In July, we had the opportunity to host a live session to talk all things payments. Eddie Beqaj, Head of Customer Management, and Joseph (Joe) Hargreaves, Senior Product Manager came together to share customer insights on building an efficient payments strategy by balancing the three pillars of cost, risk and conversion.
The panel began by highlighting the current landscape of payments in Canada with a focus on the available technology options. Eddie and Joe then dove into the three pillars of cost, risk and conversion and how each of them play a role in building your payments strategy. Lastly, they wrapped up the conversation by laying out a framework for balancing the three pillars to have the most efficient payments strategy for your business.
It was a packed 30 minutes so we would definitely recommend checking out the full session here. In the meantime, here are favourite takeaways from the chat:
The current payments landscape in Canada
1) Build or go full-stack
The current payments solutions are still quite fragmented. Companies either have to settle for many different payment providers to get what they need or for a full-stack service payments provider that doesn’t fully understand their business, users, or needs.
2) Fragmented solutions = fragmented data
Building a tech stack can provide a more personalized approach to payment solutions but can be very difficult when it comes to data consistency. Transferring data from one platform to another is not only inefficient but also costly.
3) There is a heavy reliance on banks
Canadian enterprise businesses still rely heavily on banks for the most part when it comes to payment solutions. While reliable, banks can be slow in rolling out new payment initiatives. With users demanding easier, quicker and cheaper payments for various activities, a slow rollout of new initiatives can lead to a loss of customers and revenue.
The 3 payment pillars: Cost, risk and conversion
1) It’s not just transaction costs
The cost of implementing a payments strategy should be seen as actual transaction costs bundled with 5 or 6 additional ‘soft costs’. These additional soft costs range from the cost of failures and manual intervention to the cost of lost or delayed working capital within the market. Reducing risk around the payment lifecycle can actively reduce these soft costs and increase efficiency.
2) You can have 2 but not all 3
In some ways, balancing the three pillars is similar to the old construction model: you can pick two, but not all three! Multiple factors can impact priorities which directly impacts cost. For example, we have seen customers with higher average transaction amounts need to prioritize and manage risk whereas clients with lower transaction amounts tend to focus on improving and accelerating conversions. Both of these objectives would impact transaction costs and soft costs differently.
3) Balancing the 3 pillars, growth and client expectations
Expanding on the point above, the balance between the three pillars is also based on the delicate balance between the company’s incentives and its clients’ expectations. An organization’s incentives towards increasing revenue and profitability have to be weighed against their client’s expectations of their product and processes.
Looking ahead
Overall, both Joe and Eddie agreed that we are seeing a lot of optimism in the market for the future, especially with the advancement of new direct-rail technologies. While we are a couple of years out from the actual release and the testing of these elements, we are seeing a lot of excitement from clients about new and innovative solutions that help convert users faster and make it quicker and easier to move payments.
Curious to learn more? Watch the entire session here! If you are looking to learn more about Flinks Pay or how to optimize your payments strategy, chat with our team today!
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