Identifying and solving key aspects of global payments friction via the 2022 Global Payment Survey
Using Payments for Competitive Advantage in Your Channel Automation Architecture
As purpose-built channel automation tools and multi-function channel management tools evolve, end-to-end payment processes can be readily embedded to support any of these software applications requiring either external funding or payments.
Using Payments for Competitive Advantage in Your Channel Automation Architecture
In our last post, we explored how the growth of indirect channels has been constrained by business models — and their associated payment methods — relying on the 20th-century premise that each tier of distribution took ownership of the product, and each market was being served separately rather than globally, i.e., the two-tier reseller/distributor model
The advances in payment capabilities, now available and emerging, accompanied by the explosion in as-a-service product models and the emergence of new partner types including cloud-native, referral and influence partners, have made the two-tier model but one of many means to grow product and services revenue and nurture partner profitability in go-to-market strategies aligned with the consumer and B2B buyer behaviors.
The State of Channel Automation
Channel automation needs have given rise to whole new categories of channel-specific software. From marketing automation tools adapted for the channel, Through Channel Marketing Automation (TCMA), to CRM-like tools focused on managing partner relationships (PRM) in concert with a vendor’s CRM tools. Forrester, among others, publishes a Channel Software Tech Stack with well over a hundred companies and growing. Forrester’s taxonomy includes eight functional categories:
- Channel Data Management
- Financial, Pricing and Inventory
- Through Channel Marketing Automation
- Channel Incentives & Program Management
- Partner Relationship Management
- Channel Opportunity Management
- Channel Management & Reporting
- Channel Enablement and Training
And while each of these offerings is presumably designed to offer its technology vendor users’ tools to automate channel processes, simplify or make these processes easier (really?) and accelerate manageable channel revenue growth, there is no industry-standard process for managing payments to partners, partner employees and customers. Each is left to consider how best to manage payments to/from partners, partners’ employees and partners’ customers in the context of how their specific niche fits in the channel automation architecture of their customers and prospects.
Almost by definition, managing incoming and outgoing payments globally is not the sweet spot for these vendors competing against those in important functional areas like TCMA, PRM, Channel Incentives & Promotions and Channel Opportunity Management, although many offer some form of payment services supported through in-house capabilities or outsourced.
Creating Competitive Advantage for You and Your Customers
While many Channel Software vendors seek to plug payment functionality into their offerings on an as-needed basis, managing payments is an area where disruption opportunities are abundant. Simplifying payment processes can be done across any/all of the functional categories. Leveraging new fintech capabilities can not only improve efficiencies, lower costs, reduce administrative and compliance burdens, it can also streamline global payments facilitating the receipt of funds in one currency and payment in another. It can also make it much easier for partners to do business with technology vendors
Perhaps more important to the software firms competing for channel automation budgets, the ability to incorporate simplified payments using these new fintech capabilities and APIs can perhaps enable them to compete more aggressively across the channel software category.
With the proliferation of new business models including non-reseller models, from referrals to agents to influencers and beyond, the opportunities for faster scale and greater operational efficiencies abound, channel technology developers are often scrambling to adapt to new demands. Operationalizing a flow of monies (incoming and outflowing payments) often requires unique consideration specific to the strategic and relationship issues.
Using APIs that simplify and standardize how monies are exchanged between vendor and partners, irrespective of the use case, means that developers can focus on more strategic business requirements and specific use cases from MDF to Rebates or Partner Employee Incentives tied to Enablement Achievement or Revenue Goals tied to Deal Registration, Referrals or POS, or a unique revenue-sharing model designed to process incoming Customer revenue and allocate to multiple parties in a predetermined revenue share model.
How to Get Started
Consider the entire channel stack – top-to-bottom and the flow of monies end-to-end – what functions require an incoming or outgoing flow of monies between vendor and partners?
- How will the monies be received, managed and distributed amongst each of the stakeholders?
- How will we make sure that each stakeholder will have a ‘Portfolio View’ of their incoming and outgoing activity through a single lens?
- How will we enable incoming and outgoing flows in multiple currencies?
- What funding sources will need to be supported (ACH, wire transfer, credit card processing, PayPal, cryptocurrency, etc.)?
- What are payment options need to be supported (ACH, wire transfer, prepaid card, credit card, gift card, PayPal, cryptocurrency, etc.)?
- How will we ensure compliance and tax reporting needs are met?
Providing a ‘Portfolio View’ to everyone involved, Company or Program Manager, Partner or Payee, is essential to ensure transparency. Linking the who, what, when, where and why enables each (you and your partners) to manage multiple objectives using a common process and embedded payments platform to manage all the entry points for sourcing incoming funds and all the endpoints for payments, irrespective of payment method.
Managing Embedded Payments
Embedding an end-to-end payment architecture within your platform capabilities makes it seamless to create and manage a series of Individual or Company digital wallets configured to align with the transactional workflows of each business relationship – the payment platform can provide line-of-site to each stakeholder in the value equation.
Digital wallets can be created for any purpose (program, event, transaction, etc.) as well as at any Partner level (single-tier, two-tier, etc.) creating a ‘Portfolio View’ to everyone involved – Company or Program Manager, Partner or Payee.
The digital wallets for each account can be organized based on currency, effectively provisioning all constituents – aggregators, companies and end-user recipients – with multi-currency capabilities. Thus, the payments architecture can handle currency FX within its managed processes for both remitters and beneficiaries at much lower rates than a Company or Individual would receive externally via traditional methods.
Entry Points – Accept Funds from Any Source
By converging traditional card processing and bank transfer methods including ACH and wire transfer with a sophisticated, flexible digital wallet system, XTRM APIs enable ISV and in-house developer to build external funding payments directly into nearly any business process.
Simply configure connected accounts on whose behalf incoming funds are to be received, designating acceptable payment sources – Visa/MasterCard/American Express or via ACH/Wire. Then direct the flow of the incoming funds through digital wallets to the designated beneficiaries.
Eliminate Merchant Processing Fees
The payment platform aligns incoming and outgoing payments to simplify business process, lower operating costs and provide transparency, flexibility, compliance and security to both payor and payee while removing the need to for a separate merchant processing account.
Direct and Indirect Flows
The platform enables aggregators to create both direct and indirect flows by creating programs unique to each payment workflow to receive direct customer payments as well as pay beneficiaries directly.
Accepting funds directly from Customers on behalf of partners, paying suppliers or profit sharing directly can be configured through Connected Accounts. Connected Accounts can be created via APIs, then Customers of Connected Accounts can be dynamically added as needed automatically and the KYC compliance tasks managed from within the payments platform without the need to hold-up fund transactions.
APIs can link newly acquired customer info to both a Company and the Partner’s (Connected Account) CRM tools. These can be configured to support a broad range of use cases from e-commerce to incentives. Aggregators can configure multiple workflows at the Program level to accommodate the specific payment workflows based on the unique business requirements and transactional nature of various relationship models including referral and reseller partners, franchisees, agents, ISVs, contractors and sub-contractors, fundraisers, etc.
End Points – Make Payments using Any Pay Methods
Providing multiple endpoint options within a singular payment platform enables you to serve your clients and partners with choices that are more attractive for your payees’ personal or business needs or they can be structured to be more aligned with your payment’s business purpose.
XTRM Direct and XTRM Choice – End Points
Business or regulatory issues may dictate the use of a specific option (e.g. ACH) which is managed via using XTRM DirectTM.
However, when choice is an option, we have found a strong preference for Companies and Individuals to be paid in the manner they prefer; we call that XTRM ChoiceTM, providing the recipient with the ability to choose their preferred payment mechanism – ACH, wire transfer, digital prepaid debit or gift cards, or PayPal.
As noted earlier, XTRM Choice also enables the recipient to use their digital wallet for currency FX at lower than market rates prior to selecting their payment endpoint.
While the proliferation of channel automation software is likely to continue as purpose-built automation tools are adapted for the channel and multi-function channel management tools evolve, end-to-end payment processes can be readily embedded to support any of these software applications requiring either external funding or payments.
Doing so simplifies both the developer and end-user challenges to reduce cost, improve speed and, potentially, standardize what has often proved to be a difficult set of functionalities to master given the security, compliance and technical considerations balanced against the need to make it easier to do business.