Chelsey Kukuk, Managing Director at Redbridge, gives her insights on outsourcing the payment acceptance strategy and the many benefits that come along with it.
What is the benefit of outsourcing the strategic oversight of a payment card acceptance program to Redbridge?
Chelsey Kukuk: We have found that most organizations do not have the time, resources, tools or technology to effectively stay on top of managing their payment acceptance strategy because this is an ever-evolving space. There are constantly new rules from brands and the regulatory environment continues to evolve.
Outsourcing the entire payment strategy to a third-party firm is common in certain industries, such as in the college and university space, waste management, utilities, etc. Handing it over to a third party can be a great solution for organizations who do not want to deal with payments at all, but it’s not what we offer at Redbridge.
We believe that businesses should keep ownership of their card payments, particularly to be able to choose the innovations that best suit their customers’ needs, but also to prevent any costs drift.
To help each company manage its payment card acceptance program, Redbridge has created “PACE”, which stands for Payment Advisory and Cost Management Experts. PACE is a dedicated team of payment industry experts that helps organizations create efficiencies within their own payment acceptance environment, specifically focusing on helping to improve the user experience while minimizing the total cost of accepting these payments.
Many of us previously worked at Vizant, a boutique consulting firm focused on the payment space, acquired by Redbridge about three years ago, which has allowed us to grow and scale our solution to serve a larger audience.
What type of company is your service aimed at?
CK: We have roughly 60 clients in our portfolio today, representing about 3.5-4 billion in payments volume annually.
Since our solution is customized, it creates value for any organization of any size and in any industry. We can help robust teams focus on cutting-edge solutions and we can also work as an extension of teams who have minimal time and resources, effectively providing them extra arms and legs to tackle their payment acceptance strategy.
Our team has a proven track record of adding value in any of those scenarios. We have a good concentration of clients in the insurance space and in the B2B or business services space. Healthcare is another large and growing space for us, and we’ve also been very successful in the higher education, non-profit, e-commerce, and even retail spaces.
What are some examples of cutting-edge payment acceptance management solutions that companies need to consider today?
CK: There are no “one size fits all” solutions to improve your payment card acceptance environment.
For some organizations, the improvement will come from getting a handle on the data, being able to normalize it, to draw insights and have conversations that may not have taken place before with acquirers, card brands, gateways. Here, getting to know the incentives to introduce or grow card brand solutions, marketing approaches, payment types or channels is at stake.
For other clients, the improvement will come from solutions like pinless debit or debit routing, when the organization simply hasn’t yet had the opportunity to introduce them because the ROI wasn’t worth it so far.
In the retail space, the trendy topic is “Buy Now, Pay Later” and how it can not only improve the user experience, but also be implemented to attract new customers and increase repetition with customers as well as grow the average basket size.
Another big challenge in the B2B space is getting very granular on interchange optimization and third-party solutions to help organizations better optimize the interchange moving forward. These are just a couple of examples of where Redbridge can help add value.
How does Redbridge work with its clients?
CK: We are sensitive to the fact that our clients don’t have a lot of time, so we’ve designed the process with that in mind.
Part of the help we provide is assisting them in getting a handle on their current state and then being able to draw some conclusions on what the available solutions are to create additional efficiencies and reduce costs. What do those cost saving levels look like?
We provide support from the very beginning to help them collect the data and information that we need to be successful with this process. We help them with collecting that data and information. We then take that data and information in-house and do a very intensive audit or deep dive into their existing environment to identify areas of opportunity, specifically where we can introduce and create efficiencies as well as where we can derive cost savings. We then present this information to our client along with actionable recommendations and solutions on how to achieve these results.
Timing is the essence. We move with a sense of urgency knowing that acceptance costs are continuing to increase. Depending on the client’s involvement and the accessibility of the data, we can deliver findings to the client about 6-8 weeks after we receive the data in-house.
After we deliver our findings, we work in a very hands-on fashion. Each month, our team takes the lead to help each client implement our recommendations. They’re receiving reporting and insights, as well as industry updates, and we’re working together to validate the levels of cost savings achieved.
Could you describe the advising and technology that are offered as part of this service?
CK: They go hand-in-hand. We have tools and technology that help us in getting timely information to our clients and give them great insight into their acceptance environment. Then our dedicated team of experts, who have been working in the payment card industry for well over ten years on average, add an additional level on top of that. They’re here to help with the real-world applications and navigating some of the challenges that organizations face when they’re looking to execute their optimization strategies.
What is the return on investment for clients?
CK: The ROI is typically quite significant and we help clients to assess that. The investment upfront from their perspective is very minimal. It’s really an involvement from a data collection perspective, and we’ve even automated and taken over that to a great extent. So, there’s very small investments as far as time and resources.
Once we get into the implementation itself, the solution varies for each client, but we work with them to identify ROI for each solution and then track performance over time. But what our clients see in general is that there is a significant reduction in their cost of acceptance, and over time we are able to maintain these reductions.
We talk in terms of effective rate, which is a unit of measurement in the industry that looks at fees divided by volume. You can track effective rates for a multitude of things. When you look at overall effective cost in terms of the effective rate, we are able to demonstrate to our clients, significant decreases in the effective rate and then sustained effective rates over time that outperform the market.
Reduce costs, boost revenue, and minimize fraud