Payments modernization is a hot topic in the financial and payments industries right now. We’ve made great strides in technology and innovative processes since the beginning of 2020, and it’s easier than ever for people to connect their banks, fintechs, and payment platforms to each other in effective ways.
Because the flow of money is easier for end-users to control than it has ever been before, there are many considerations to be made about the security and regulation of these entities.
A large component of payments modernization is the rise of open banking – where consumers and account owners can move money as they see fit, regardless of the financial institutions, payment gateways, and other systems and apps they are using.
Here’s the breakdown of payments modernization: what it is, what it does, and what it means for your business.
Payment Processing Is the Foundation
Every business owner and manager can see that accessible payment options greatly affect your ability to capture more business (in both brick-and-mortar spaces and online).
That’s why payment processing is the foundation of any successful payments modernization work. But the goal if this modernization isn’t to just offer as many payment options as possible. It’s about creating a seamless customer experience, with as little friction and confusion in the checkout process as possible.
There are very few businesses that don’t have direct competitors or at least competitors selling a very similar line of products and services. That means the company with the best customer experience will win out if other factors are comparable, including things like price, quality, availability, shipping, and the like.
There are more options for payment processing than ever before, which gives your business and your customers the opportunity to create avenues for accessing and transferring money in a way that is best suited for that individual or entity.
And some banks, large and small, are not always giving their clients unfettered access to real-time payments, it’s often easier and less cumbersome to find a partner like ReliaFund that can offer you the payment flexibility that both you and your clients and customers are looking for.
BNPL and Subscriptions are Dominating Payment Spaces
There are two big payment trends we wanted to mention here, both because of their prevalence in the industry now, and due to their reception.
Subscription models have been around for a while now and many businesses and consumers have found they benefit their bottom line or their lifestyle. However, some subscription model-based businesses are on the cusp of alienating some customers because of the lack of instant buying options.
For example, having groceries and streaming services or toiletries on a monthly payment plan may be convenient for most people, but what about those people who like to buy in bulk to save money? Or those who don’t have a stable, consistent living arrangement?
Taking the options for customizing orders and shopping experiences away has now created a sour taste in the mouths of many consumers looking just to pay a one-time price for certain products or services.
For example, some people still primarily use checks and cash to pay for things. But others solely rely on their credit or debit cards. Your payment structures and options should reflect not only the price of your product and your ability to carry out transactions, but also take into account the primary preferences of your customer segments.
Conversely, BNPL (buy now, pay later) plans don’t immediately benefit your business. However, right now consumers are loving these programs as inflation, post-COVID economic instability, and other mitigating factors are affecting their wallets.
Because these payment structures are outside the traditional “scan, purchase, take home” model, they are getting a lot of airtime in the discussions surrounding what payments modernization looks like.
Open Banking Benefits
Another key component of payments is the concept of open banking (or open bank data). Open banking, according to Investopedia, is “a practice that provides third-party financial services providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of application programming interfaces (APIs).”
Embracing open banking will not only increase the ease and efficiency with which we can perform transactions across business and individual accounts, but it can also help compare accounts and financial transactions in aggregate ways that can even offer people better options when it comes to financial products and services.
There are, as with many tech-based innovations, several concerns about how open banking will affect consumer and business account privacy, security, and financial history collection and analysis. In much the same way that cookies and other pieces of data can help create targeted ads and suggestions for individuals, sharing banking data and trends can help customize the options given to account holders by showing them helpful tips and applications that will help them reach their goals.
But what does that mean for your business? It means your payment processing needs to be efficient, transparent, and helpful in your own operations and financial analyses. ReliaFund has all that because we know the value of payment processing isn’t just in the collection of funds.
Payments Modernization with ReliaFund
Because payment processing is arguably the foundation of the payments modernization movement, your business will need a top-tier payment processor with smart integrations and a high-quality user interface (UI).
The ReliaFund Electronic Payment Services platform was built for your business, whether it is large or small. We built our platform 100% in-house and our goal is to provide end-to-end streamlining of all your payments across online and mobile interfaces.