Payments represent the lifeblood of business success. And business success, like payments, is inherently complex.
This inherent complexity, arising because today’s payments sit at the intersection of technology, finance, regulation, and end-user behavior, can impede businesses’ ability to maximize revenue.
“The payments industry has moved faster, technology has changed, consumer needs and experiences, and innovation have all changed significantly, not just along the last 20 years, but in the last three to five years,” Laura Miller, chief revenue officer and global head of eCommerce at Nuvei, told PYMNTS.
Miller said the complexity of payments, payment analytics and risk management represent the three “most significant” pain points that businesses must overcome to unlock revenue potential through payments optimization.
But navigating the labyrinth of options, regulations and risks composing today’s payments landscape is far from easy, even for the most sophisticated and forward-thinking firms.
One of the most significant hurdles in payment optimization is the sheer complexity of the payments industry. Over the past few years, particularly accelerated by the COVID-19 pandemic, consumer expectations have evolved. Customers now demand the ability to pay anywhere, anytime, in a safe and secure manner. However, with this convenience comes a host of challenges.
“The payment experience can be daunting for consumers,” Miller said. “From error messages to internet stability, and the vast array of payment options, each of these factors can either enhance or hinder the customer experience.” The proliferation of global payment methods adds another layer of complexity, making it imperative for businesses to approach the payment process holistically.
Nuvei recognizes these challenges, Miller said, noting the company has developed pretransaction tools such as smart routing and adaptive approvals to streamline payment transactions. These tools not only reduce complexity but also improve transaction success rates, with some clients seeing a 5% increase in successful transactions.
At the same time, the vast array of payment options available today presents a double-edged sword for businesses. While offering multiple payment methods can attract a broader customer base, it can also lead to confusion and inefficiencies. Striking the right balance between choice and operational efficiency is crucial.
“There’s always a trade-off,” Miller said. “The more choice, the more confusing it can be for consumers.”
She added that by embracing a localized approach and identifying the optimal alternative payment methods for their specific markets, businesses can present the right payment options to the right consumers, enhancing the overall customer experience.
In the digital age, data is abundant, but leveraging this data effectively remains a critical issue for many businesses. According to Miller, nearly a third of businesses report that limited data visibility is a missed opportunity to boost revenue. The key lies in using this data to improve payment processes and, ultimately, customer satisfaction.
Risk management remains a cornerstone of payment processing. As the industry evolves, so do the risks, particularly in the form of fraud. “Businesses face substantial financial losses due to fraud, which can amount to billions of dollars annually,” Miller warned, noting that fraud not only impacts the bottom line but also erodes customer trust and loyalty.
Looking ahead, Miller highlighted three key trends that are set to revolutionize payment optimization: artificial intelligence (AI) and machine learning, biometrics and contextual payments.
AI and machine learning are already playing a role in enhancing fraud detection and personalizing payment experiences. By automating processes, these technologies enable businesses to realize revenue faster and with greater accuracy. Meanwhile, biometrics, particularly in authentication, promises to simplify and speed up payment processes while enhancing security.
Perhaps the most exciting development is the rise of contextual payments, which Miller described as a way to enable and automate payments during personal moments.
“Contextual payments create an emotional connection for consumers, making them feel confident in their purchases,” Miller said, citing as an example an end user watching their favorite show and instantly purchasing items featured on screen, or seamlessly paying for services through a mobile device while on the go. This trend has the potential to transform the way consumers interact with businesses, she added, making payments a more integrated and intuitive part of everyday life.
