Identifying and solving key aspects of global payments friction via the 2022 Global Payment Survey
Is It Time for Another Look at Your Rebate Payments Process?
The transformation of rebates from paper-based to digital offerings in both consumer and B2B markets has opened the door to rebates on a global scale
Rebates have long been a key promotion strategy in marketing products and services across disparate industries from consumer packaging to home-building and remodeling to appliances, automotives, utility providers and electronics. Meanwhile, channel partner rebates have been a common practice in technology channels for many years and their use has expanded to other industries as well albeit in differing forms.
Thus rebate payments differ broadly from industry to industry, in economic value and delivery method ranging from paper-based rebate schemes where breakage is both a critical part of the calculation and a potential source of customer dissatisfaction, to instant or near-instant digital delivery of cash or gift cards in integrated, digital marketing efforts designed to also capture survey data, drive referrals, recommendations and facilitate direct customer engagement. Meanwhile rebates have become entrenched in certain B2B sectors as partner rebates have become an essential element of maintaining reseller partner profitability in competitive markets where partner rebates are offered in lieu of deeper discounts which were nearly always passed along to the end-customer.
New technology now enables transformation of rebates from paper-based to digital offerings in both consumer and B2B markets, opening the door to rebates on a global scale with multiple payment formats ranging from instant cash to digital gift cards and more. Beyond the digital transformation, using a global payment platform provides both multiple payment formats and currencies while also automating tax reporting (US/CAN) by providing 1099-K’s.
Let’s take a look at trends in both reseller partner and customer rebates.
Channel partner rebates have been a common practice in technology channels for many years and their use has expanded to other industries as well, albeit in differing forms. Arising from the stated need to protect partner profitability, rebate frequency and values vary widely, however, the most common implementations are based on quarterly sales activity and often tiered based on volume and/or a channel partner’s medallion level (Gold, Silver, Bronze, etc.) in a vendor’s partner program. This enables the vendor greater leverage in assuring partner engagement by placing requirements on the partner for non-revenue criteria such as training and certification, deal registration, etc.
While these criteria are critical to the vendor’s channel program objectives, many of the partners’ biggest complaints about rebates is more often how long they have to wait for payments.
Channel technology service providers and agencies can help vendors streamline processes and automate rebate calculations. The final step is making the payment distributions. Using APIs and an intelligent payments platform, payments can be embedded in the service provider program applications to power multi-currency digital wallet capabilities, simplifying global payments both for their client vendors and their partners globally.
Managing client payments can be part of any managed service using platform capabilities including connected accounts to manage the flow of funds on behalf of clients, or delivered as a self-service capability for clients using Master, Controller and Standard Administrator rights to manage payment distribution in-house.
Using Administrator functionality and Level 3 access to Connected Accounts allow a managing agency or service provider to manage payment functionality on behalf of their connected clients including:
- Security & Set-up – Connect APIs, submit required Advance Profile info, upload client logs, customize communications, configure SSO, etc.
- Client Banking Details – Submit, link, delete, change, etc.
- Mass Payment – Make payment (fund digital wallets, Submit mass payment requests
- View/Manage Client – Company Profile, Employees, Admins, etc.
- View/Manage Connected Remitter – Company Profile, Employes, remitter transactions including wallet transfers.
- View/Manage Connected Beneficiary.
Cross-border Payments and Global Payments Flexibility
Beyond the flexibility to manage clients’ rebate payment flows and participants, the global payments platform allows service providers to configure rebate programs so that their client vendors can create and fund digital wallets in as many currencies they need – USD, Euro, British Pound, Yen, Yuan, etc. In the past, creating currency-specific accounts has been limited to the vendor’s legal structure and where they do business.
While legal and regulatory requirements continue to be a key program design/configuration consideration, the ability to provision multi-currency digital wallets for every account holder – Company or Personal, Remitter or Beneficiary gives the program designer choices in how to accommodate cross-border payments. FX is handled on the platform at below market rates. This allows global rebate payment flexibility at an unprecedented level. Most vendors may elect to continue their current practice to make rebate payments in their currency and leave the currency exchange to the partner but as partner experience heats up as a competitive differentiator, this may change. Either way, the platform can accommodate.
The primary use cases for customer rebates include product trade-ins, new product introduction, clearing out old inventory, etc. and, increasingly, these same payment mechanics are being applied to non-purchase related behaviors from test drives to survey completion and referrals.
Given that online shoppers rank rebates and discounts third after free shipping and privacy/security concerns that influence where they shop, it’s no surprise that rebates flourish. In fact, recent Promotion Marketing Association data showed that consumers are 75.4 percent more likely to buy a product when there is a rebate present.
Understandably most of the research on rebates focuses on promotion and pricing strategy and consumer behavior related to redemption as breakage (unredeemed rebates) is an important part of the economic equation. Of course, smart marketers are paying evermore attention to the customer experience and the recognition of the value of customer data garnered through rebate offers that might otherwise escape them.
To them, making rebates easier using digital delivery mechanisms making rebates instant or nearly instant and mobile is central to a better customer experience and the rewards that can bring in long-term customer loyalty and referrals spurring further growth.
Embedding rebate payment distribution with global payment platform capabilities that can deliver payments in multiple modalities (e.g. cash or gift card) is one strategy to addressing consumer acceptance and usage considerations: the relative effort required and the confidence that the payment will be received without complications .
While maximizing breakage may be a KPI for rebate offers based on past program design, the time may have arrived to rethink program economics and evaluate the success of rebate offers on the percentage utilized rather than the percentage unredeemed.
Irrespective of program design, however, tapping into a global payments platform can offer payment distribution speed, flexibility and efficiency using APIs to embed payment distribution in automated workflows that can improve program cost of operations.
No matter the use case: global, instant and mobile payments are the new norm. Encompassing digital payments in a platform that surrounds them with the security, privacy, tax and regulatory compliance needed to conduct global channel business enables channel technology service providers to focus their service and technology innovations in a rapidly changing marketplace.
An intelligent payments platform is designed for use by any company – or their agent/service provider – that needs to make payments to anyone, company or individual, anywhere. That extends to present-day use cases as well as new use cases as they emerge.
Agent/service providers, of course, need additional functionality that enables them to manage payments on behalf of their clients including access to connected accounts information to view transactions and provide first-line customer service. Global payments program capabilities now require the use of multi-currency digital wallets to make payments more efficient today as well as to support the use cases that are sure to emerge in the era of ecosystems.
For more information or help setting up or improving your rebate payment capabilities, drop us a line. We are here to help.