Why a legacy payment system is actually a cost for your business
If you're using legacy technology for payments, you're missing an opportunity to cut costs, drive operational efficiencies and provide the business with the flexibility it needs to move at speed. At worst, you're placing the businesses at risk of being left behind by competitors who've made the switch and are reaping the benefits a modern payments solution can deliver.
Let's take a closer look at the dangers of standing still and why commercial success increasingly depends on having the right payments technology and payments partners.
New challenges, new technologies
Over the past decade, the digital economy has reshaped how businesses operate and engage with consumers. Buying habits have changed and payment methods have diversified to meet the needs of ecommerce and mobile commerce. Businesses must now think globally and in real time, using payments data as a strategic resource to increase operational efficiency and better serve their customers.
Legacy payments systems were built long before the forces now shaping commerce and consumer expectations. Their limitations will be apparent to any business that isn't optimizing its systems and adjusting to new market requirements and pressures, be it the need to cut costs, maximize revenue, or satisfy the payment preferences of customers who may be anywhere in the world.
This is where fintechs can bridge the gap, creating specialized platforms that put payments at the heart of your business.
Speed, scale, flexibility and reach
Legacy payments are slow and inflexible compared with modern payments platforms designed for the ecommerce era. Businesses must be agile and adaptable to take advantage of cross-border trade and reach new markets. They need payments solutions that scale, are versatile and customizable, and can serve customers anytime, anywhere.
Making piecemeal changes to legacy structures is a bad idea. It can be both time-consuming and costly and create operational problems and points of failure because different systems may not be interoperable. If you want to expand overseas and your backend is a complex mix of systems rather than a cohesive and purpose-built platform, inefficiencies will multiply and compound.
With cloud-based, modular platform technology, you have a unified solution and can easily add new features and payment methods. Your payments systems can flex with your business while managing risk, and your authorization rates can remain high and costs low when entering new territories.
Consumer power and payment choice
Consumers have grown used to the high level of service provided by digital pioneers such as Apple and Netflix. They expect payments to offer the same individual focus and seamless experience every time they make a purchase. Consumers want the experience to be simple and stress-free wherever they are and whatever payment method they use. Personalization and straight-through processing are therefore critical success factors in the digital economy.
Payments that are not optimized for digital-first and mobile-first consumers and can't accommodate local payment preferences will quickly lead to frustration. Moreover, a negative payments experience may lose you more than a sale: it could mean dissatisfied customers never return, and they may share their negative impressions with other potential customers.
One of the most important considerations is whether your current infrastructure can handle the growing variety of payment methods. If your payments aren't evolving and the only way to upgrade is through complex and risky integrations, it's bad for your business and your brand.
So, can you accept all major card types and local payments? Are you set up for mobile wallets such as Apple Pay and Google Pay? What about subscriptions, Buy Now, Pay Later (BNPL) and even emerging payments such as crypto payment Can you adopt these new payment methods quickly and without adding backend complexity? Any business with a legacy payments structure may fall short of these requirements.
No data insights, no direction
It's been said that the information about a payment is now as important as the payment itself. Because consumers today are more discriminating and the marketplace more competitive, businesses must use the data available to identify trends, patterns and preferences. Actionable data can reveal strengths and weaknesses, increase understanding of consumers and their buying habits and influence business decisions.
Legacy payments providers are unlikely to have a comprehensive view of customer journeys or be able to capture the right data at the right level of detail. Only modern payments providers with data analytics can offer a granular view and business intelligence. For example, many businesses don't receive detailed bank response codes and don't know why payments fail. Performance data and analytics are vital to measure the effectiveness of payments and show where improvements should be made.
Transparency and cost-efficiency
Keeping costs down is essential in today’s challenging business environment. Payments are a cost base that leaders should be optimizing to minimize expenditure and increase revenue. But this is an unequal struggle if you have legacy systems that constantly leak money. Worse still, even though many businesses know there are leaks, they can’t pinpoint where.
The solution is a payments platform with transparent pricing and real-time reporting on how money flows in and out of business. Without this visibility and control, your business will operate in the dark and suffer avoidable losses.
The way forward for payments
Businesses that cling to the past and lack a strategic view of payments will not thrive in the digital economy. The future belongs to those with modern payments platforms that provide value-added services. From versatility and global scale to data insights and market intelligence, these platforms can improve overall efficiency and maximize revenue.