Adyen, a leading global payment technology company, has recently released a report that uncovers substantial cost-saving opportunities for businesses through the strategic implementation of advanced payment technologies. Titled “Strategies to reduce your total cost of payments,” this report draws upon insights from 100 global enterprise businesses, shedding light on how optimization of payment methods can lead to significant financial benefits.
The report reveals that businesses can save up to 59% on payment costs by prioritizing domestic transactions over cross-border ones. Interchange and scheme fees account for a staggering 85% of total payment costs, and businesses often unknowingly incur higher expenses when processing cross-border transactions. By shifting focus toward local transactions, companies can not only capitalize on cost savings but also enhance customer satisfaction by providing a more seamless shopping experience. This insight is crucial for businesses aiming to maximize their bottom line while meeting consumer expectations.
The analysis presented by Adyen emphasizes the need for a comprehensive evaluation of payment providers. Many companies often focus solely on upfront costs, overlooking the hidden expenses that can arise over time. The report cautions that “the transaction fee is merely the tip of the iceberg.” Over time, businesses may discover that their initial cost savings fail to translate into long-term efficiencies. To avoid these pitfalls, companies should adopt a holistic approach to assessing payment providers, factoring in potential hidden costs, along with transaction fees.
One of the standout features of Adyen’s offerings is its Intelligent Payment Routing. This technology, which includes a recent US debit payment routing functionality, is designed to optimize payment processes without sacrificing authorisation rates. The report highlights that businesses utilizing network tokens—an advanced technology for managing payment data—experienced a remarkable increase in revenue, totaling USD $7.55 billion over the past year. This figure highlights the financial impact that strategic payment solutions can have on a company’s overall revenue.
Trevor Nies, Adyen’s Senior Vice President and Global Head of Digital, remarked on the findings, stating, “The challenge is to find the perfect balance between optimizing your conversions and ensuring your business and customers are protected.” The use of network tokens not only drives increased revenue but also positions companies for enhanced security in a landscape where digital transactions are susceptible to fraud.
Moreover, the report exposes a concerning trend related to offline declined transactions. In 2023 alone, businesses incurred a staggering loss of USD $474 million due to transactions that were declined in physical stores. However, there is a light at the end of the tunnel: the adoption of Adyen’s Store and Forward solution enabled large enterprises to save approximately two million in-person transactions, translating to a remarkable savings figure of USD $42.1 million. This highlights the vital need for businesses to adopt innovative payment solutions that minimize rejected transactions and maximize customer loyalty.
With 80% of retail transactions taking place in-store, the importance of optimizing the in-person payment experience cannot be overstated. Long checkout lines and cumbersome payment processes significantly hinder potential revenue generation. To counteract these challenges, businesses can benefit from solutions like self-checkouts and mobile POS (mPOS) systems. These technologies streamline payment operations, thereby reducing wait times and enhancing customer satisfaction. By prioritizing a seamless payment experience, businesses can create loyalty among existing customers while attracting new ones.
Adyen’s report also underscores the broader advantages of its technological solutions when it comes to market expansion. Managing payment terminals through a centralized back office can reduce Full-Time Equivalent (FTE) costs by up to 75%. This consolidation allows companies operating across different geographies to simplify their payment processing and reconciliation efforts, which leads to a more efficient operational model.
Nies addressed the operational pressures that businesses face in today’s challenging landscape, saying, “In difficult operating circumstances that include supply chain challenges and high inflation, we know that business leaders face pressure to increase efficiencies.” His statement resonates with many business leaders who are grappling with the need for innovative payment technology to quickly enter new markets and streamline operations.
In conclusion, the insights shared in Adyen’s report provide a roadmap for businesses seeking to navigate the complex world of payment strategies. By leveraging advanced payment technologies and prioritizing efficient transaction processes, companies can unlock significant cost savings and revenue growth potential. It’s imperative for business leaders to take a comprehensive approach when assessing payment solutions, ensuring that they not only focus on initial costs but also consider long-term implications. As the digital landscape continues to shift, those who strategically enhance their payment ecosystems stand to gain a competitive edge in the market.
