By Paul Davidson, Stephen Whitlam and Paul Lucraft

When we say that businesses are struggling with inflated costs, we aren’t telling you anything that you don’t already know. It is likely that you are facing many of those costs yourself, seeing reduced footfall as consumers tighten their belts in response to economic downturn.

There are fewer opportunities to pass on your increased costs. Instead, you should – if you haven’t already done so – undertake a forensic analysis of your spending.

Are your resources being directed to the most effective areas?

Are you as efficient as possible?

Are there any specific opportunities to get ahead of your competitors?

Addressing those questions, many companies race to their office consumables, energy tariffs and waste management, finding significant savings in their biggest areas of spend. With this document we are recommending that you take that enthusiasm and address your banking and payments. It is an area of spend that is often overlooked, but – due to the rapid advances in the world of fintech – it is also one that can reap impressive rewards.

Let’s look where they can be found.

1. Deal with rising costs of commercial debit cards

If your card sales include a high proportion of B2B activity, you may have already noticed a significant increase in costs. If not, an increase is almost certainly coming. Although the increase affects all sales channels, it will have a higher impact on companies that rely more heavily on e-commerce, telephone or mail-order activity.

For a bit of background, the card schemes – Visa and MasterCard – have increased their own fees as well as those paid to the card issuers. The greatest impact is on cards presented by business users, as you can see from the graph below.

How will the interchange cost increases impact you?

Innovative Payment Solutions Graph

As a rule, your card processor will pass these increases on to you, the merchant. The higher volume of business-to-business sales that you have, the more noticeable the increases will be. In the best-case scenario, the increase will be limited to the amount the service provider faces. But some providers will take the opportunity to widen their own margins – increasing their profits at your expense.

The good news is that in particular circumstances we have been able to identify ways to enable significant reductions in those costs for our clients.

2. Understand how open banking can benefit your business

The revolutionary way to pay for things is spreading from ecommerce to telephone and in-store transactions.

In the existing model, the cardholder provides their card details – which is easy with Chip and Pin or contactless, but slow and a hassle online and by phone unless the customer has stored those card details from a previous purchase.

By giving the website card details to store, it can also be a security nightmare for banks; what if the website doesn’t have appropriate levels of security? A hacker could come along and steal the details for their own use.

By using open banking, the purchaser simply selects their bank from a drop-down box, biometrically confirms it’s them (with a fingerprint or face recognition via the bank’s app) and the payment is sent and settled instantly.

It doesn’t matter if it’s a regular customer or a first-time purchase, the buyer doesn’t need a banking card to pay. For telephone sales, you can send the customer a link which they can open in their mobile device to smoothly complete the transaction, or to use on their computer by signing into their banking app.

At a time when many businesses are seeing increased transaction friction and declined transactions, caused by 3D Secure authentication being added into the card payment process, open banking offers a solution where authentication requirements were built in at the design stage, so are effortless for your customers.

But why are retail banks keeping Open Banking a secret?

It might be because with every purchase made using business cards, the bank gets an interchange fee, of anywhere between 0.75% and 1.7% of your hard-won sale value.

Added up, that can be quite a substantial amount to add to your bottom-line if your customers paid through open banking.

But it is you, the wholesalers and retailers who have been paying the Interchange and you who will benefit most from its removal from the supply cost chain.

Key benefits of deploying open banking:

  • A smoother customer experience
  • Fewer declined transaction
  • No chargebacks
  • Significantly lower costs

3. Consider receiving payments by Link

Many clients are looking at improving the way in which they process card payments to match the changes in the way customers live their lives. Many of us now use our cards through our mobile phone apps and we may often be away from home when we make payments.

Contactless payments make up 48% of all European payment transactions made at point of sale (POS) each month.

To help meet the challenges of remote (over the telephone) sales to ensure that they complete sales securely many businesses now send a link by text or email for the customer to be able to connect direct to their billing page.

This technology removes the scope for keying errors, speeds up the sale and is more secure and cheaper to process as the cardholder completes the payment using online security. Merchants can obtain a link quickly and easily from their bank through their virtual terminal.

The same technology can be used proactively in chasing payments due on account balances or collecting payments with instalment plans. It also enables direct payments from bank accounts as well as traditional card payment options and can thus help moving to access open banking.

Innovation in Payments Solutions

One innovation which the payments team at ERA have seen is to supplement the service offered by the card acquirer with tools to manage the links generated. Managing these links efficiently is key to unlocking further benefits to the business. Links can be tracked, payments monitored and goods only released on confirmation of funds received.

Other features include the ability to set future links to be sent on a planned timetable, old links cancelled if not used and automation of the follow-up processes and management information to help manage back-office processes; be that account collections / sales etc.

ERA is able to build into a review of payments processing charges and services consideration of operational redesign to enable clients to take advantage of innovation in sharpening up business process and efficiency as well as direct cost savings.

Payment request links replace difficult bank transfer payments with just a few clicks.

Innovative Payment Solutions Image

The way that your business takes payments is not and should not be set in stone. Innovation is open to you, but it’s important to find the most suitable tool for your needs.