Payments have entered a new era, defined by flexibility, scalability and interoperability. The solutions that power this new era don't just allow companies to accept payments; they empower them — no matter their size or sector — to thrive in the digital economy.
However, few businesses have taken full advantage of the advancements in payments technology. Most are using solutions offered by banks and other legacy providers whose solutions were built for a bygone era. These solutions allow businesses to accept payments but don't empower them to do much else.
It begs the question, why do businesses stay with these legacy solutions when there are better alternatives? There are several reasons. Sometimes, inertia is the culprit: payments have always happened this way, so why change? There's the fear that operational changes are either risky or costly, or both, so best to play it safe and stick with a proven system and provider. There's also an education gap. Do businesses know they're using a legacy solution and that better options are available?
Whatever the reason, the truth is, in this ever-competitive world, as a leader in your business, you need to demand more from every tool you have. If you're clinging to old technology and reluctant to evolve, you're not only living in the past, you're also potentially compromising the future.
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A legacy payments system is simply any outdated software or technology that your business still uses. Often based on obsolete code, these legacy systems can lack features that make them useful for modern needs and may have compatibility issues with your newer systems.
While legacy payments systems can still provide critical functions for your organization, they can be expensive to maintain, hamper operational efficiency, and limit growth.
If it's not broken, don't try to fix it. That may be sound advice sometimes, but not when legacy payments impede business growth and dent profits. Although your current digital payment system may appear satisfactory, the chances are that it's not functioning as well as it could or maximizing revenue. If it's built on old foundations and hasn't been optimized for the way consumers like to buy today, it will cost your business more than you think.
The overall cost may not be evident. That's because with payments usually issues stem from multiple small inefficiencies that have a cumulative financial impact that's not easy to spot and quantify. Similarly, these inefficiencies can lead to risk accumulation. Complacency means increasing your risks and losing money without realizing it.
Many businesses only discover they have a problem when, for example, they try to add a new payment method, and it takes months to integrate at the expense of costly developer time. Even if you suspect that a payments weakness is responsible for flagging sales and a slump in revenues, running repairs and ad hoc fixes won't future-proof your business; glitches will continue to appear because the payments structure hasn't been modernized from top to bottom.
Legacy payment systems can affect transactions in a number of ways. Firstly, any downtime you experience as a result of faulty hardware is time you’re not able to process transactions. If a customer’s payment isn’t successful the first time round, they may not try again. Secondly, the limited capacity, memory and storage of your old system may not be able to handle a high volume of transactions, leading to slower processing times and a higher overall cost per transaction.
As they weren’t designed with modern fraud threats in mind, and rely on outdated code, legacy systems are inherently less secure than contemporary systems and can be soft targets for hackers. If you’re using a payments system that's vulnerable to cyberattacks, you’re exposing your business and customer data to an unnecessary level of risk.
Because of this, maintaining the security of your legacy system can be an extremely costly endeavor, not to mention the financial and reputational costs you’ll be hit by in the event of a data breach.
If there are hidden costs in staying with a legacy payments provider, switching to a new provider with advanced technology is an investment in the future of your business and can give you a competitive edge.
Apart from the actual cost of standing still and doing nothing, there is also an opportunity cost if you don't migrate to a new system. Over time, the gains in efficiency from modernization will significantly impact your balance sheet, while the weaknesses of a legacy system will have a compounding effect and continue to erode revenue and undermine your operational efficiency.
Fundamental problems include information silos, manual processing, lack of interoperability, and an inability to scale. Legacy providers may have built systems separately or acquired them piecemeal, perhaps through mergers, resulting in a patchwork solution that presents integration and flexibility challenges.
In addition to higher operating costs and added risk from disparate and aging systems, there may be a lack of support if things go wrong. And what about new markets and payment methods? Can the legacy system evolve with your business and quickly accommodate your evolving business strategy?
Being digitally connected and committed to customer experience are musts for every business, and COVID-19 has only underlined the importance of having a mature digital strategy. Payments should be at the heart of this transformation.
Using a provider who has a unified payment solution, you can achieve the following benefits:
Modern payments systems provide businesses with extremely in-depth data and reporting functions. The ability to get super-granular on everything from sales volume to fraud rate helps you to continually optimize your operations and customer experience, and to spot fraudulent activity before you become a victim.
The latest payments systems are much more secure than legacy systems because they have advanced security features. Modern systems have been built with modern threats in mind, and utilize robust authentication protocols like 3D secure, as well as sophisticated fraud detection to spot and block suspicious transactions, and built-in compliance, which helps to meet your regulatory requirements.
Thanks to multi-factor authentication protocols, which verify customers based on combinations of aspects like passwords and biometrics, and machine learning, which learns to distinguish between legitimate and fraudulent transactions, modern payment systems have much higher acceptance rates than older systems. What’s more, they allow you to offer your customers a much greater range of payment methods, ensuring they can choose the one that’s most likely to be accepted.
Modern payments systems are built with your global ambitions in mind, giving you the ability to process transactions in dozens of currencies and to offer the most popular local payment methods in your customers’ countries. They can also reduce the burden of complying with the ever-evolving regulatory landscape and to meet specific regional requirements. All of these factors make international expansion much easier and more cost-effective.
With sophisticated authentication, dozens of payment options, and advanced security, modern payment systems allow you to provide a great user experience to your customers. With these features, making a purchase is a much more frictionless process, avoiding the delays and frustrations that are often caused by legacy systems. Meanwhile, your customers can choose to pay in whatever way best suits their needs and preferences, helping to drive loyalty and repeat sales.
Access to actionable data is a primary benefit of a modern payments system. Instead of being a cost center, the digital payment system can become a profit center that provides valuable insights into consumer behavior and trends, individual transactions and overall performance.
With legacy systems, this data is often unattainable or invisible. But when businesses work with providers who offer a granular view of payments data, they can easily see why transactions succeed or fail–for example, because of false declines.
Digital payments are the foundation for success in the digital economy. It's essential to have a forward-looking payments provider and an up-to-date and versatile platform to meet consumer expectations and support the next wave of innovation. The cost of not modernizing is both financial and reputational, and those who continue to rely on legacy systems will soon find they are no longer competitive.
With Checkout.com, you get a modern, flexible payments system in one integrated solution. We offer support for global growth, advanced security features, and powerful data and reporting capabilities that empower you to grow quickly and confidently.
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