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.
Counting the cost of legacy payments
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.
Leave the legacy and seize the opportunity
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?
The benefits of a modern payments system
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:
- Access to better data and business analytics
- Improved security and compliance
- Higher authorization rates
- Easier access to new markets
- Better user experience
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.
Building a business on a digital foundation
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.