The payments landscape is changing rapidly. Back in February, I had the opportunity to chat with PYMNTS.com about the state of online payments today, and what business platforms need to be thinking about as the ability to process payments becomes a requirement. Here is the writeup of our conversation:
As of 2017, platform businesses need payments solutions — they are becoming a less optional part of the business. But turning payments isn’t exactly as easy as flipping a switch — and therein lies the rub, according to Kurt Bilafer, CRO at WePay. Platform businesses aren’t at a payments-optional point in their evolution — their merchants and consumer end users more or less demand them. Commerce in the digital age is built around notions of frictionlessness and seamlessness, and being unable to start and finish a full transaction on a single platform is nothing if not a friction-filled experience.
But acknowledging a demand and actually being able to deliver on it are different things — particularly for up-and-coming small and medium-sized business (SMB) platforms.
“Transactions that happen online and on mobile at a critical moment of engagement need to be frictionless,” noted Bilafer of WePay in a recent conversation with PYMNTS. “But providing [them] is much more complex than it seems. There is a whole other set of industries where commerce is enabled on a platform, but not transacted. The reality is there’s a lot of commerce that is enabled by the platform but isn’t realized.”
This is particularly true for platforms that deal with service providers — landscapers, builders, home care technicians and the like. Instead of an easy pass-through, where customers can book the work, see an invoice and pay it off all digitally, platforms are doing a bit more cobbling together.
“SMBs then have to use multiple systems — one to generate an invoice, one to settle it — and this is all time-consuming, and in many cases adding complexity for the merchant and the customer end user,” Bilafer noted.
Payments, in this work, are a problem — they are the thing that “is keeping everyone from getting out there and pursuing their passions.”
Which, Bilafer said, is about more than enabling payments where a thousand payments processing solutions now bloom. He and WePay believe that it’s possible for businesses like this to turn payments from a headache into a potential revenue stream.
“Payments integration isn’t one and done — it evolves as the product evolves and as the platform learns more about customers and their end merchants. The more the process is fully integrated, the more it allows [the platform] to really differentiate. Payments is now capable of being a value-added service when it is correctly integrated and positioned — possibly with customers who are willing to pay a premium for that service.”
Keeping It Simple
The hang-up with payments is that it’s so much harder that it looks from the outside. To really do it right, according to Bilafer, it’s key to look hard at a handful of major areas: onboarding/enabling, payout/settlement, payments processing, risk management, compliance and value-adds.
Some of that, Bilafer noted, is table stakes. If payout and settlement don’t happen easily and merchants or consumers are left to scream for their money, things will not go well for long.
But other things — particularly risk and compliance — can be easier to overlook because often platforms and merchants don’t know what they don’t know until it is far too late.
“When you start looking at risk and compliance, we have people who believe they know their clients and merchants,“ he said. “But the reality is that fraud is more and more online — and fraudsters are getting a lot more aggressive and creative about how to extract illegal value from marketplaces and platforms. Again, platform operators don’t specialize in payments, so it is not immediately obvious that how compliant they are is really important. The reality is if they aren’t [compliant] and don’t take fraud seriously, one big fraud event can completely wipe them out.”
And so the goal becomes to be the strategic partner that takes that element off the plate for the merchant, instead using their integrated solution to manage the fraud/chargeback side of the business.
That’s the place in the platform that Bilafer said WePay would like to occupy — the strategic partner that finds the friction point where the platform’s ability to address it fully is lacking — and builds the bridge for that missing piece.
“Even the ability for my contractor to submit his bill online and make it easier to for me to pay is a big step forward,” Bilafer said. “My books balance, he’s paid faster and the platform now runs in a smoother and more simplified manner, where it isn’t trying to use four tech solutions to really solve a very simple consumer need.”
Because, he noted, although the solutions are technical, the issues are often more than just that.
Solving For The Business Need, Not The Tech
Platforms need payments — and payments are a high-tech ordeal these days — but in some cases, Bilafer said, payments decisions often really aren’t about payments.
Even if platforms have already offered payments, “there are all kinds of decisions and implications they need to think through,” Bilafer noted. “Enablement is the hardest and the most misunderstood and underrated. Oftentimes the people who are doing the evaluation of the platform are technical in nature because it is a technical integration. But the reality is that the design decisions actually impact the business.”
That’s one of the reasons that WePay felt the need to build both — a technical solution wrapped around the guidance on how to leverage the payments. For example, it asks whether there is a potential revenue stream, how exactly premium services can be built around payments and how risk guidelines appropriate to the firm’s appetite for loss can be set.
The questions are complex, and platform operators often don’t have the background or interest to supply an easy answer.
“Integrated payments is all about who owns the customer experience,” Bilafer said. “And in the case of platforms, the last thing you want to do is hand off that payments relationship.”
So WePay isn’t looking for a hand-off — instead, it wants to collaborate and help platforms using payments as a stepping stone instead of a stumbling block.
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To learn more download the January edition of the PYMNTS.com Payments Powering Platforms Tracker™, click the button below.