In A Decade of Digital Transformation in 12 Months, 46 C-suite executives spoke with PYMNTS for its Q2 eBook on what the world will look like as recovery rolls on and the next iteration of normal rolls out. In this excerpt, Mike Massaro, CEO of Flywire, explores how embedded finance and payments are taking shape in different ways across a range of industries.
Read the entire eBook here.
Payments are the lifeblood of any business. The ability to transact impacts everything a business does — from cash flow and hiring to credit, investment and expansion. But until recently, payments were an afterthought in most businesses, separate from sales, marketing and customer service. Companies controlled the payment process mostly by limiting customers’ payment options, without a thought to how they could help modernize the business.
The advance of digital and mobile into our daily lives started to shift that dynamic – most visibly in the B2C arena, where most eCommerce transactions happen with a click or a swipe. Now that innovation is translating into B2B payments as well. The pandemic put the need for seamless digital transactions into hyper-drive, as convenient, secure, digital payments became a minimum business requirement.
As a result, the payment experience is quickly becoming an integral part of the customer experience. Businesses can no longer worry about how the customer – whether it’s a consumer or a business – will pay after the fact. It needs to become part of the overall value proposition they offer up-front, or they will risk alienating a loyal customer base.
For some, it’s a matter of survival. Businesses and consumers both expect a convenient digital payment option, no matter what they are buying. For others, it’s the logical result of an ongoing quest to make things better, faster and cheaper by minimizing friction at the point of sale, enhancing customer engagement and driving operational efficiencies.
Some call it embedded finance and payments, others call it payment services. The most visible examples are Apple and Uber, but we can see the trend taking shape in different ways across a range of industries – and in many cases, it’s what happens behind the scenes that makes the biggest difference, for example:
- B2B technology companies are digitizing their international payment processes to enable overseas customers to be billed and pay in their local currency, while making it easier to reconcile those receivables in the tech company’s financial system of record. This simplifies a complex and costly process for both parties — and addresses a customer need that influences their choice of suppliers.
- In leisure travel, payments have also become an important part of the selection process. In recent research by Flywire, of 800+ frequent leisure travelers from the U.S., U.K., Canada, Spain and Japan, 89 percent say that ease of payment is important to them, and 70 percent say that having an easy payment experience impacts their choice of travel agent and/ or tour operator. Travel agencies and operators are responding by expanding digital payment methods and enabling split payments that make it easier for groups to divide costs.
- Educational institutions are connecting the initiation of tuition payments to their backend reconciliation process by offering students preferred payment channels that reduce fees, speed settlement and make it easier for both students and schools to track status. Schools are also using payment histories to automate the offering of installment payment plans to students before they fall behind. This limits potential dropouts due to financial difficulty.
- In healthcare, new payment capabilities are addressing critical needs by providing increased visibility to expected patient costs pre-treatment to avoid billing surprises, and automatically setting up payment plans before care is delivered. This is increasing patient satisfaction while also preventing lost revenues and reducing AR and collection costs.
The pandemic has changed payments – both in the role they play in our daily lives and the difference they make in who we choose to do business with. These are just a few of the ways they are likely to change forever. Expect to see a lot more in the months and years ahead.