Faulty Payment Systems Are Costing Some Businesses a Minimum of £11million in Lost Revenue

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Merchants across various industries are seeing substantial losses as a result of unoptimised payment strategies and faulty payment systems; according to senior payments professionals surveyed by emerchantpay.

Over nine in 10 payment leaders in the UK and Germany reported experiencing revenue losses due to shortcomings in their payments systems.

The research was conducted by Censuswide, with 954 managing directors, payment managers, finance directors, heads of payments in companies with a turnover of £1million to £10million (a quarter of the sample), £10million to £50million (a quarter of the sample), £50million to £100million (a quarter of the sample), £100million or more (a quarter of the sample) in the industries of gambling, travel, airlines, online retail and hospitality in Germany and the UK.

Quotas were applied across all industries to ensure a minimum number of completes per industry, with fieldwork taking place between 30 December 2021 and 07 February 2022.

Of the 954 surveyed as part of the payment service provider’s ‘Great Payments Transformation‘ report, 39 per cent of the largest businesses (with £100million-plus turnover) estimate 11 to 25 per cent of their revenue is being lost, while 54 per cent stated that up to 10 per cent is being lost due to a lack of optimisation in payments.

This equates to 54 per cent losing a minimum of £1million (one per cent lost revenue) a year, whilst 39 per cent lose a minimum of £11million (11 per cent lost revenue).

What’s going wrong?

The study makes it clear that the performance of payments remains a primary concern for merchants, with four in five saying regular performance reviews are crucial as an area of customer support from their payment service provider.

However, several barriers to investing in optimising payments performance were identified when respondents were asked about their top three blockers.

Regulation and compliance burdens were cited by 38 per cent of respondents as taking away time and focus. In addition, 36 per cent of participants said a lack of data or access only to poor quality data was an issue.

This is further amplified by a lack of in-house resources and skills hindering change, as cited by 34 per cent of participants. Data, in particular, remains a pressing concern, as 37 per cent of participants felt like their use of data to inform their payments strategies could be improved.

Svetlio Todorov, managing director at emerchantpaySvetlio Todorov, managing director at emerchantpay
Svetlio Todorov

“Improving payments strategies can deliver huge commercial benefits to businesses, helping to boost profit margins. However, while they understand this, payment leaders are being distracted by regulation and compliance, while experiencing a lack of high-quality data and a shortage of in-house skills,” explains Svetlio Todorov, managing director at emerchantpay.

“They know they need to act now to transform their payment strategies and systems, but lack the insights needed to drive change and buy-in from the wider business.”

When is it going to get better?

The majority of respondents were keen to see the swift arrival of a solution to this issue, with nearly a quarter saying they would need to make improvements to their payments strategy by the end of H1 2022.

A further 40 per cent said that change must happen by the end of the year at least to avoid losing any more customers or revenue.

Twenty-nine per cent said that they would need to take similar action in the next 13 to 23 months, while nearly a quarter plan to do so within the next six months.

It’s evident that organisations acknowledge the need for change to keep up with demand – driven by consumers and the industry alike.

“By providing hard data and evidence to demonstrate why it pays to invest in optimised payment processes, strategic payments partners can give payments leaders the tools they need to build a case for continued innovation,” Todorov continues.

“Payments transformation is critical if merchants are truly going to keep up with customer demand and respond to the revenue losses identified in this research.”

Looking at what is required in a payment service provider (PSP), one that could tackle specific issues was favoured. Just 32 per cent of payments leaders cited offering a range of global payments options as a priority, with a further 32 per cent looking for payment routing capabilities.

One in three looked for integration options and 29 per cent were seeking anti-fraud solutions from their PSP. Interestingly, low rates was the least popular response at 22 per cent, suggesting merchants are willing to invest in a PSP that will help them move the dial on issues that need to be addressed.

  • Tyler is a Fintech Junior Journalist with specific interests in Online Banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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