Categories: Payment Methods

PYMNTS’ Labor Day Reading List (Without The Labor)

And just like that … it’s September.

Labor Day is the end of summer for many — and amid the lurch toward the first day of school, we scramble to fit the last BBQs in, get the last binge watches in, embrace the long weekend’s languid pleasures and maybe sneak in some last dives at the pool.

At PYMNTS we’ve got deep dives of a different sort — a summer reading list that won’t take time, but will pay dividends.

Readers of this space no doubt know that in payments, the devil is in the details — in the numbers that pop up as dots to be connected, pointing toward tomorrow’s trends today. Keeping track of it all is a bit easier if you’ve got … trackers.  We’ve got em, of course, touching on everything from subscriptions to faster payments to gig economies — and below is a roundup of some of the more notable ones.

With the links all in one convenient spot, we save readers some labor (on Labor Day, no less) when undertaking these deep dives.  Come on in, the water’s fine.

Think Global, Pay Local:

One emerging theme in payments has been the growth of recurring payments.  It’s an attractive business proposition, after all, regardless of vertical.  The company that is successful in attracting subscribers is likely to see improving margins, as costs are relatively fixed and scale is in the offing.

But as a recent Global Recurring Payments Tracker found, subscription providers that have global ambitions have their work cut out for them.  It turns out that that the lure of expanding beyond domestic markers, with limited subscriber pools, has challenge — especially when it comes to payments.  Providers must take into account the payment options that are readily available to — and preferred by — the consumers in new, targeted markets.  Consider the fact that, for example, 40 percent of surveyed German consumers said they were “unlikely” to use credit cards for recurring purchases; by way of contrast, 74 percent of eCommerce (including subscription) purchases by Singaporean consumers used cards.

In payments, as in politics, everything is local.

As for recurring payments, research shows areas where there can be room for improvement across at least some verticals. In the Subscription Commerce Conversion Index, we found that 32.1 percent of streaming services consumers plan to end their accounts because costs are perceived to outweigh benefits.  Separately, the same study found that 26.7 percent of digital media consumers plan to end their subscriptions within a year.

Faster, More, Better and Now … on Demand

Since it’s Labor Day, it would make sense that at least some deep dive reading would navigate the brave new waters of faster payments, and specifically how faster payments can lead to happier workers.

Speed thrills when it comes to payments, and the Faster Payments Tracker done in conjunction with Fiserv found that offering instant disbursements to workers — letting them access funds for work performed — breaks the shackles of the payroll cycle.  It lets workers manage cash flow.  In one statistic, 57 percent of hourly workers surveyed have said that early wage access would be “very helpful.”  Drilling down a bit: within one vertical — quick service restaurants — where turnover can reach triple digits as measured annually, quicker access to earnings can be a huge advantage for businesses.

In further evidence of the lure of flexible payments, PYMNTS and Mastercard surveyed more than 2,200 gig workers and found that — as the title of the report “Pay Advances: The Gig Economy’s New Normal” suggests — the offering could be a game-changer for the gig economy.  In one stat, 51.8 percent of gig workers using platforms that do NOT offer pay advances would consider switching to platforms that do offer that option.  That’s a sobering stat, considering that roughly a third of worldwide professionals now participate in the gig economy.

And if that weren’t enough, 12 payments execs weighed in on the various ways instant payments can build competitive advantage and foster sticky relationships — not just for gig workers, but between utilities and customers (for just one example).

Thinking Intelligently About Smarter Payments

Thinking globally, paying locally, paying faster … it all involves smarter thinking about payments in general.  That means examining infrastructure through a critical lens — and moving beyond legacy systems and legacy mindsets.

Faster international payments mean that cross-border rails need an upgrade.  The opportunity is significant in, say, B2B, where cross-border payments are worth as much as $125 billion — and that figure is on the rise.  And in one example, a deep dive shows 75 percent market share for cross-border payments handled by SWIFT gpi, for a value of $40 trillion last year.  There are many ways, and many initiatives underway, to streamline transactions and take advantage of new technologies such as blockchain.  You can find a host of them here.

Winnow the subject of infrastructure down a bit, from the global stage to as smaller one, and individual companies are grappling with legacy systems, too. As noted in the Credit Union Innovation Playbook, CUs are examining what they need to do to foster loyalty in the digital age.  We found that 30 percent of loyalty-focused CUs are innovating to meet potential members’ needs, and 54 percent were focused on digital wallet innovations through the past few years … with more to come.

Ferreting out the Fraudsters…

But where eCommerce is on the rise, where payments, done digitally, gather speed … lurk the bad guys.  The transition away from card-present transactions and toward banking done by mobile means promises convenience, yes — but risk, too. Account takeover attacks resulted in $5.1 billon in losses last year.  No wonder, then, that as the Digital Fraud Tracker found, the online fraud prevention market is slated to grow by as much as 20 percent annually, as measured for a CAGR projected from this year until 2025.

As noted in an interview with Nicolas Kopp, United States CEO for the Germany-based, digital, mobile first challenger bank N26, perspective is key when FIs seek to stop fraudsters in their tracks. In expanding into new markets, traditional FIs and tech-nimble upstarts must adjust their fraud protection strategies to better fit local customer needs. “There’s definitely a benefit to having a global setup when it comes to fraud, because some of these fraud schemes are very elaborate, but … they [also] happen everywhere around the globe,” Kopp said.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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