service provider. They should find a collaborator and partner who understands their challenges, shares their ambitions, and is genuinely invested in their journey.
A partnership of this nature offers numerous advantages, including optimized revenue streams, valuable market insights, strategic guidance, and accelerated growth. On the other hand, a purely transactional relationship can lead to missed opportunities, misaligned strategies, and business stagnation.
In the realm of payment processing, it’s payment partners not the providers who will shape the future of commerce.
Join the Payment Revolution
The payment landscape is changing, and it’s time to embrace a new paradigm. Payment processors can no longer afford to be mere service providers; they need to become educators, strategic tools for growth, drivers of innovation and adaptability, and genuine partners invested in the success of businesses.
Businesses must also recognize that their choice of payment partner has significant implications on their long-term success.
Together, payment processors and businesses can create a revolution in payments — one where transparency, value-driven solutions, innovation, adaptability, and genuine partnerships are the norm.