Podcast: Play in new window | Download
For businesses, regardless of size, not all payments partners are equal. Finding the right partner to manage payments can be a key to improving cash flow and simplifying the payments experience, as well as making cross-border payment a piece of cake.
In a PaymentsJournal podcast, Rupert French, Product Lead at Worldpay from FIS, and Daniel Keyes, Head of Merchant Services at Javelin Strategy & Research, discussed what businesses can expect from a high-quality payments partner and how they can differentiate the best from the rest.
Differentiators in Payments Partners
Businesses barely have enough time to manage the core functions of providing products and services, so partnering with a third party to manage and optimize their payments is a wise move. It’s an opportunity to outsource a level of complexity to a third party and make sure that there’s as little friction as possible in payments.
“Your payments partner should be specializing in fund flow and simplifying the payments experience,” French said. “And there’s a huge amount of trust that business offloads to their payments partner, which has to be respected. We’re empowered with managing the primary revenue source in most cases for a lot of small, large, and medium businesses.”
A payments partner, such as Worldpay from FIS, can help with transaction data and cash liquidity in a bank account. As French notes, those two are key drivers behind the success or failure of businesses, particularly smaller ones.
In particular, improved transaction data enables a high percentage of payment acceptance with lower risk.
Payment Flexibility is Prime for Gig Economy
Gig workers often have to wait to get paid, sometimes as long as weeks after they’ve completed their work. The ability to pay gig workers any time, particularly on the weekend, is an important differentiator small businesses should look for in a payments partner.
“The possible competitive advantage presented by being able to pay those gig economy workers on non-business days with funds from online commerce could be enough of a competitive advantage to help keep that business above the waterline,” French said. “For example, consider competition for takeaway drivers on a Friday night. If you’re able to guarantee that you’ve got cash in your bank account to be able to pay that delivery right driver on the Saturday morning or on Sunday morning, that could help you keep that driver.”
Another important piece is the accuracy of data. “Being able to trust your payments partner to provide you not only the funds but also the data—which you need to be able to reconcile your prior days’ activity services requested or services provided—is absolutely critical,” French said.
Cross-Border Payments Optimization is the New Standard
For small businesses that are international and use international gig workers, moving funds across borders at the lowest possible cost and at the highest possible speed can be crucial.
But cross-border payments can be complex and a headache to deal with.
“The rails operated by the banks invariably have cut-off times, depending on the geographies in which you operate,” French said. “There can be significant layers of regulatory control which can further complicate payment movement. What your acquirer should be aspiring to do is operating on the best possible domestic schedules on clearing card payments.”
For many small to medium-sized businesses, expanding into new markets abroad can be daunting, and not just because of learning the new market environment. Sorting out the currency conversions and payments infrastructure can be devilishly complex, and this causes many businesses to shy away. But this can be ameliorated by the right payments partner.
“By leveraging the power of your acquirer to access markets that would otherwise be fabulously complex to access, small to medium-sized business can try out explorative initiatives abroad,” French said. “So with a great payments partner, you can trial product sales within a market that you don’t want to enter fully, to engage real-world market appetite. Based on that, you can then better inform the level of investment you want to put to move into that new market.”
All of this falls under the rubric of value-added services, which Keyes said is important in differentiating payments providers.
“A lot of providers can offer other varying interfaces and so on,” Keyes said. “But when you add more value-added services, you better meet the needs of a merchant and you can really stand out from other payment providers. These value-added services are increasingly necessary for businesses and merchants to survive and succeed.
“As alternative payments became more popular, these value-added services become less of a value added (and) more of a requirement.”
French noted that just figuring out the payments aspect can be a huge task for cross-border businesses. This can distract business owners from focusing on the core aspects of their business.
“Removing the complexity of cross-border funds transfer and the regulations associated with it, to just enable our customers to really focus on what they care about, is really a motivating aspect of my own role,” French said.
In general, reach and breadth of services distinguish the haves from the have-nots among payments providers.
For reach, businesses should look at where the provider has customers or partners and how those align with the customers the business is interested in serving.
Depth refers to the depth of features offered by the provider. This could involve cross-border payments, as previously mentioned. Another popular one is the ability to advance funds based on a forecasted receivable due the following morning.
Overall, the outlook is bright for companies looking to expand abroad. By finding the right provider, they can lean on that payments expertise to get all of the infrastructure in line and have it ready to deploy when the company is ready to try out a new market.