How the digital revolution has helped real-time payments evolve into business growth opportunities
- New study published by Nasdaq-listed fintech company Nuvei offers insights from industry leaders representing large global companies
- Research highlights ways forward-thinking companies can stay ahead of the curve of digital advances in payments
Consumers’ experiences of everyday transactions – from buying a cup of coffee in a cafe, a birthday gift online, or sharing the cost of a meal between friends – have been transformed in recent years by the digital revolution. This has led to rapid and widespread acceptance of cashless payments via an app or digital wallet.
Those providing such smart, electronic transactions, including merchants, retailers, restaurants, hotels and public transport providers, have had to act quickly to keep up with the growing demand among consumers. Customers expect the newest, rapidly evolving digital payment methods, which require advanced payment platforms.
However, electronic payment systems and the technologies that drive them are no longer a simple means of settlement. Payments have become a strategic business pillar. By leveraging connected payments technology, companies can increase revenue and also consolidate their suppliers and data streams, while increasing their customer base.
Merchants with a progressive mindset can capitalise on these opportunities by leveraging payments technology to achieve their goals. These benefits, and the associated risks of falling behind, are outlined in a new study, “Empowering New Business Innovations with Payments”, published by Nuvei, a Nasdaq-listed financial technology (fintech) company, in partnership with market research firm IDC.
Researchers interviewed industry leaders at large global companies across international markets to get their views on how they operate in the rapidly evolving payments landscape.
Adding and removing payments channels and methods can have a critical impact on a business, the study has found. “One [industry leader] said that activating new payment channels such as BNPL [buy now, pay later] yielded a monthly revenue increase of up to 32 per cent,” Juan Franco, Nuvei’s general manager for Asia-Pacific, says.
Alex Tay, founder and CEO of Singapore-based ZeusX, a digital gaming marketplace for global users, reveals in Nuvei’s study how “orchestrating” – or carefully organising – a company’s payment systems can have a big impact on revenue. “From day one, payments have been a strategic factor; if we remove a popular payment method, we can see a 30 per cent drop in a month,” he says.
Keeping up with the rapid development of new systems requires businesses to optimise what are known in the fintech world as “payment stacks” – the technologies and components a company uses to process customers’ payments. The study highlights the importance of coordinating these stacks to meet customer demand and ensure revenue acceleration.
“Of the 10 companies interviewed, six had more than five payment providers in their stack, with three having more than 10 payment providers, highlighting the huge importance of payment orchestration,” Franco says. “Some organisations utilise up to 20 different payment providers in their payment stacks. Consolidating the data from these providers can become increasingly complex for merchants.”
Achieving excellence in operating payment systems, meanwhile, has become a new benchmark for leading companies. With consumers having so many choices in the payment methods they use, a merchant’s technical processes require “continuous optimisation” if they are to get the best results. By embracing innovative technologies such as payment orchestration, merchants can get an overview of their stacks and potentially unlock new revenue streams.
Franco says merchants are introducing new ways to help their payment systems meet customer demands for smoother, easier transactions. “Centralising payment management can have a direct impact on a company’s internal operations and improve the customer experience,” he says.
“As a payment orchestration provider, we can help increase revenue and reduce costs while delivering consumers’ preferred payment methods.”
The global Covid-19 pandemic, along with the widespread increase in e-commerce, have helped to spur the rapid evolution of contactless payments. Nuvei’s study shows the history and evolution of cashless payment systems, from credit cards slowly becoming popular in the 1970s, then embedded with microprocessors in the 1980s and 1990s, before the internet boom and online shopping took off in the 2000s, and today’s “connected payments” era.
Nuvei’s study says ISO 20022 is likely to be the standard for further payment data capabilities and cross-border integration between financial institutions for real-time payments between financial institutions.
Alvin Chan, sales director at Nuvei Hong Kong, says this surge in new payment systems will offer more business opportunities across the region, but also means the cost of payments is now a “prominent metric of interest in the industry”, along with the revenue each new channel may generate. “This is particularly relevant for merchants entering new markets,” he says.
While opening new payment channels can lead to significant revenue increases, there is also the lingering threat of cybercriminal activity.
Nuvei’s study reveals that companies are turning their attention to artificial intelligence (AI) – computer systems that can copy intelligent human behaviour – and machine learning to detect fraud. Such advanced technology enables more legitimate transactions to be completed while keeping fraudulent attempts at bay.
AI is also helping merchants to optimise their payment stacks and track the costs involved in using them. “One respondent in the study mentions that AI was implemented to optimise the processing of their payments stack,” Franco says. “They utilised data – layered and granularly – to extract greater efficiency from their payment investments.”
Franco believes Nuvei’s business role in the future will continue to be that of a partner in the industry, not just a fintech provider. “It is critical for merchants to work with payment orchestration partners like us who can enable transactions through all preferred channels and provide them with the consolidated data metrics to optimise their payment mix effectively,” he says.