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Unbundling the Payments Value Chain to Improve ROI

How can the payments process – incoming and outgoing – be made more efficient, more user-friendly and more cost-effective? How can payments processes lead to positive ROI outcomes?

As a business professional, how often do you wake up thinking about money?

OK, maybe not before coffee, but it certainly comes up frequently re: Sales, Budgets, Payroll. Payables, Receivables. If you’re in Marketing, Sales or Finance, or Operations, even IT, you likely spend most of your working hours on how to make more of it by growing revenue, reducing costs or both. You may spend days, weeks or even months involved in projects or systems development designed improve the ROI of your portfolio of Customers, your internal Sales team or Channel, your Marketing spend or your infrastructure investments. But how often do you actually think about, not metaphorically think about, cashing the check.

How can that process — the payments process — be made more efficient, more user-friendly and more cost-effective? How can payments processes, both incoming (AR) and outflowing (AP) lead to positive ROI outcomes? It’s a topic that seldom comes up when discussing company strategy or competitive advantage. Yet there is no process as essential to the any for-profit or non-profit enterprise than the flow of funds into and out of the organization.

No matter your business, if you need to receive or make any type of domestic or global payments, then removing complexity and cost while improving the user experience reducing the burden of compliance and tax reporting should be on your action list not just on your radar. If it’s been awhile since you’ve thought about it, the good news is that there’s been plenty of recent innovations that could make doing so very much worth the effort.

The first step is to review any payments process including every direct and indirect value exchanges in the context of your operational processes and your business strategy.

Indirect Payment Flows

For many indirect go-to-market business models, a more flexible payments platform can address issues that standard payment process and traditional financial fail to resolve. Companies may be required to know who their Customer is even if the Company does not (yet) – to comply with Know Your Customer (KYC) regulations among other reasons – without restricting the flow of business to known entities.

Adding new payees can be done automatically and KYC compliance tasks managed from within the payments platform without the need to hold-up fund transactions. APIs can be used to link newly acquired Customer info to both a Company and Partner’s CRM tools. Funds received can be immediately designated to a digital wallet assigned to a Customer Beneficiary trackable to what (event) and attributable to the Company using your platform who is responsible for engaging the Customer.

Aggregating connected accounts enables more efficient money flows and creates new potential use cases to support business models that foster enhanced collaboration.

Direct Payment Flows

And while these connected account capabilities offer exciting possibilities, even direct payment flows have tremendous ROI potential if the incumbent payments value chain can be modified using a payments platform and APIs to automate payments processes. The three primary external cost drivers inherent in most B2C and B2B global payment processes include Banking Fees, Card Processing and Currency Exchange along with the often- hidden cost of regulatory compliance, e.g. KYC, AML and tax reporting.

Each of these cost drivers should be assessed to determine both their external and internal costs.

The internal costs of managing these disparate elements of the overall payments process must also be reviewed. The scope of services and supplier trust level, as well as the relative level of automation and sophistication of the end-user Customer Experience, can result in significant administrative overhead. If you outsource this oversight to a third-party be sure to include those costs as well.

Payments Platform Flows

Using a payments platform and APIs enables you to embed automated indirect and direct payments received from multiple inbound sources via many methods (card, ACH, etc.) within your business process.

Within the platform itself, it facilitates the aggregation of funds with proper attribution using connected accounts and digital wallets. It hosts intra-platform W2W exchanges (wallet-to-wallet); and it manages FX currency exchange wholly within the platform — at much lower exchange rates than traditional financial institutions. And, through automation and business process. it manages compliance and tax reporting requirements so your internal teams or third-party firms, will not have to.

And, finally, the payments platform APIs enable you to disbursed funds directly to anyone, anywhere in nearly any currency while offering a choice of payment methods: ACH, check, prepaid Visa, digital gift cards, etc.

The payments platform generally manages all of these functions for one simple fee.

Considerable Impact

Addressing your payments process can lead to some handsome returns. First, in process improvements that lead to cost savings from self-serve processes and automation. But even more importantly, it can lead to UEX improvements which can positively impact customer and partner satisfaction, retention and loyalty.

Beyond those considerable impacts, cashing the check on payments process improvements requires quantifiable cost savings directly attributed to using an intelligent payments platform.

Current Expenses (A) less New Process Expenses (B) = Total Cost Savings.

  • External Expenses
    • Banking Fees – account management fees, transaction fees, trust and custodial fees, etc.
    • Card Processing – merchant processing and network fees, etc.
    • Currency Exchange – cost of cross-border payments
    • Compliance (if outsourced) – Know Your Customer (KYC), Anti-Money Laundering (AML)
    • Tax Reporting Costs
  • Internal Expenses
    • Admin hours, IT hours, Management hours required to manage all of the above.

In summary then, first calculate (A) your Current payments-related expenses (External and Internal); then estimate (B) your New Process expenses (External and Internal). Subtract B form A and, voila, you’ve got the amount for that elusive check.

Let us know how we can help you achieve these cost saving results.

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