Let's Talk About Payments

Recently, I participated in a lively discussion with a prospective client around customer payment options. I listed dozens of Advantage features (more on this later) and I was struck by the client’s uncertainty about which features they wanted to support. The discussion changed from what-can-Advantage-do? to what-should-our-business-be-doing? The marketing director wanted to test all options, the customer experience manager wanted frictionless payments, the finance director wanted to reduce fees and cash liability and the operations manager wanted simplified processing. The client realized they had not fully appreciated the complexity and impact of payment options.

In the past five years, there has been an explosion of studies on consumer payments and technological preferences. The reason for this is straightforward; markets are rapidly changing and technology companies are introducing new options at a dizzying pace. Let’s look at a couple of reports to highlight the variety of available studies.

• The US Federal Reserve publishes an annual report called the Diary of Consumer Payment Choice. This analysis essentially tells us that, in the US market, cash is king---maybe not the most helpful finding for our clients. Look further into that report and there are interesting statistics though that might be more helpful: credit cards are preferred in the 25-44 group, as household income increases so does credit card usage and credit cards are used most frequently for general merchandise purchases. It is an intriguing report done at a high-level that gives some insight into US consumer behaviors.
  
  
• Perhaps the most researched demographic in the past few years is millennials. Studies abound about their behavior! The reasoning is simple---they have tremendous buying power. The behaviors of millennials cannot always be considered uniform, so tread carefully with generalities. Pew Research has a great series on millennial research. A few highlights: 92% of millennials own a smartphone, but more Gen Xers own tablets, millennial social media use is stagnating while Gen Xers and Boomers are increasing and the Silent generation (born before 1945) lags significantly in all technological categories.
  
  

When deciding on payment strategies, there is a strong marketing aspect to it, but we need to consider the entire process—business models, financial requirements, customer demographics, product profiles, etc. Should organizations aggressively pursue mobile payment solutions if their key demographic is 65+? Probably not. Should organizations move towards billed models instead of requiring payment up front? That depends in part on cashflow requirements. The point here is that it is critical for organizations, including publishers in our space, to combine market research with business knowledge to determine the optimal payment strategy.

Now, let’s look at some of the ways Advantage can support your payment strategies.

First of all, Advantage supports a wide variety of payment gateways (CyberSource, Vantiv, Chase Paymentech, etc.) and payment methods (credit card, direct debit, PayPal, Apple Pay, pro forma, quotes, etc.).

Other supported strategies include:

• Recurring billing – This is by far, the fastest growing payment model amongst our clients. Choose to collect payment from customers by term (e.g., every issue) or by time (e.g., every month). With recurring billing, Advantage also supports options for when to collect the money. This decision is often heavily influenced by finance departments for cashflow purposes. The choices are:
  • Bill before service – Collect the money prior to serving the issues and/or content.
  • Bill after service - Collect the money after serving the issues and/or content.
• Varying promotional offers by payment method – Advantage supports varying the offer (products, price, premium, etc.) by payment method. For example, run a special discount for Visa users.
• Billed with invoices schedule – Full support for the traditional “pay later” model with invoice and reminder efforts schedule.
• Installment billing – Surprisingly, this model is making a comeback with younger consumers but has been rebranded as “buy now, pay later”. Payment giants Klarna and Afterpay have started partnering with retailers to offer this model. Advantage supports many installment billing options---automatic payments, schedule-based, custom schedules, down payments and different timing schedules.
• Credit policies – These policies control refunds, if any, due to customers that cancel or return products. Customers may also be subject to cancellation fees. Read the fine print!
• Early payment discount – Incentivize customers to pay early for billed orders by providing a discount.

For more information on how Advantage can support these strategies in your organization, contact your AdvantageCS representative or email info@advantagecs.com.