Op-ed: The Payments Triangle — how to choose the right payments system
Trying to get to the heart of what makes a truly fit for purpose payments solution is complex and challenging. There are endless facets and characteristics that can appear impossible.
Yet despite this difficulty, it is absolutely necessary. Because it is only by getting this understanding that the payments industry can provide the services that merchants, banks, agents and PSPs want and deserve.
In order to achieve this, a holistic view of payments must be taking, avoiding the silo-thinking that, all too often, impedes progress.
By doing this, we are able to see payments as a whole process and get a better understanding of what drives it and what it consists of. This is what we call the Payments Triangle
The Payments Triangle is made of three sides — three characteristics that any payment solution has to have at its core:
These core characteristics should complement each other, working together in harmony to make the payments proposition stronger and better.
However, all too often, the triangle is incomplete, with one side being sacrificed for the sake of others; it is secure and speedy but not simple. It is simple and secure but not speedy. It is simple and speedy but not secure.
If one side of the Payments Triangle is missing then that payment solution is not fit for purpose or might even harm the customer.
The article will explain how the three sides can work together in harmony and why none have to be left out or neglected. Throughout the article, we will refer to two distinct stakeholders — the customer and the consumer. The customer is any business using a payment platform such as a merchant or bank. The consumer is just that — a member of the public making a payment in exchange for goods and services.
The fundamental promise of electronic payments, indeed electronic commerce, is that it is simple. The Internet has made retail a truly global proposition and has revolutionized how we shop and do business.
Yet the plethora of global currencies and payment methods can add a huge level of complication to this landscape. Combined with the fact that many of the payment solutions used to navigate this landscape are, themselves, complex, payments can seem far from simple.
For the customer, this simplicity has to be threefold — simple to integrate, simple to manage and simple to use.
Integration is an absolutely critical period. Businesses cannot afford any down time, any time when payments cannot be accepted. If a payments platform is not easy to integrate then it is going to fall down at the very first step.
Use is vital too. On a day-to-day basis, any payment platform has to run smoothly and with minimal customer user interface.
This is equally true of management. The customers need to be able to get what they need from the payment platform to allow them to manage their business in a simple and straightforward way. From processing to transaction reconciliation and account management, the good payment platform has to do it all and in a simple way. This requires high quality, easy to analyze data being produced by the system.
For the consumer, simplicity is equally key. The payment provider they are using should be easy to use in regards to accepting payments in multiple currencies, multiple channels and multiple devices. This might mean that the back end is complex, but that should not be a concern of the consumer.
It is an old cliché but it is true — time is money. So, for the customer, any payment platform needs to have speed as a key feature. Payments should happen swiftly and money should move swiftly. Underpinning all of this should be low latency and reliability.
For the consumer time is also critical. Abandonment, where shoppers do not complete online transactions, is the scourge of Internet retail. Figures vary as to its true extent, but findings from 2014 suggest that only three in ten online transactions are completed.
One of the key drivers of abandonment is the time it takes to complete a purchase or a transaction. No bricks and mortar retailer would make their customers wait in lengthy queues to make purchases and the same should be true online. If the payment provider isn’t speedy, it is pushing consumers out of the door.
To achieve this speed, the payment solution needs high performance and high availability. High performance to make sure that the processes are carried out swiftly and high availability to ensure that there is little or no downtime. Underpinning this has to be scalability to allow technical processing.
Security is critical. A security breach in a payment platform can cost money, reputation and business. No one can afford one.
So security can never be compromised in the slightest. The payment solution must be PCI DSS compliant, it must offer end to end encryption and must comply with EMV protocols for POS support. Not only this, but it must also comply with the laws and regulations of each territory it operates in.
For the consumer, it isn’t enough for the payment provider to be safe, it has to look and feel safe too. It is critical that the payment solution looks and feels familiar and trustworthy.
On the customer side, it is not enough that the system is secure, it has to add to the overall security of the business. With specific data being available the payment platform can guard against chargebacks and fraudulent transactions and do this automatically, saving time and saving money.
Three characteristics, three critical components, three sides to the payment solution that is fit for purpose and will solve problems rather than create them.
The well designed payment platform will have these three sides working in harmony together, not against each other. Because there is no reason that any have to be sacrificed to maximize the others.
Making sure that the payment solution you choose to adopt gets the right equilibrium between speed, security and simplicity is key to business success.