Running a company is a juggling act but not keeping your payments strategy as a top priority will quickly have you dropping the proverbial balls, affecting multiple parts of your business.
And as your business grows, each department can turn into its own ‘mini-business’ with its own priorities, processes, and challenges. But running a smooth payments operations can have positive, wide-reaching implications across all business functions. We’re sharing the top 5 strategies that businesses should prioritize when it comes to their approach to payments:
When it comes to payments, every penny matters. And if you’re not vigilant, those pennies can add up to a huge expense.
- Know your negotiable from non-negotiable costs. This will vary from business to business and across different industries so it’s important to do your research. Beyond negotiating fair pricing, be sure to ask your payment service provider to lay out scheme/network costs. Also, ask your solutions provider about different pricing models that could better suit your needs (for example, you may want to consider a tiered pricing model for flat costs).
- Watch your Interchange fees. Beware of downgrades! Make sure you review reports on a daily, weekly, and monthly basis to monitor any changes in your interchange costs. Be sure to work with your solutions provider to understand any downgrade fees (penalties) and surcharges – and gain advice on how to avoid them.
- Consider cross-border costs. Card Schemes/Networks apply International Service Assessments and Cross Border Assessments depending on where the customer’s bank, merchant, and the merchant’s acquiring bank is located. Understanding these unique relationships and the volume of transactions associated with each will enable you to evaluate different payment processing models that could help you reduce costs.
Data is King
We’ve heard this a million times because it rings true, particularly in payments. Merchants must review their performance and the performance of their partners on a regular basis. If possible, have a dedicated business intelligence analyst or team who can review your data in-depth and evaluate key performance indicators like authorization rates, uptime, and decline codes, and provide actionable insights and opportunities based on the data available. In the absence of an internal resource, ensure that your solutions provider is data-dedicated and can supply robust, actionable data to support your business.
Optimization, optimization, optimization
Technology and customer preferences are constantly in flux, so never get too comfortable. Make sure you’re consistently testing and optimizing all elements of the user journey including your payments process. Staying nimble and consistently learning about your customers’ behaviors will help improve approval rates and conversion while also aiding in reducing fraud and chargebacks – both of which can impact revenue.
Before pulling any levers, however, merchants should establish their company’s goals for optimizing their payments and consider elements like resource availability, platform capability, testing methodology, and result analysis – and applying these same considerations to their solutions provider to ensure full functional support as testing and optimizations are underway. Having all these pieces in place will ensure manageable, timely, and effective execution of your optimization strategy that will ultimately drive up your revenue.
Keep Good Relations
Often, companies put an emphasis on internal team relationships but may fail to effectively prioritize external partnership management. By dedicating resources to building, cultivating, and monitoring these relationships, merchants can achieve a higher degree of mutual visibility, communication, and engaged collaboration with their solutions provider subsequently deriving successful, long-term value from these partnerships. Additional benefits include cost control and transparency, risk mitigation, increased revenue, invitations to try new products, and overall better customer service. Strong relationship management can also lead to the formation of new and mutually beneficial partnerships.
Be sure to develop a partner selection strategy, some of which include:
- Defining the objectives and requirements of the partnership
- Creating a proposal (RFP requirements guide) and clear framework
- Establishing a selection criteria/model
- Assessing and measuring post-integration
Your solutions provider should have a strong presence within and outside their domestic market. Today, a business’s international expansion rests in large part with its solution provider’s ability to branch out to specific locales and markets by assisting with localizing currency and local payment methods. When evaluating your solution provider’s localization capabilities, consider their efforts on the following:
- Language ability and fluency
- Currencies available
- Communication: format and usage (dates, time, symbols, graphics, icons)
- Cultural sensitivities and references
- Local payment methods available
- Regulatory and compliance requirements
As a merchant evaluates currency support and local payment methods (regulatory too), operating model assessments and feasibility of options are important as the outcomes could define the true capabilities of the merchant in their expansion strategy.
Example models could include Domestic, Cross-border, and Merchant of Record. Look to your solutions provider to help you define these models including how you are, or may, utilize these models and what opportunities they provide toward your expansion strategy. For example, a US-based merchant that is seeing a lot of customers coming in from Europe may want to consider opening a European entity in order to reduce cross border fees and improve authorization rates.
Implementing these 5 key strategies will improve your payments process and ultimately create a better user experience for your customers and generate more revenue for your business.
Ready to be your company’s payment hero? Contact a Checkout.com payments expert to learn more about optimizing your payment strategy and growing your bottom line. Get in touch!
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