The Cost Savings and Benefits of Accepting Electronic Payments
Businesses that can’t accommodate electronic payments risk losing revenues to competitors who can.
Since the introduction of mobile devices, digital payments have become a key fixture in the revolution of convenience. Innovations in digital/electronic payments combined with surging mobility adoption have driven global transactions to exceed $3.9 trillion in 2017, up 14% over the previous year according to a recent study conducted by Juniper Research. Online retail purchases accounted for 55% of digital payment transactions in 2017. As global migration to digital transactions continues to expand, accommodating digital payments will be required for companies to remain relevant.
- Digital payments (non-cash transactions using credit cards, debit cards, prepaid cards, ACH/electronic checks, wire transfers and mobile wallets) increase customer spending through 24/7 access.
- Fewer administrative and supply expenditures cut operating costs.
- Integration costs have fallen dramatically, putting this capability well within reach for all businesses.
Advantages of Digital and Electronic Payments
Digital payments are non-cash transactions using credit cards, debit cards, pay/prepaid cards, ACH/electronic checks, wire transfers and mobile wallets. Advantages include:
- Increased customer spending—Digital and electronic payment platforms provide customers the ability to make purchases 24/7, allowing companies to generate sales past regular business hours. For companies that sell membership or subscription services, automated recurring billing options are extremely convenient. For consumers, the ease of access (online, mobile or phone support) and instant traceable responsiveness can be irresistible.
- More currencies accepted—Payments can be accepted globally and in different currencies, since digital payment platforms will automatically convert payments to USD. Businesses can also opt to accept payments in purely digital cryptocurrencies like Bitcoin and Ether.
- Engagement with younger consumers— Millennials and Generation Y consumers are likely to have an affinity for digital transactions. They are embracing Apple Pay and Android Pay for contactless payments and peer-to-peer payments through apps like Venmo. Tapping into this segment of the nation’s largest consumer demographic mandates having electronic payments enabled.
Improved Recordkeeping, Analysis and SalesMany digital payment platforms provide customer and database management tools in addition to data analytics and reporting. Business owners can view reports and transaction details from home, office or on the road via a mobile app. Online marketing and promotional campaigns to existing and potential customers can generate ROI through e-mail and social media that include links to your e-commerce site.
Administrative and Office Supply Cost Savings
Low- to No-cost SetupThe cost to implement an electronic payment system varies based on the scale and usage. Usually, there is no setup fee, only transaction fees. Fintech vendors provide complete end-to-end solutions that automate processing, reporting and analytics for a transaction fee, usually around 1% to 2%. Sometimes, setting up online is as easy as registering with an e-payment provider’s network and linking your website and bank account. Competition among providers and networks has driven down costs and onboarding time, which is upping the ante on features. Some vendors offer complete solutions for both online and on-location payments. They also provide online store creation apps embedded with shopping carts that facilitate digital transactions for your website. Major players allow businesses to set up electronic payments easily online. Others provide physical card readers that attach to tablets and smartphones to enable face-to-face digital payments.
Customized Options Allow for In-house ManagementBusinesses that want to keep the transaction sequence in-house with customized design and website maintenance should consider the labor costs involved with programming and maintenance. The cost of integrating digital/electronic payments into your website depends on the complexity of installation. Companies that want an online store can hire programmers to design and install it, at a cost of $25 to $100 an hour.
The Pitfalls of ReturnsMake sure to clearly display refund and exchange policies on your website, since chargebacks can incur additional fees. Charge disputes tend to favor the card member, and businesses usually bear the burden of validating charges and policies. Companies can protect themselves by implementing a dispute resolution process that includes screenshots of refund policies and legalities to support your case. For these reasons, it’s important to pay attention to the log reports to monitor any excessive purchases and seek additional verification.
The low costs to implement electronic payment capabilities coupled with opportunities to boost sales, cut costs, and reach a larger audience make implementing digital/electronic payments an absolute necessity for businesses to stay competitive in today’s marketplace.
Let’s talk about your business. For more information on KeyBank’s capabilities, contact your KeyBank Relationship Manager.