Payments Increasingly Central to Business and Consumer Experience
This blog post is republished from an article that Amir Wain contributed to the Mexico Business News.
Retail and business customers today are not only expecting smoother experiences, they‘re demanding them. A critical part of many customer journeys, both digital and physical, is the moment of payment. Once an overlooked step with low expectations, payment experiences are becoming a key concern across industries seeking to make paying and receiving payment ever more fluid and differentiating, whether the moment of truth is at checkout, payment for a recurring service, payroll or settling an invoice overseas.
The key to capitalizing on this important business trend is understanding the two-part model that underpins most digital payments: issuance and acceptance – systems and solutions that allow individuals and businesses to make reliable, secure payments using credentials, like digital cards, and those that allow merchants and others to accept them, respectively.
This more streamlined and innovation-driven approach to payments has been years in the making and was greatly accelerated by the pandemic when individuals and organizations had to adapt to survive, overcoming the closure of bank branches, dine-in restaurants and countless cash-based processes.
Much of this dramatic shift continues to be quietly led by innovators collaborating behind the scenes to hide complexity and delight end users at the moment of payment. A tightly woven fabric of specialists includes acceptance networks like Visa, Mastercard and American Express, merchant acquirers helping to make accepting digital payments easier, issuer processors like our own company, i2c Inc., that make it easier to open accounts and wallets directly on mobile phones and other devices, and a variety of fintech players contributing their particular expertise and closing innumerable gaps within the financial realm.
The result is an acceleration of innovation so deep and wide that a payment that was hard and time-consuming yesterday, must and can be made simpler, faster and more invisible today, regardless of what business or part of the world you‘re in.
“Digital transformation” has become a popular buzzword that refers to the use of technology to transform something that was complicated, expensive or relatively inaccessible to something that’s simpler, more affordable and convenient. In financial services and payments, we‘ve come to see much of this transformation led by financial technology (fintechs) firms, some of which we recognize as new brands and others that are less familiar, but like our company, enable fintechs, banks, merchants, acquirers and other businesses to overcome legacy payments technologies and leverage new approaches like BaaS (banking as a service).
So, how are these transformations manifesting themselves? The short answer: in countless ways, most of them faster. That’s because financial technology and payments innovation is both global and local, driven by visionaries in small and large organizations that require infrastructure and partners with the speed-to-market to match their novel and forward-thinking ideas.
Where are payments impacting business?
Payments and financial innovations are broadly impacting business in interesting ways, for example:
- Issuing technologies make it easier to open a debit, prepaid or credit account. The pandemic required replacing in-branch and in-person processes with new digital ones, like virtual account opening. These technologies today make it easier for a greater number of people and businesses to access the instruments they need to pay digitally, whether through a traditional institution or a fintech. For many individuals, these payment instruments can also be the key to starting a formal financial identity.
- A similar group of technologies also makes it easier for small and microbusinesses to accept and receive payments digitally for the first time, spurring new kinds of entrepreneurship and reducing dependency on cash. As a result, the corner kiosk that only accepted cash can now accept a quick contactless payment from your card or smartphone and participate in an online delivery service. It’s also important to note that accepting digital payments in this manner requires a secure and often digitally-issued account in which to receive them.
- Payment innovations are also attracting new customers for different types of e-commerce and recurring services like streaming and ridesharing, which have often required what’s known as a card on file. Traditional businesses are adopting these same capabilities to emulate these sleek customer experiences and change the way their customers transact by embedding the ability to open an account and issue a payment credential directly into an app or associated wallet.
- Yet another example is making it easier for online and brick-and-mortar retailers to offer things like buy now, pay later (BNPL) – the ability for customers to receive goods immediately and pay over time using installments – a feature that also helps many to establish credit worthiness over time.
- Crypto is also having an impact in areas like crypto-backed cards where we‘re seeing a rapidly expanding and diverse group of consumers around the world wanting easy ways to convert their cryptocurrencies to fiat for spending in the real world. Another trend we are seeing is crypto rewards for consumers attracted to the prospect of having their loyalty rewarded in cryptocurrency instead of traditional points or other units of value.
Key Lessons for Business
Customers across different industries have control over their own user experiences. When it comes to payments, customers prefer it to work like electricity, which is to say the least evident and most automatic part of the system. The less friction, the better.
But if seamlessness is important, then businesses must look closely at reliability, scalability and security. To achieve this, businesses need agile and reliable financial technology partners that can work collaboratively with them to protect their interests and help them keep pace with changing customer expectations, emerging technologies and competitor value propositions.
Ultimately, even the most innovative businesses want to be able to focus on what they do best – for example, to help the underserved establish credit worthiness and healthy financial habits, like some fintechs do – while their financial technology partners focus on adapting as the environment changes.
Payments and Financial Innovation Abound in Mexico
Major innovations in customer experience may have their origins but they have no geographic boundaries. As it relates to payments and financial services, Mexico is no exception, beautifully building on top of and adapting capabilities to suit its own market opportunities and realities.
Take organizations like Credijusto, for example. Headquartered in Mexico City, the company is geared toward providing financial services and credit to SMBs across Latin America. Since their program rollout, they have partnered to launch feature-rich corporate cards and have even become the first fintech in Latin America to buy a regulated bank in Mexico. They are thinking critically about their customer needs and leveraging partnerships and collaborations to realize true innovation in the region.
And this type of partnership and collaboration strategy is not unique to Mexico. Facebank (Puerto Rico), Cornerstone Trust & Merchant Bank (Jamaica) and several others are exploring use cases for credit, debit, prepaid, cryptocurrency and ACH programs. All are interested in partnering with payment companies to leverage faster innovation cycles and a self-service “plug-and-play” type platform with an eye on building tomorrow’s financial infrastructure.
Innovations in payments have brought about new opportunities for businesses to differentiate themselves and strengthen loyalty and preference with customers. Like other disruptions of recent memory, as payments continue to become more frictionless and invisible in other aspects of our lives, the less appealing and more friction-filled traditional payment experiences will become for customers.
As businesses continue to look for ways to delight customers with features and convenience, let’s not forget the moment of payment and its lasting importance in the changing customer journey.