November 22, 2024
The world of payments is rapidly evolving, with businesses needing to adapt to new technologies and changing consumer behaviour. At UbiCllaborate 2024, Adrian Ferguson Tuor from Stripe explained that what was once seen primarily as a cost centre is now becoming a revenue generator, thanks to advances in payment optimisation and the increasing demand for flexible payment methods. During his presentation, he discussed:
Optimising Payments for Increased Revenue
A common misconception is that payments are just an operational cost for businesses. However, optimising the payment process can directly increase revenue. For example, a small 1% improvement in payment success rates translates to a 1% boost in revenue. This simple optimisation can be achieved by improving the checkout experience on your website or using tools designed to enhance payment processing.
The key to increasing revenue lies in offering a seamless and efficient checkout process. A well-optimised checkout suite can improve conversions by as much as 12%, resulting in a significant revenue increase. By reducing friction in the payment process, businesses can improve the chances of a successful transaction and, ultimately, increase sales.
Localised Payment Methods: Meeting Customer Needs
Payments are not a one-size-fits-all process. Different regions and demographics have distinct preferences when it comes to payment methods. For instance, offering localised payment options is essential for meeting customer demands. A customer in Asia may prefer mobile wallet payments, while a European customer might lean towards direct bank transfers.
Adapting to local preferences isn’t just about convenience—it’s about creating a customer-friendly experience. By offering the right payment methods for each market, businesses can increase customer satisfaction and reduce the likelihood of abandoned carts. This approach can help companies stay competitive in an increasingly global marketplace.
Payments as Revenue Generators, Not Cost Centers
Historically, businesses have viewed payment processing as an unavoidable cost. However, modern companies should start thinking of payments as a potential revenue stream. For every bit you improve conversion rates or optimise payment flows, you’re putting more money in the door.
By implementing smarter payment systems, such as subscription models or instalment options, businesses can not only capture more revenue but also foster customer loyalty. Tools like these can give customers the flexibility they want, leading to higher satisfaction and, ultimately, more sales.
Understanding Generational Payment Preferences
The rise of Generation Z is reshaping how people approach payments. According to recent studies, while 71% of Gen Xers use credit cards, only 42% of Gen Z do the same. This shift reflects a broader trend toward alternative payment options, such as Buy Now, Pay Later (BNPL) services.
Younger consumers prefer the flexibility of BNPL, allowing them to pay for goods in instalments rather than paying upfront. This approach appeals to those who may not have the immediate funds available but want to spread out payments over time. Offering these flexible payment options can help businesses capture this younger audience and increase sales, especially for larger purchases like parking season passes or event tickets.
Innovative Payment Solutions for Business Growth
Emerging payment technologies, like PayTo, are making it easier for businesses to offer real-time payment solutions while reducing costs. With PayTo, payments are made directly from a bank account, offering a seamless and secure experience for customers. This method also provides businesses with real-time information, allowing them to automate processes such as blocking failed payments and reducing administrative overhead.
As payment technology continues to evolve, businesses must stay ahead of the curve and adapt their systems to meet customer expectations. By embracing innovations like PayTo or BNPL, they can improve cash flow, streamline operations, and enhance customer loyalty.
Conclusion
Payments are no longer just a transaction at the end of the sales funnel—they’re a key component of revenue generation. By optimising payment systems, offering localised payment methods, and embracing alternative payment options, businesses can unlock new revenue streams and enhance the overall customer experience.
Watch the full presentation: https://www.youtube.com/watch?v=QqEk9D5Anyo&ab_channel=UbiPark
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