Achieving Payments Optimization
In theory, succeeding as a company that sells goods or services seems pretty straight forward: make something people want to buy and sell it to them. But as any modern commerce business can tell you, there are far more roadblocks to success than simply selling something worth buying. Regardless of how good your product or service is—or even how in-demand your business is—success often hinges on your ability to optimize your payment processing. Because what are payments if not the true fulfillment of an ongoing customer relationship and the lifeblood of any business?
This blog is the first in a series, digging into the angles from which to approach payments optimization and the business success directly associated with efficient payment strategies. Let's get started!
Defining "Optimized" Payment Processing
When we talk about payment processing, we refer to the full operation of accepting different payment methods and card types, offering an intuitive checkout experience, and using one or more payment service providers to actually process your sales—not to mention procedures for handling subscriptions, returns, refunds, and chargebacks. If you're an international business, it also includes the countries you support sales within and the currencies you accept.
How you manage all of these complexities is a determining factor in how your business performs. Optimizing them means you go a step further: you set goals for your payments operations, learn from your payments data, and you operate at maximum efficiency. While that might sound intimidating, we've identified five key objectives to guide your quest for payments optimization:
1. Realizing Your Greatest Revenue Potential
To maximize your revenue potential, it is crucial to make informed business decisions. With good data and direct oversight of your payments operations, you can always find new opportunities for growth. While driving more revenue at its base level does mean making more sales, that can take shape in a variety of ways, such as:
Identifying missed opportunities to make successful sales to potential customers who previously tried and failed (i.e. increasing conversion and approval rates)
Discovering the best markets to sell in
Accepting your customers' preferred payment methods and in their preferred currencies
Swiftly identifying and responding to outages to minimize their impact on sales
Enhancing your checkout process for a smoother customer experience
Reducing involuntary churn
2. Keeping Costs Low
One of the central tenets of payments optimization is cost reduction. The costs of processing payments can really add up—especially when you aren't tracking where fees come from and what's driving them. As such, finding ways to cut costs requires work and a deliberate strategy. Here are just a few examples of what cost cutting measures might look like for your business:
Ensuring you're always sending the correct data with each card transaction to optimize interchange costs
Identifying and blocking high-cost payment methods that don't drive enough revenue to offset associated fees
Negotiating competitive rates with card brands, processors, and other vendors
Keeping stored credentials up-to-date to avoid paying for transaction attempts that are guaranteed to fail
3. Decreasing Fraud Risk
Fraud can incur significant costs for your business, both in the workload it puts on your employees and the actual financial cost of fraudulent declines, chargebacks, and returns. With the right payments data, you can identify trends in your transaction volume and identify opportunities for mitigating fraud risk by:
Blocking BINs or issuing banks frequently associated with fraudulent transactions
Customizing your fraud rules with each payment processor
Detecting and addressing fraud attacks in real time
Adjusting your customer communications and chargeback response processes to win more chargebacks
4. Understanding and Serving Your Customers
If payments are the lifeblood of a commerce business, customers are the true life source. Fundamental to your business success is your ability to market to, attract, and deliver excellent experiences to your customers. Your payment processing data contains a multitude of information about who your customers are and what they want, such as:
What countries, regions, or markets they exist in
What payment methods and currencies they use and demand
What payment methods (or card types) they gravitate towards for the largest orders
Creating happy customers isn't just about delivering a positive shopping experience; it often comes down to designing a seamless checkout experience. In a world of increasingly online commerce, customer satisfaction and loyalty often comes down to how easily customers can go from adding something to their cart to checking out successfully. The design and logic of your checkout flow is an undeniable piece in the payments optimization puzzle.
5. A/B Testing New Solutions
Embracing innovation is essential for staying competitive. To optimize your payment processing, you need the ability to test new processors, payment methods, markets, and checkout experiences and measure their performance side-by-side. This empowers you to make data-driven decisions and continually improve your payment processes over time.
Optimizing Payments With Pagos
Payments optimization is not a one-size-fits-all solution—it involves a strategic approach tailored to your unique business needs. But while the approach may differ, we believe every commerce business can realize their highest payments potential with a strategy centered around these five optimization cornerstones: cutting costs, increasing revenue, delighting customers, reducing fraud, and market testing new solutions.
In the coming weeks, we will explore each of these cornerstones in more detail through a series of blog posts. These posts will provide actionable insights and strategies to enhance your payment processes—along with examples of how the Pagos platform and suite of products can help you achieve it. With Pago's data aggregation capabilities, out-of-the-box data visualizations, automated data monitoring tools, and more, we have everything you need to optimize payments without exhausting your internal resources.
Streamline your payment processes, maximize efficiency, and boost profitability with Pagos! Check out the next couple posts in this series: