Podcast
The PaymentsJournal Podcast
Hosted by The PaymentsJournal Podcast · EN
Payments Content, Expert Insights and Timely News
52episodes
Episodes
Newest firstAll episodes
Why Painless Payouts Matter
Jan 23, 202500:22:43Tap to summarizeThe buzz is growing louder. Many merchants are tired of navigating intricate payout processes that drain valuable time and resources. They want to be rid of payment headaches and welcome more seamless efficiency. Merchants demand a cutting-edge payout solution that helps them focus on their business while giving them the peace of mind that the complexities of their payout operations have been managed. A Personalized Payouts Experience Payouts have historically taken a back seat to adding new payment acceptance functionality for consumers and the resulting experience can be fragmented and inefficient. Each market has its own set of payout rails that can be leveraged by domestic merchants but trying to cobble together a unified, global payout experience that allows for personalization has been a substantial challenge for organizations. In a recent PaymentsJournal podcast, John McNaught, Senior Vice President and General Manager of Payouts at Worldpay, and Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, discussed the importance of payouts, the ways merchants can customize the customer experience and the innovative tools that can optimize payouts. No Longer Ignored One of the main reasons there hasn’t been substantial headway in the payouts space is that it hasn’t been a high priority for many organizations. While merchants have fiercely competed over the shopper checkout experience, payouts have often been deprioritized and accomplished using traditional systems. In the insurance industry, the payout experience was often purposefully neglected in the past. For example, an insurance company may have intentionally caused a poor payout experience by delaying the payment for weeks and sending a paper check in the mail. The company might have hoped that the check would get lost or stolen or the beneficiary would forget to take the check to the bank. “That type of thinking has changed in the last few years because there has been an increase in competition,” McNaught said. “Particularly amongst marketplaces and similar platforms, the payout experience can drive overall ecosystem participation and directly generate more content and more goods for sale. It has made the payout experience something that can no longer be ignored and it’s a space where many platforms are now competing.” As these platforms aim for global reach, they have faced significant challenges. Merchants have often relied on local payment rails accessed through traditional banking partners to pay domestic beneficiaries. However, when the beneficiary is located outside the merchant’s country, the payment experience often deteriorates dramatically. “Oftentimes, the wrong currency arrives for the beneficiary and it might take three to five working days for the funds to arrive,” McNaught said. “The merchant might not know exactly how much to expect because correspondent banks will take off a varying amount from the transaction principal. It’s a horrible experience for beneficiaries and it’s a barrier to adoption for the service they’re being paid.” Gradual Realization In the past, many merchants held onto their cash as long as possible, a practice that —while giving businesses greater control over the timing and management of payouts —often led to inefficient processes. This manual approach lacked transparency and created a frustrating experience for consumers. “In fairness to merchants, there weren’t many good solutions for payouts up until the last couple of years,” Apgar said. “Now that merchants have new tools available, they are realizing that the benefits of a positive customer experience outweigh what you gain by optimizing payouts to the benefit of the company. It underscores how important the customer experience has become in all facets of interaction.” When payout beneficiaries become aware of mechanisms and rails that allow them to receive payments reliably, in their preferred currency, in real-time, and often at no cost, it could profoundly transform the payouts industry. “I call that the Amazon effect,” Apgar said. “You just need one disruptor in the market to get consumers to say, ‘Why can’t it be that easy all the time?’ That effect will start to get traction in the payout space. As consumers continue to have positive payout experiences, they will want that from all their interactions.” This realization has led to a dramatic shift in the way many companies offer payouts today — touting the speed of their payouts as one of their most important selling points. However, speed isn’t the only consideration. Many companies now process payouts via different payment rails and in the consumer’s preferred currency, all to remain competitive in a crowded market. This growing demand for efficient payouts is also driving changes across numerous other industries. “The more business models that involve payouts to users who are not necessarily shoppers of the service —but are ecosystem participants —that is what will drive the gradual realization that a company’s payouts model must function correctly,” McNaught said. “Then the payout will become as important as the shopper checkout experience.” Freedom of Choice Personalization is one of the most effective ways to improve the payout experience. One way to tailor this experience is by giving beneficiaries the option to choose their preferred payment method. However, this flexibility should also extend to the speed of the payout. Many platforms provide scheduled payouts, typically biweekly or monthly. Personalizing this process means offering users the option to expedite a payout for an additional fee. “It allows the user to take control and customize the experience but it also takes the burden of choice off of companies,” McNaught said. “Do I accelerate payments for all my customers or do I do it for none of them? The sweet spot is when the user selects the time and the circumstances under which they receive their accelerated settlement.” Users are often willing to pay a fee for earlier access to payouts. Similarly, many consumers would likely accept a higher foreign exchange fee just for the ability to receive their payout in their preferred currency and have clarity on the exact amount they’ll receive. These tailored experiences contribute to greater user satisfaction, fewer barriers to adoption and increased engagement within the ecosystem. “Consistency is the number one thing in the user experience,” Apgar said. “The last thing a merchant wants to do is have a footnote that says payouts are only available if you reside in certain country, use a certain payment method, or bank at a certain bank. For this to be a differentiating factor, merchants need a broad network of connections to enable a consistent experience.” The Critical Battleground Creating consistency can be difficult when every market has unique properties. This includes various payment rails, including bank rails, card rails and various types of wallet rails. There are also different data gathering requirements and regulatory considerations for each market. Understanding the most effective payment methods for each market and what payment experiences fit each use case is crucial. Partnering with a trusted payments provider (like Worldpay), with proven expertise in global payouts, can help you navigate local complexities effectively and ensure you send funds to your customers in a way that works best for them. “The payout experience has historically not been something that companies have invested heavily in or fought over,” McNaught said. “However, we see the power of personalization becoming a critical battleground between services that use payouts. It’s a competitive advantage for your particular service that could increase user satisfaction and NPS scores and drive additional adoption. The advantages of a painless payouts experience will continue to drive demand for better solutions among merchants. Payouts are too important to today’s business operations and they are often too complex for merchants to accomplish on their own. That is why the buzz around a painless payouts experience will continue to amplify.” The post Why Painless Payouts Matter appeared first on PaymentsJournal.
Transcribe →How Rules-Based Fees Engines Drive Innovation
Dec 5, 2024Tap to summarizeOrganizations seeking more flexibility and sophistication in devising transaction fee and commission structures are increasingly turning to rules-based fees engines. Billing systems are designed to handle invoicing and collect payments, but they are limited in their ability to help companies create new fees and commissions. Rules-based fees engines allow payment processors to stay competitive and profitable, enabling them to offer new value-added services, develop creative incentive programs, create new revenue streams, and respond quickly to market shifts. In a recent PaymentsJournal podcast, BHMI’s Chief Technology Officer Mike Meeks and Senior Program Director Cheryl Fitzgarrald spoke with James Wester, Co-Head of Payments at Javelin Strategy & Research, about the advantages of rules-based fees engines and who benefits from them. Developing the Solution Rules-based engines allow fees and commissions to be configured from any combination of attributes, such as the payment method used, the amount, the merchant category, and the time of day the transaction occurs. Unlike traditional billing systems, a rules-based fees engine provides the ability to measure and test the financial viability of new fees and commissions before they are implemented. “Back in 2004, we were approached by one of the country’s largest debit networks, which was not able to introduce new products or new pricing strategies without long software development cycles,” said Meeks. “All of their rules for how they price things were embedded in code, which made it very slow and costly to roll out new structures and to respond to what their sales teams were asking them to do in a timely manner.” “They needed a solution that was flexible and could meet unforeseen future requirements,” he said. “That’s what drove us to the concept of a rules-based engine and the kind of open-ended capabilities it would provide. For more than 20 years now, we’ve been implementing these solutions for companies all over the world.” This solution gives companies the ability to be creative and innovative, supporting any business opportunity, client relationship, or product offering that marketing and sales bring to the table. It also speeds up time to market, as new fee and commission structures can be quickly configured and implemented. “Research is showing that there is a requirement now in payments for companies to be able to pivot quickly, to be able to bring products to market quickly and to not necessarily be held hostage by those development cycles,” Wester said. A modern rules-based fees engine should have the flexibility to create any type of fee or commission on any type of payment transaction. This includes card-based transactions as well as account-to-account and real-time payments. It should also have no limitations on the types of fees or commissions that can be configured and should allow for additions and modifications without requiring software changes or downtime. Another important factor is that the system must be able to access payments data in real time, applying the appropriate fees or commissions while the transaction is still in flight. Finally, rules-based fees engines should provide companies with a real-time view of fee revenues, enabling them to analyze the financial impact of those revenues and easily determine if adjustments are needed. Under the Hood A rules-based fees engine integrates data from multiple sources. The most common way to access data from these sources is real-time APIs, but in some cases, automated file-based mechanisms are required, depending on what is supported by the originating data source. “The typical sources that we see are credit and debit card transactions that an authorization system is writing to a transaction log file, a clearing system that creates a clearing file for POS dual message systems, and a card network that creates a settlement reconciliation file,” said Meeks. “A modern rules-based fees engine can use data from any and all of those sources to assess fees and commissions as a transaction is being processed.” Once that data is collected, companies have discovered a wide variety of use cases for the technology. “The possibilities are unlimited,” said Fitzgarrald. “Some common use cases would include things like calculation of gateway fees, processing and service fees, and recurring fees. They are also used to calculate many different types of commissions. If you think about it, a commission is just like a fee, but the money goes the opposite way.” Opening Up Creativity Rules-based fees engines have allowed companies to be more creative with their services and pricing structures. Fees can vary based on time sensitivity, such as higher fees during peak business hours and lower ones during off-hours. Companies can also introduce fee models tied to loyalty programs or specific merchant partnerships, incentivizing behaviors that increase transaction volumes or customer loyalty. Once a company implements a rules-based fees engine, the infrastructure allows them to better analyze and address important questions like which fees bring in the most revenue, which commissions provide the most incentive, and whether a particular service can be expanded or rolled out to other customers. “One of the amazing parts of this is the approach to testing,” said Wester. “Testing is very difficult and time consuming. The idea that you can test a product or a fee, and pull it back if it doesn’t work, gives you a tremendous amount of flexibility.” Any company that processes transactions and has a need to calculate fees and commissions can benefit from this technology. “Probably the single most important reason that I’ve heard for people adopting rules-based fee engines is that they are money makers,” said Fitzgarrald. “They allow the company to rapidly configure creative fee and commission models and let them pivot quickly in response to changing market conditions. All of this Is done without the cost and delay of code changes.” Learn more about maximizing your pricing and fee structures. The post How Rules-Based Fees Engines Drive Innovation appeared first on PaymentsJournal.
Transcribe →