Keeping up with the Fintechs
It’s business 101 that even if you have the best product or service in the world, you will never make a success of it if you don't have the means for your customers to pay for it in the way they want to.
Yet why do we find in so many businesses that, when dealing with suppliers, you can have the best relationships and discounts in place yet only a small margin are equipped to pay them.
Make it easier for your customers
In today's technology-led society, it has never been more important for companies to go that extra mile and offer a vast range of payment methods - everything from traditional cash and credit cards to Apple Pay, PayPal, Direct Debit, direct remittance and even cryptocurrency such as Bitcoin. It is now incumbent on all modern businesses to keep up with this pace of change when it comes to their payments and remittances.
Last September, it was reported that purchases made on plastic accounted for more than three quarters of retail sales, with cash accounting for just 22%. The changing habits are clear and cash usage will be driven down further and faster in the coming years.
Some of this change could be attributed to the Government's ban in early 2018 on fees levied by stores when paying by credit or debit card. This has been augmented by the growth in many smaller merchants and one-person micro traders taking advantage of the availability and ease of using card readers from the likes of Square, PayPal Here, iZettle or SumUp or online and app services such as Stripe.
As this article predicted last year, SMEs have had to go cashless to keep up, no matter how small financially the transaction a customer wishes to make.
The rise of open banking
But the growth in popularity of open banking tools is also playing its part. Since PSD2 came into force in January last year, Fintechs are cleverly using open banking's ability to hook into people's accounts to show them data on every penny of their spending. These APIs will eventually be programmed to tie in to every electronic payment made whether for bills or shopping, offering deeper insights on where our money is and where it goes.
This will continue to fuel the demand for businesses to put in place robust procedures and systems for accepting payments of all types and kinds.
Advances in payment platforms from Fintech and beyond
Is it any wonder then that £7.6bn has been invested in UK Fintech companies since 2014. The fast growth of this sector shows how crucial it is for companies to adapt to the changing face of payment technology. This will only become more important to a digital-first Millennial generation as technology giants they interact with daily such as Google, Amazon and Facebook move deeper into becoming payment gateways, just like Apple already has successfully with contactless Apple Pay on its smartphones and Watch.
Amazon now offers its own cashback credit card and Apple's CEO Tim Cook recently announced one similar, made of titanium and promising cashback when a customer buys from its own physical, online or app stores or from iTunes. This was seen by experts as a way to keep a payment foothold even in those places where Apple Pay is not currently accepted, and as a way to stay in touch with the changing nature of the incumbent finance industry being challenged by Fintech entrants to the market such as Monzo and Starling.
The challenge for businesses
As a business, accepting cards payments generally follows the same pattern.
But integrating the execution of these payments within your ERP is critical whether for your customer and/or supplier base. If you can't or don't have the technology to most effectively process them, aggregate them and spot fraud, you risk extreme complexity with reconciling your payments and chasing debtors.
The escalating maze of payment platforms doesn't have to bring confusion though. By accepting more and more options, you widen the ability for potential customers to transact with you - and to grow your profits and wider business.
PayPal is one great example. Once it was the preserve only of eBay buyers and sellers, but now your PayPal account can be used to purchase from big high street names online, Currys PC World being just one example of this.
Cryptocurrency too such as Bitcoin can now be spent in several places across the UK, in a variety of outlets from pubs to small stores to mechanics to online retailers.
Underpinning your success
Having an ERP system in place that can handle various payment gateways and allow customers to make direct payments makes it critical for robust technology and practices to be implemented, ones that ensure orders are paid for and fulfilled, whichever method is used.
Payment habits are changing fast. Now businesses of all shapes and sizes must ask if they are ready, willing and able to do the maths and see the positives that brings them.