Dave Carr, Transformation Director at Access PaySuite, writes for Payment Expert on the vital role of digital payment solutions, specifically at a time when inflation continues to spike.
There’s no doubt that the cost of doing business has risen significantly over the past year. Whether it’s spiralling energy bills or inflation, organisations of all sizes are under pressure to retain existing customers – as well as win new ones – in order to stay afloat.
At the same time, consumers are feeling the squeeze, with many re-evaluating their finances and cutting back on their non-essential spending. In fact, Mastercard’s Strive Business Barometer report revealed around 1.5 million small and medium-sized (SME) businesses anticipate a loss of business due to the cost-of-living crisis. .
Some experts are warning that inflation could reach 18% next year, but even with conservative estimates expecting it to reach around 12%, this challenging economic climate shows no sign of easing. For businesses wanting to thrive and come out of this period stronger, providing flexible payment options is essential.
Attracting and retaining customers
With policy makers and economists facing growing questioning around what measures can be put in place to curtail inflation, business owners are understandably nervous of what lies ahead. However, despite this uncertainty, now is not the time to sit back and simply hope for the best. Innovation is needed.
Whether that’s offering a new service, subscription model, or providing consumers with more freedom and flexibility when it comes to managing their regular payments, there’s a range of options businesses can explore. Not only will this help maintain cash flow, it will also ensure that consumers feel valued, supported and listened to.
Only a few months ago, Netflix announced that for the first time in a decade it had lost subscribers – losing 200,000 during the first three months of 2022, and projecting a loss of a further 2 million subscribers between April and June. This shock announcement saw Netflix’s share price drop by more than 35%the following day, cutting around $55bn (£42bn) off the company’s value.
In response, the streaming giant announced innovative plans to launch a lower-priced subscription tier – supported by advertising. Other streaming services who are also feeling the pressure, such as Spotify, have taken a different approach and instead of chasing full-price sales, have offered new deals for multi-user subscriptions. Both of these examples demonstrate how by introducing relatively straightforward changes to the services on offer, businesses can prevent disastrous losses.
Incorporating digital payment solutions
While there’s a number of options for brands to explore, this diversification will only be a success if the right payments infrastructure is in place. The last thing anyone wants is to find that payments are being made late or missed altogether and then having to invest significant resources back into resolving these issues.
In addition, choosing the wrong payment channel can prove costly too as some channels are more successful and cost effective than others depending on the demographic.
With a fully integrated digital payments solution, businesses no longer have to manually process each and every payment, and can easily amend or track customer records. Similarly, they have the ability to offer flexibility around key processes such as collection dates, the payment method used and customer logins.
Those that attempt to manage this manually may find themselves falling victim to admin errors or oversights which can gradually damage a brand’s reputation and add extra costs at a time when outgoings are already increasing. If a customer calls and asks to amend or pause their payments, the process needs to be seamless.
Specialist technology can also allow brands to offer more choice around how and by what means a customer makes their ongoing payment. Given the aforementioned economic challenges consumers are currently facing, being able to exceed expectations is essential to build long-term customer relationships.
Should a customer miss a scheduled payment, digital solutions can automatically raise this within the system and notify staff that action is required. This might involve reaching out to find out if the subscription set-up needs to be amended in any way or put on pause.
From the consumer point of view, knowing that the business managing their subscription is easily contactable should they have any problems making their regular payment is also of high importance.
While it’s impossible to predict what lies ahead, it’s clear that the next 18 months will be challenging for businesses and consumers alike. With a flexible digital payments solution in place, businesses can offer greater flexibility around the services they offer consumers, without having to invest in additional resources.
Similarly, consumers will continue to feel valued and listened to, as well as feeling confident that should their own economic circumstances change, they won’t be tied into an inflexible arrangement.