The payments sector must adopt a performance mindset to drive growth

Payments is one of the most dynamic areas of technology, and the pace of change and innovation gets ever greater. Businesses across all sectors are continually looking for the next big disruptor within payments, offering consumers ever-greater numbers of alternative payment methods (APMs), as part of their endless quest to optimise the customer experience and drive both loyalty and growth.

This focus on innovation has brought with it huge benefits for end users, and those businesses that have successfully integrated, localised and personalised APMs into their payments infrastructure have gained competitive advantage as a result.

However, whilst innovation is unquestionably a good thing for our industry, the pressure for everybody within the payments eco-system to continually innovate and look to the future, means that we’re now at risk of overlooking the fundamental principles of effective payment processing.

It is all too easy to get caught up in the ‘hamster wheel of payments’, where businesses are focsed on ‘keeping the lights on’ in their payment eco-system, dealing with regulation, fraud and chargebacks, scheme changes and a wide network of suppliers.

As a result, businesses get trapped in a never-ending cycle, balancing business as usual tasks with the need for innovation, but never really getting to grips with performance and the need to drive maximum revenue from their existing payments set-up.

This week we published a white paper, The New Performance Agenda, which argues that the payments sector needs to focus as much on the present as the future; to take a step back and examine closely the performance of existing payments infrastructures, rather than focusing all of its efforts on the never-ending race to innovate.

The paper details ten key focus areas to drive payments performance, from the payment gateway and payment page optimisation, through to managing chargebacks and detecting and preventing fraud. In each instance, we show how businesses across all sectors can make significant improvements to their business (higher acceptance rates, fewer fraud cases, reduced costs etc.) by analysing their current data to make more informed, strategic decisions around performance.

Indeed, driving payments performance is all about identifying and utilising meaningful data, analysing that data, benchmarking it, and then implementing a strategic plan to improve and optimise the given process.

The type of data across the payment landscape is wide ranging. It includes issuer responses or extended decline information, gateway configuration or transaction type flagging, and acquirer set-up, right through to currency usage and preferred local payment method process flow and responses.

For example, an area of payments where smarter use of data and insight is hugely beneficial is fraud prevention and management. Businesses should be analysing their data to accurately identify root causes of fraud and then to predict patterns of behaviour. By drawing insight from their data in this way, it becomes easier to efficiently manage and reject potentially fraudulent transactions, whilst maintaining, allowing and optimising the right level of deposits to be captured.

Data-driven decisions can deliver significant improvements across the entire payments economy, not just in terms of increasing acceptance but also in improving the customer payment experience.

A number of small tweaks across a payments infrastructure can add up to big operational and financial benefits. I liken it to the ‘marginal gains’ philosophy that has been deployed by many successful sports teams over recent years, where if you achieve small improvements in multiple areas, it results in a significant advantage overall.

Based on our own experiences within payments over the last few years, across a whole range of sectors, from gaming and gambling through to travel and retail, I believe that performance is set to be the next big play within payments, as businesses recognise the huge cost savings and growth that can be achieved simply by taking a more data-driven, strategic approach to their payments operations.

Of course, innovation will continue to shape the industry, but it is those businesses that focus on performance across their entire payments eco-system, whether that’s traditional card payments or the very latest APM, that will drive efficiency and grow the bottom line.

Jonas Reynisson is the founder and CEO of emerchantpay, responsible for the strategic direction of the emerchantpay business.

Prior to his career at emerchantpay, Jonas was the managing director of one of the local savings banks in Iceland for 13 years, chairman of a life insurance company, and a board member of one of the leading investment banks in Iceland at that time.

Jonas has a BA Honours degree in business and economics from the University of Iceland and an MBA degree from the Edinburgh Management School.

Related reading