Your company, like many corporate treasury teams, is likely under pressure to optimize payment processes while minimizing costs and staying agile. But payment environments are complex, and identifying the areas most in need of improvement can be tricky.
Here’s a look at five common payment challenges and practical steps for addressing each:
1. High Acceptance Costs, Complex Fee Structures, and Interchange Optimization
Payment acceptance fees are one of the most significant financial challenges treasury teams face, especially when processor and acquirer charges are layered and difficult to analyze. Organizations that don’t have a firm & detailed understanding and ability to review these costs may be paying more than they realize or may overlook optimization opportunities that are hidden in layers of data.
A substantial portion—typically 75% or more of these costs comes from interchange fees, which require treasury teams to find the time and effort to decode, analyze, and improve the qualification or mitigate with other payment methods.
Interchange optimization can have a huge impact on the bottom line, so it’s essential to map out the structure of these fees and pinpoint areas for improvement.
2. Detecting and Preventing Fraud
Fraud costs you money and consumes time and resources that you could spend on strategic work. Yet many treasury teams don’t have the tools or insights they need to identify fraud patterns before they become costly.
A detailed assessment of your current fraud detection environment will provide insights into your authorization rates, where vulnerabilities might exist, and help identify steps to mitigate risk. Implementing tools like tokenization or machine learning can be an added advantage, but you must first have the data to analyze and understand the trends. This process helps you work smarter against fraud, aligning your strategy to fit your specific risk factors.
3. Streamlining Payment Processes
When payments come in through multiple channels—whether via e-commerce, POS systems, or online platforms—managing them efficiently can become difficult, especially with disparate systems or outdated platforms. For companies planning CRM or ERP integrations, payment processes that aren’t optimized can complicate things even further.
Before launching new integrations, your team should make an effort to streamline your payment environment. An upfront evaluation can reveal opportunities to consolidate payment points, minimize chargebacks, and automate reconciliation. Reviewing the architecture of your payment system ensures that new integrations are seamless and effective, saving you time and reducing operational drag.
4. Adding New Payment Options
Expanding your payment options is an effective way to meet customer expectations, but it also comes with its own considerations. Each new option—whether it’s virtual cards, ACH, or international payments—adds complexity and potential costs.
Make sure your team conducts a cost-benefit analysis before implementing new payment options. This includes understanding regulatory requirements, assessing fees, and determining the customer impact. Companies looking to expand internationally should pay close attention to cross-border fees, local payment methods, and FX risks to avoid unnecessary complications.
5. Clarity Through Comprehensive Reporting
Payment systems require comprehensive reporting to track and evaluate performance across vendors, regions, and channels. Standard reports don’t always offer the in-depth view needed to drive strategic decisions.
Has your team adopted or upgraded reporting tools? Many of our clients are actively looking to centralize data across multiple payment sources because having access to robust reporting systems allows treasury teams to monitor performance in real time and access the information they need to support strategic initiatives. Custom reporting can simplify contract negotiations, enable better forecasting, and streamline monthly reviews for teams working with large or varied vendor bases.
initiatives. Custom reporting can simplify contract negotiations, enable better forecasting, and streamline monthly reviews for teams working with large or varied vendor bases.
Final Thought: Optimizing Your Payment Environment
Tackling these payment challenges can help your treasury and payments teams cut costs and build a more efficient treasury function. By identifying and addressing these issues ahead of time, your company can simplify its payment environment and stay competitive in the marketplace with your customers and in new relationships with banks and financial partners.
For treasury teams that need an extra hand, Redbridge’s GPS team provides a data-backed approach to help clients optimize, monitor, and streamline payments across complex environments.