In today’s competitive landscape, businesses are constantly seeking ways to reduce operational costs and increase revenue. A recent report from Adyen reveals that companies can save up to 59% on payment costs by optimising their payment strategies. This saving potential emphasizes the significant impact that advanced payment technology can have on a company’s bottom line.
The report, titled “Strategies to Reduce Your Total Cost of Payments,” draws upon data from 100 global enterprises. It highlights key opportunities for both cost reductions and revenue enhancements that come from refining payment methods. According to the findings, interchange and scheme fees account for 85% of total payment costs. In essence, many businesses are unknowingly losing substantial profits due to inefficient payment practices, especially when conducting cross-border transactions.
One of the report’s standout recommendations is the shift to domestic transactions. By focusing on sales occurring locally, businesses can avoid the high costs associated with cross-border payment fees. This simple change can potentially result in substantial savings, making it imperative for companies to assess where their sales are originating.
The insights from Adyen don’t just point to cost savings; they also highlight lucrative avenues for revenue increase. The implementation of network tokens, for instance, has, on average, contributed USD $7.55 billion to the revenue of the businesses surveyed. The use of network tokens enhances authorisation rates as they allow transactions to be processed more securely and with lower fees compared to traditional primary account numbers. This finding underscores the need for businesses to reconsider their payment strategies and technologies to better capitalise on these advancements.
Trevor Nies, Senior Vice President and Global Head of Digital at Adyen, commented on the need for balance in payment strategies, stating, “The challenge is to find the perfect balance between optimising your conversions and ensuring your business and customers are protected.” This balance is crucial as businesses strive to maximise their profits without compromising customer experience.
Another concern raised in the report is the revenue losses attributed to declined offline transactions. In 2023 alone, businesses collectively lost USD $474 million from these types of transactions. However, with Adyen’s Store and Forward solution, the ten largest enterprises saved two million in-person transactions, yielding a remarkable USD $42.1 million in savings. This indicates that adopting advanced technologies can mitigate losses that stem from operational inefficiencies.
With 80% of retail transactions occurring in physical stores, it is crucial to address the long checkout lines and inefficient payment methods that cost retailers valuable sales opportunities. Innovations such as self-checkouts and mobile POS (mPOS) systems become essential in creating a smoother in-person purchasing experience. By streamlining payment processes, retailers can significantly reduce waiting times and enhance customer satisfaction.
Adyen’s strategic payment technologies also provide businesses with the ability to expand into new markets seamlessly. The report notes that managing payment terminals from a single back office can cut Full-Time Equivalent (FTE) costs by up to 75%. By consolidating payment processing across different regions and channels, businesses not only simplify their operations but also significantly improve their efficiency.
In the face of rising operational challenges like supply chain disruptions and inflation, Nies highlighted the need for businesses to leverage innovative payment technology to enhance their efficiency. By utilising a single platform for launching new markets and integrating the latest payment methods, companies can cut down on costly developer hours, ultimately speeding up their time to market.
The analysis presented in Adyen’s report underscores the importance of informed decision-making in payment technology. Businesses that invest time in evaluating their payment providers and consider long-term costs versus initial investments can unlock significant savings and revenue growth.
In conclusion, the insights provided by Adyen’s report should serve as a wake-up call for businesses looking to thrive in the competitive world of e-commerce and retail. By focusing on advanced payment strategies, companies stand to benefit from lower costs and increased revenue, ultimately enhancing profitability in today’s challenging economic environment.
