Hannah Fitzsimons, CEO of Cashflows shares her insight with Payment Expert on the three steps that payment providers can take to elevate transparency between their merchants.
The level of complexity in the payments industry has increased dramatically over the last decade. As such, it is no surprise that small and medium sized businesses (SMBs) are struggling to keep up. Not having the resources to dedicate an entire job role to payments acceptance, payment technology decisions at SMBs are often made by people without a payments specific background, such as those in operations, finance and marketing. This, combined with the jargon and lack of transparency from payment providers, is having a negative impact on SMBs.
To understand the motivations and pain points of the people behind payments, we recently conducted a survey of the people in charge of payments acceptance within SMBs. The research found that, despite 72% stating they understood how UK retail payments work, when asked to place the different parts of the payment value chain in the right order to show how a transaction is handled, 96% answered incorrectly.
This shows a lack of understanding within SMBs of payments processes, which needs to be addressed as a priority. The lack of knowledge continues to have a negative impact on the businesses that are the lifeblood of our economy.
Efficient payment processes are crucial to minimise outgoings and maximise profit – particularly important as the cost of business continues to rise. Without the understanding of the different processes and stakeholders involved in accepting a payment, it is difficult to identify which of the many solutions available are right for a particular business. For example, a rapidly growing business might need faster access to their funds in order to reinvest them into the business, whereas another business may want to prioritise an omnichannel payment solution.
At present, almost eight in 10 (78%) of those surveyed do not know how to switch payments provider, despite over half (52%) wanting to. This unfortunately makes sense, as identifying the best payments partner for a business can be difficult – but it shouldn’t be. SMBs should be able to easily access detailed information about payment providers and the different services they offer.
However, before we look at switching providers, the people behind payments need a good understanding of how the industry operates, which is currently lacking. The payments industry is consumed with jargon and overcomplication. And it is our job, as payment providers, to simplify payments and help SMBs to make informed decisions. In my opinion, there are three core ways payment providers can be more transparent with their merchants.
Jargon-free language is a must
In the payment industry, acronyms are used across the landscape. Whether it’s BNPL (buy now, pay later), ISV (integrated software vendor) or PSP (payment service provider), technical language is a part of our industry. In reality, it is not going anywhere anytime soon.
That said, payments still need to be accessible. In the same piece of research, we asked whether those responsible for payment acceptance enjoyed this part of their role. Shockingly, 100% of those in finance job functions who responded negatively stated that their lack of enjoyment of managing payments acceptance was due to an inability to directly compare different payments providers. And why can’t they directly compare providers? Because of the range of jargon being used across the industry.
The importance of transparent pricing
Transparent pricing isn’t ‘nice to have’; it is essential. In any other industry, smoke and mirrors around product pricing would be hugely concerning, yet in payments, many acquirers are not being transparent about their pricing upfront – and are getting away with it.
With SMBs accounting for around three fifths of UK employment (61%), and 51% of total turnover in the UK private sector, they have a significant role in supporting the UK economy. These businesses need to be empowered to access the best services aligned to the needs, wants and budget of the business. Merchant acquirers should present fair, consistent, and easily accessible pricing to enable SMBs to make direct comparisons, and ultimately, select the best solution for them.
Education is needed, and we need to deliver it
Yes, payment providers should be transparent about their products and ensure customers can understand the language used to describe them. But above and beyond this, they also need to actively educate payment decision makers. Based on the fact 96% of the people we surveyed placed the different parts of the payment value chain in the incorrect order after 72% stated that they understood UK retail payments, it is clear payment decision makers are not aware of their knowledge gap – and understandably so.
It is our job as payment providers to step up and educate our merchants. As mentioned, almost eight in 10 (78%) of payment decision makers readily admit that they don’t know how to conduct a search for a new payment provider. This can result in small and medium businesses being slower than their competitors to adopt new payment methods that their customers expect, or even lead them to pay over market value for a middle of the road solution.
By providing impartial and unbiased educational resources, we as an industry can make a real difference to the people behind payments. Whether it is taking the time to explain the payment flow during the sales process, or publishing a selection of impartial ‘explainer’ resources accessible to all, we can empower SMBs with the knowledge to make informed decisions, benefitting their businesses and, ultimately, UK PLC.
Between the economic impact of Brexit, the pandemic, and now the cost-of-living crisis, it has been a challenging few years for British SMBs.
We have an opportunity to make a real difference and support our small and medium business community by helping them to navigate payment obstacles and providing payments perfected by people. Transparency, education, and simplicity are the first steps towards making payments accessible to everyone.
