How rethinking your payments can increase revenue and delight customers
If you've ever managed a scaling platform that serves merchants of any size, you understand that product, service, and customer needs change rapidly and often. While growth is good, it can come at high costs both to your bottom line and customer experience. Below, we share what we've learned from our customers about the key indicators that signal the need for change to your payments solution.
1. Increased costs from your provider
Many software platforms find that payments present the ultimate predicament. Payments should be a core component of your product, but as your business scales, costs can quickly add up. Do you know the saying "what goes up must come down"? Well, that's not exactly true when using a payments provider that charges by volume (vs. a flat fee). Any service provider you seek out should have a pricing structure that accommodates changes in your business needs as you grow. Volume-based pricing is a tricky way providers penalize customers for growth, which is why many businesses have long considered payments a cost center rather than a profit center.
2. Limited support
Issues with declined transactions, chargebacks, or disbursement delays for smaller merchants especially, could mean the difference between keeping the lights on or meeting financial obligations on time. Consider that as you scale, some of your larger merchants may be scaling too, which could result in more complex support issues.
Using a third-party payments provider means your customers may have to contact your provider when they're having technical payments difficulties with your software. Imagine your banking app stops working. You call the customer service number to determine if pending transactions have been posted to your account, and your customer service representative gives you another company's phone number to call. This happens in payments all the time. Besides being forced to engage with a support experience they've not encountered before, seeking outside help for payments problems on your platform would likely mean poor customer outcomes.
Once you've started considering improved options that allow you to own your payments, ask yourself the following regarding support:
- If my merchants have an issue, how will they solve support issues?
- If I experience technical difficulties, how prompt is the response time?
- Will I have personalized assistance from my provider?
Ultimately, you'll want to proceed with the payments solution that offers dedicated, timely support, thorough documentation, and personalized guidance and care.
3. Merchants feel your growing pains
Even with the best intentions to shield customers from product inefficiencies, your software problems will eventually become theirs without upgrades and improvement. The providers responsible for handling your merchant's funds also have the authority to change the rules whenever it suits them, irrespective of your needs. Economic fluctuations propelled by uncontrollable factors could render your formerly stable and reliable merchants riskier, causing funds holds and unfair limits.
Remember, your customers are consumers also. They've likely experienced the seamless ease with which they use ride-sharing, money transfer, and food delivery apps. These frictionless experiences have become the norm for software, and your product experience should be no different.
4. Increased payments volume
Whether it's supercharged or steady, growth is great! It can mean you've found the right product-market fit, you've built a best-in-class user experience, are first to market, or all three. Increases in your merchants' payments volume mean that your platform is humming and presents opportunities to do more for your merchants.
Some of the most successful payment facilitators do a lot more than payments. Companies like Toast, for example, offer back office support, a partner ecosystem, and digital ordering, which make it easier for their restaurant customers to serve patrons better. Platforms processing even $1M/annually, which may seem small by some standards, have the opportunity to think about providing even more financial services to their customers. It often starts with owning your payments stack.
5. Need for ownership to do more
The trend in software is verticalization, as companies strive to be a one-stop-shop for merchants in need of a variety of solutions. Payments are the product, meaning with payments ownership, you can offer extended financial products and services, creative fee structures, and enhanced product innovation. Payments are also profit, and help you create a new revenue stream or make an existing one more profitable.
If you're thinking about what your customers will need next year and in the next decade, then learning how to own your payments now is a natural next step to having more control and building for the future. Your customers will be delighted to discover you've thought about their needs before they have.
Any of the challenges above, either individually or collectively, are signals that it's time to rethink your payments solution. What you may think is merely the need for an upgrade to a higher level of service is usually an indicator that a more comprehensive solution is best suited to address all of the issues caused by growing pains. For many software organizations, owning payments historically seemed out of reach, but no longer has to be. Learn more about how you can earn on your payments now while learning and preparing for full payments ownership in the future.