The benefits of investing in your payment strategy
Last editedMar 20233 min read
The idea of updating your payment strategy might seem too expensive, too time-consuming, or even just too overwhelming. You wouldn’t be alone in feeling this way, with 54% of businesses saying they have no intention of investing in improving the way they collect and manage payments in the next two years. However, we recently surveyed over 8,500 payers and found that the payment methods offered play a significant role in whether someone decides to complete a purchase. So, we thought we’d explore some of the benefits investing in your strategy can offer using further insights from both the survey and our own GoCardless customers.
Attracting new customers
Over two-thirds of payers said they would abandon their purchase if they weren’t given the option of paying with their preferred payment method. A further 81% revealed that the security of a payment process was a top factor in deciding whether or not to complete a purchase. When we delved deeper into exactly what payers meant - we found that around nine in 10 people trust bank payments more than any other payment method, and overall the top four favourite ways to pay for all types of purchases and use cases are:
Bank payments (think Direct Debit)
So, what’s the issue?
It’s clear that the payment methods you offer have a significant impact on a potential customer’s decision on whether to complete or abandon a purchase. Yet many businesses haven’t updated their payment strategy for a long time, with nearly half still using cheques to collect payments, and a further 45% requesting cash. If you’re offering payment methods that don’t align with your customer’s needs, then you’re making your competitors look more appealing and quite frankly, running the risk of looking outdated or even unsafe - not terms that you want your brand to be associated with.
Reducing admin time and utilising resources
Different payment methods require different levels of resources to manage them. Some, like cash and cheque, require very manual handling and processing, as well as reconciliation time as they don’t automatically integrate with your accounting system.
The Norwegian Refugee Council, which in 2020 supported over 12 million individuals in crisis, have an aim of ensuring at least 90% of its revenue reaches beneficiaries. In order to achieve this, they had to make their approach to managing donations as robust as possible. They decided to migrate their payments over to GoCardless so that they could take advantage of automated recurring payments, but it wasn’t a decision they took lightly as any changes in payments came with a risk of interrupting revenue or losing donors in a mandate changeover. However, it was an update that paid off - with the non-profit now able to save nearly 60 hours every week, giving them the flexibility to streamline resources and use their teams’ time in places it’s needed most.
“The GoCardless customer success team really simplified the bulk migration of payment mandates from our previous provider. The solution’s well-defined API allowed data and payments to flow seamlessly between our internal CRM system and the GoCardless interface, further streamlining the migration. We didn't lose a single mandate in the migration.
GoCardless saves us 50-60 hours on payment admin and reconciliation every month, so it really helps ensure we meet our mission of at least 90% of all of the funds we raise reaching people in need.
The larger we grow, the more value GoCardless will bring to us as a trusted outsourcing partner providing vital revenue security.”
Maria Kosberg, Head of Donor Lifecycle Management, Norwegian Refugee Council
If you’re a business leader or work in finance, then you’ll be no stranger to transaction fees. Different payment methods, and even different payment providers, can charge varying amounts every time you take a payment. It can quickly add up, with methods like credit cards charging anywhere from 1.5 - 3% transaction fees.
Capital on Tap provides small businesses with much-needed access to funding and initially, they used cards as their main method for collecting payments. However, they found that the costs associated with them steadily added up as they grew - and they realised that they would need to find a scalable approach to their payments.
“It became clear early on that card payments are expensive. As our customer base started to grow and the number of repayments we were taking each month increased, it quickly became unscalable. We needed a payment provider that could grow with us. GoCardless just works all the time and as a result, we have successfully moved 80% of our customers over to Direct Debit – and this is only going to increase as we have made it the mandatory payment method for our new customers in the UK.”
Damian Brychcy, Chief Operating Officer, Capital on Tap
The move away from cards and other payment methods to recurring bank payments led to the business saving millions of dollars in transaction costs and associated fees, enabling them to scale and better future-proof their revenue.
Want to know what other benefits your payments could unlock?
Demystifying Payer Experience shares insights from over 8,500 payers from across the globe. Diving into preferred ways to pay, key checkout considerations by demographics, and which businesses are investing in their payment strategy, it’s an insightful way to better understand how your business aligns both with your customers and your competitors.
It’s available to download and read for free. Simply click here for your copy.