I tagged along with our CEO, Ralph Dangelmaier and Head of Business Development,Jeff Coppolo, to some meetings last week in Silicon Valley, aka “the heart of technology.” These companies are hot and growing faster than Katy Perry’s Twitter followers, but for all of the incredible technology talent, people are always shocked when they realize their payments systems are not as functional as they think.
Here are a few reoccurring themes many merchants run into by accident:
“I never want my company to sell beyond it’s own country’s borders nor will I accept payments from foreign credit cards” – said no entreprenuer ever
1: People tend to choose a payment gateway for their current needs, accepting local online payments, and don’t plan for their future global success. Most merchants are actually pigeon-holing themselves to be local rather than global.
Many merchants don’t include the global payments conversation in the product strategy discussions early on. This removes them from the global game. I get it, if you’re a startup, you are primarily focused on making a good product and generating revenue. This may seem like the right strategy, but a little extra planning in the beginning can help you choose the best payment gateway that will suit your needs now and grow with you. If you don’t, you will likely be limited by the quick solution you chose. Two years later you’ll need to overhaul your payments completely because you are unable to accept cross-border payments. Not to mention, you will be inadvertantly declining foreign cards from shoppers that are inside your own country. (Never thought of that one, did you?) Don’t learn the hard way. Plan a payment solution that can grow as your business grows wildly successful.
“I love leaving money on the table and rejecting my shopper’s credit cards” – said no CEO ever
2: Most merchants don’t realize their decline rates are way above normal.
CFOs – make sure you are checking your decline rates. The typical payment gateway model connects you to one acquiring bank. If that bank declines a transaction based on a shopper’s location and transaction amount (which they are known to do), there is no getting that sale back. Rather than leaving that money on the table, make sure your payment gateway connects to multiple acquiring banks. That way, the payment can be intelligently routed based on a shopper’s location and amount. With multiple acquiring banks, the valid transaction is more likely to be approved, versus sending it halfway around the world to be declined. Our customers often see a 10-20% lift in revenue simply from lowering their declined transaction rates. That’s a lot of table money!
“I love spending hours of my time cobbling together reports from multiple payment integrations and banks to understand where my company is making money” – said NO CFO ever
3: Optimizing payments is nearly impossible if you don’t even know what you don’t know.
“Frankenstein” payment solutions are a result of quick growth and acquisitions where several payment systems are trying to work together. You could spend hours data mining your transactions from various banks and solutions that each of your revenue centers uses. Or you could plan ahead for growth and assume your company will need flexiblity. This planning leads you to find a payment provider that will plug-and-play the pieces your company(s) are using and then roll the reporting into one easy-to-use dashboard. Better yet – find one that does the heavy lifting and has Quarterly Business Reviews that will help you tweak your payments each quarter by giving you specific advice. Using company-specific data helps you get back to what you love to do: growing your business.
To summarize, if merchants could have one wish, it would be to grow into a world-renowned company and have the ability and agility to overcome all of the hurdles thrown at them. If you can handle the transactions the right way from the beginning and plan ahead, you will rule the world of global payments – said every smart entreprenuer, CEO and CFO ever.
We’ve pulled together a worksheet to help you future proof your payment strategy so that you don’t have to make these same mistakes. Get to planning! Your future self will thank you!