Toolkit: Adopting innovative payments and winning with fintech

Increasingly, customers are demanding seamless payment journeys, whether this be in-store or online. Digital payment solutions can benefit both businesses and customers. 

For businesses, you can benefit from improved customer experience, lower card transaction fees (for example, a merchant discount rate), higher basket conversion and higher transparency around the payment settlement process. Digital payments can also provide improved security.

The most common issues facing businesses are:

1. High fees on customer payments
   “Fees are one of our most significant pain points. As a small company who operates internationally, payment fees are a lot for us.”
   Online education platform
   
   
2. Finding the right payment solutions for customers
   “PayPal now makes up a quarter of our sales. We need to keep up with the next evolutions of this – customers might decide they won’t buy anything from your site if you don’t offer their preferred ways to pay.”
   Sports clothing & equipment distributor
   
   
3. Slow payments with poor visibility
   “Most of our clients pay by account transfers which take three working days. We will get a notification the day before the money arrives, but this creates issues for our accounting team, and we often chase customers for payment when they’ve already sent it.”
   Large utility company

Lifestyle Fitness improved their failed payment recovery, financial reporting and user experience with GoCardless

Situation overview: Lifestyle Fitness, a Nationwide health and fitness chain, faced a number of challenges including the need to swap its expensive and error-prone and unresponsive card system which was time-consuming to manage.  Any failed payments required membership payments to be re-requested, which was resource intensive, impacted customer experience and led to s limited payments insight.

The GoCardless direct bank payment solution allows:

• Creation of flexible payment plans, allowing customers to initiate with one-time setup
• Automatic collection of payments.

GoCardless’ Success+ feature also enables:

• A reduction in failed payments using payment intelligence data and machine learning
• Intelligent retries identify when customers are most likely to have funds in their account and automatically retries payments on that day.

This resulted in:

• Success+ increased failed payment recovery to 71.6% leading to 10x ROI
• Financial reporting processes accelerated from 3 weeks to 5 days
• Improved customer experience.

Amarante London improved revenue growth by offering buy now pay later (BNPL) with Clearpay

Amarante London - an online and in-store florist - wanted to achieve a customer-centric purchasing journey, meeting the needs of a predominantly younger consumer base. They also wanted to offer accessibility for consumers who prefer not to pay for products upfront.

How did Clearpay help?

Clearpay’s BNPL solution provided the option to spread payments interest-free over six weeks. Clearpay took on the full repayment risk and paid Amarante London the full sale price upfront, minus a fee. The customer journey was also much-improved, with express checkout needing only two-click payment. It also gave Amarante London the opportunity to reach Clearpay's audience of over 2m active customers via their app and website.

This resulted in a 160% increase in average order value, 17,000 referalls from Clearpay's shop directory in February 2020 alone, and a new, younger customer base.

Hospitality businesses can benefit from an integrated ordering and payments solution

Hospitality businesses may want to allow customers to 'order and pay now' or 'order and pay later' through mobile devices. This reduces a reliance on staff to provide bills to customers and allows a frictionless payment option for customers.

For example, a small, busy restaurant with staff shortages is experiencing issues with long waiting times, which is ultimately discouraging regular customers from coming back.

How can OrderPay help?

OrderPay allows businesses to rapidly take payments via a QR code without needing apps or card readers, including the ability to tip and split bills. This means businesses can generate more revenue, encourage upselling, and track performance. It also gives customers a more seamless payment journey.

Callsign provides a digital ID solution to offer added security and reduced fraud risk for online merchants

Businesses may want to provide seamless digital authentication, because multi-factor authentication can introduce too much friction. They also want to reduce fraud and ensure customer data is secure, as there is an increasing amount of sensitive consumer data stored through online retail customer accounts.

For example, a retailer with mobile and web presence who supports card-on-file or guest checkout has experienced issues with security in the past. One significant incident of credit card fraud resulted in negative PR in the papers. Security must become top priority, but they also don’t want to inconvenience customers by adding extra steps in the payment process.

How can Callsign help?

Callsign’s technology allows merchants to reduce fraud, increase conversion and minimise friction. By integrating with the Callsign platform, merchants can unlock benefits such as reduced costs and a simplified customer journey. In addition, retailers can mitigate external threats such as hacks and scripted attacks.

It's cloud-based with no code integration and development, and removes unnecessary steps within digital user journeys through the use of behavioural biometrics (e.g., typing/swiping recognition) and device fingerprinting and location intelligence.

Increasingly complex B2B practices can be simplified through fintech partnerships. Through interviews with CBI members, cross-border payments, accounts payable, and accessing finance are frequently cited as areas of concern for business.

The most common issues facing businesses are:

1. High cross-border payment fees
   “Most of our suppliers are based in Asia and America, and we pay them all in US dollars. Because of this, we incur trade expenses and pay fees associated with converting Euros and Sterling into US dollars through a traditional bank.”
   Sports clothing & equipment distributor
   
   
2. Accounts payable automation
   “Our current system is archaic. We populate individual details into the bank platforms and initiate payments from there. These are notably manual processes, labour intensive and lacking in controls.”
   Large home & garden retailer
   
   
3. Access to alternative financing
   “For our B2B business, our large customers are able to push us into long payment cycles which requires us to use debt factoring which ultimately affects our profits.”
   Sports clothing & equipment distributor

Alternative Airlines used Wise to save money on international currency transfers

Alternative Airlines - a small flight search and booking company - faces rapid international expansion with countries in 80+ countries. This was leading to large FX costs eroding their already low margins.

How did Wise help?

Wise enabled Alternative Airlines to send, spend and receive multiple currencies with the real exchange rate. They also benefited from low cost and transparent FX exchange fees.

This meant large cost savings for the business, with £75k saved in the first nine months. Its bespoke and user-friendly platform also helped save the finance team a lot of time.

Businesses can face a number of inefficiencies when paying employee salaries and managing their expenses. This includes the inability to make flexible payments, and burdensome expense management processes.

The most common issues facing businesses are:

1. Demand for flexible payments
   “Some of our employees want to be paid weekly, but this is a frustration as it takes extra work.”
   Sports clothing & equipment distributor
   
   
2. Arduous expense management
   “Our engineers get a £25 allowance when out of town. They give in paper receipts, which get stapled to a paper form and handed to accounts to process. It’s a lot of work.”
   Electrical & building services company

Salary Finance allows employers to pay salaries more flexibly and offer other forms of financial support

Businesses may want to support employees in taking control of their money and financial wellbeing and pay employees flexibly. Advances can be a solution for employers to help employees with the occasional unexpected expense or even to manage their budgets on a different cycle than their employers. Though advances are only powerful as one tool in an arsenal of support, not enough in and of themselves.

While providing access to debt in and of itself isn't the right way to achieve a robust financial wellbeing strategy, using salary-linked loans can be used to support employees now in the context of a cost of living crisis. Employers have an opportunity to partner with organisations, like Salary Finance, to offer more affordable loans at no risk to the business. 

For example, a major supermarket has over twenty thousand employees. The leadership team are conscious that many of them are struggling financially and want to support them in managing their money more effectively.

How can Salary Finance help?

Employees can access earned pay before payday, depending on the employer's threshold. This doesn't affect their credit score, and doesn't require interest to be paid. Salary Finance’s salary link is more affordable for employees, more inclusive, and builds more positive habits.

Employees can also access loans with good repayment terms, and participate in savings programmes, where a portion of their salary is paid directly into a saving account, building better habits for the future.

About Salary Finance's employee loans: 

Salary Finance’s Borrow benefit gives employees access to affordable loans when they’re needed – avoiding high-interest debts and keeping employees in control of their finances before finding themselves in trouble. Many people using Borrow take an extremely low-interest loan to consolidate existing debts, greatly reducing monthly outgoings and giving them more to spend on essentials each month or allow them to start saving.  

1. Employees can apply without impacting their credit score. Lending decisions are made on a multitude of factors
2. Salary Finance guarantee to have the best rates for loans under £5,000
3. By repaying regularly, on time and never missing a payment, users can improve their credit score. Employees are transferred to direct debit repayments should they leave their employer
4. Salary Finance wants to help people move out of debt and into savings. Those ineligible will either be lent a small amount, or signposted to further support if borrowing will not improve their situation.

Several interviewed businesses cited difficulty in accurately forecasting cash flow and managing changing economic conditions. Fintechs offer automated solutions for payables, collections and liquidity to improve business efficiency.

The most common issues facing businesses are:

1. Forecasts are often inaccurate
   “We’ve got a very good analyst running the forecasts, but when she’s on holiday we notice a change in quality.”
   Large home & garden retailer
   
   
2. Highly manual processes
   “The forecasting process is highly manual with about 25 steps, inputting information from projections into an Excel.”
   Large home & garden retailer
   
   
3. Concerns around the economic environment
   “Jobs at the moment are difficult to predict, with a lot of work that may or may not pull through. It’s hard to know where cash will be in a few months’ time.”
   Electrical & building services company
   

BankiFi partnered with TSB to power Revenu, helping businesses to get paid quicker and reduce time spent on admin

Between the pandemic and rising inflation, it’s no secret how incredibly tough recent years have been for businesses of all shapes and sizes. To survive and grow in these turbulent times, finding the right balance between income and expenditure is key. 

Together, TSB and BankiFi teamed up to make it quick and simple for customer payments, even when on the move, and to help remove many of the risks of being paid late. As an extension of the TSB Business Current Account, Revenu provides access to accurate and instant payment information and allows businesses to make informed, time critical decisions about payment to their own suppliers.

Illustrative example: A sole trader struggles with late payments and has limited time to catch up on admin when they get home. Manual invoicing makes it difficult to get a clear view of cash positions and they have experienced liquidity issues in the past. They are keen to find a cost-effective solution that is compatible with their existing bank account and accounting software provider.

Result: Revenu, as a bank + Fintech solution enables:

• Received payments automatically reconciled to any accounting system used
• Quick and convenient payment collection, reducing late payment days to improve cash position while also reducing administrative burden
• Requests for Payment sent to customers all from a mobile device, with or without invoices
• Instant payment, in full, using account to account services, which also keep business bank details secure
• Instant notification of payment, so you are always aware of which payments are still due
• Chasing of any overdue items with the click of one button
• No complex fee structure, one simple monthly service charge.