Strategic Value Payments

The widespread adoption of online, mobile and smart devices among consumers continues to dramatically change the way people shop and pay for goods and services.

Digital connectivity has created expectations of seamless multichannel experiences in which payments are embedded in the path to purchase. Merchants that can accept any payment method, through any channel and in any currency are well positioned to benefit from the growth of global e-commerce.  

In a 2019 Forbes and J.P. Morgan survey of more than 300 executives worldwide, just half said their company can deliver well on the overall customer experience. However, a vast majority agreed that payments are an integral part of the customer experience.

As the e-commerce payment engine for both emerging growth and Fortune 500 businesses, J.P. Morgan processes about $1.5 trillion in annual payments on behalf of its clients. The J.P. Morgan Merchant Services team has identified five ways every business can maximize the strategic value of consumer payments.

1. Give consumers the payment experience they want

What is the payment experience that consumers—and thus businesses—are looking for?

Businesses want their end-to-end revenue cycle (payment acceptance through reconciliation and posting) to be easy to execute and manage and to be seamless. They also need payment solutions to be customizable and flexible based on demographics, industry, regulations, and local and global geography. 

The survey reveals that speed and ease of use are the most sought-after characteristics of payments (45%). The ranking of what matters for businesses, with speed and ease on the top and fees at the bottom, confirms a huge shift in how businesses view payments. They are no longer a commodity, when what mattered most was the cost, but a valuable, differentiating feature of the customer experience. 

2. Use payment data to optimize and expand business

Payment data is a treasure trove that can not only keep the business engine running efficiently but also rev it up. Analyzing payment patterns enables businesses to identify fraud, improve authorizations and provide richer data to other members of the payments ecosystem. They can also use data to identify new business opportunities, such as customer segments, markets and regions.  

The amount of payment data is growing, creating more competitive opportunities. By 2030, it is estimated that there will be 130 billion connected devices worldwide—refrigerators that restock themselves, cars that pay for gas and tolls, for example—that will automatically generate payments, creating an explosion of entry points into a business and generating masses of new customer and payment data.

To use payment data to its full potential, it needs to be integrated with other data, such as consumer demographics or location.  However, due to compliance and privacy considerations, a majority of companies (59%) are not able to integrate their payment data with other streams.

Companies are beginning to recognize that payment data is a missed opportunity. The top characteristic they are seeking in a payment solutions provider is the ability to help them use technology to access data and enhanced offerings. 

3. Disrupt payments to disrupt markets 

Advanced technologies have disrupted the business world, enabling the introduction of new online and mobile business models. The adoption of new models will further explode with the broad implementation of 5G. Companies cannot survive without competitive business and delivery models, such as direct-to-consumer or e-commerce platforms which, in turn, cannot function without the right payment methods.

Among the surveyed business leaders, unattended checkout was expected to be the most widely adopted new payment experience, followed by social commerce, which is the use of social networks in the context of e-commerce transactions. Ranked as the third most popular was dynamic pricing, or the practice of varying the price for a product or service to reflect changing market conditions. More than half of executives surveyed were either already using most of these differentiating business models or expecting to do so within the next three years.

4. Go global, act local

Global business expansion makes payments more complex as different geographies favor different types of payments for cultural and socioeconomic reasons. When asked how they balance meeting local market needs and having uniform global processes, the biggest group (42%) said they favor meeting the needs of each market and offer processes and solutions accordingly.

Our survey reveals the regional differences in preferred payment options. For example, while PayPal is enabled by 42% of businesses in the Americas, only 6% of executives from APAC told us that they enable it. In contrast, 60% of executives from Asia enable PayBox, compared to 12% in the Americas. And SafetyPay is much more popular in Europe (29%), than in the Americas (18%) or Asia (2%).

5. Integrate payments, consolidate providers

A business’s incoming payment flow can be fragmented when processing is managed by multiple payment providers. No wonder then that one of the top challenges that companies have with handling emerging payment options is integrating them with banking solutions.

As businesses grow, aligning payment acceptance and cash management strategies can streamline cash flow, optimize liquidity and improve the efficiency of outbound payments. That means merchants need to align payments with their treasury and finance strategies and work with partners that can help.

The possibilities for new business models and payment options are growing with the development of advanced technologies. But with the growth of options comes an increased need to consolidate and select only the best partners.