Digital-First Firms Must Take Page From FinTech Payments Playbook

At first, the claim seems to be a bit outlandish. How could every company eventually become a FinTech? But unpack the statement a bit, and it goes from exaggeration to a sense of reality. After all, FinTechs understand consumer trends and are able to pivot quickly to meet end users’ demands. They manage money in a way that is geared toward their customers. And they also readily accept technology rather than procrastinate over its usefulness.

The claim – and its translation – comes from Alex Limerick, director of business solutions (global product and innovation) at payments platform WEX. She told PYMNTS in a recent interview that payments can power global brands to maintain their “space” and dominance in their chosen verticals – and can even interact with their supply chains more efficiently.

“Maybe they’re paying their customers, or maybe their customers are paying them,” she said. “They pay for goods and services across their supply chains. And so in order to maintain market-leading positions, there is also an emerging trend of forging payments partnerships to facilitate their commerce more seamlessly.”

Sounds like a FinTech. In effect, in the great digital shift, firms across any number of verticals will have to continue to pivot to the cloud, to partnerships and to outsourced relationships that can help them move with agility, she told PYMNTS. It’s not too far-fetched to say that in a way, down the line, every company will become a FinTech.

“We see the increased pressure to maintain payment operations in a time of crisis,” she said, which was most recently spotlighted by the pandemic. Suppliers may no longer be willing to wait for long invoice terms, and buyers may have to start buying from supply chains with which they have never interacted. Balancing credit and cash flow against some of the payment assurances they need – and managing risk – has never been more important.

Money Movement Is Critical

The movement of money, then, becomes a critical part of a firm’s operations, where seamless transactions can create revenue while also saving money. Balancing the portfolio of a known and unknown list of supplier and buyer relationships against the chosen payment method can make the difference between a successful and unsuccessful commerce approach, Limerick noted.

She pointed to the example of online travel agencies, where global businesses focus on bringing the best travel content to their customer bases. Those companies rely on global payments providers to help them pay airlines and hotels across the world every day.

“We originally saw airlines marked by high volume, and high-value transactions in the commercial space. But when the pandemic hit, all of the customers who had booked via our global online travel agencies, for example, required refunds. And so during that time, the commercial payments weren’t only about distributing funds, but also the returning of funds.” Airlines have been able to ensure that they have the right payment structures in place, and that all chargebacks and related processes are transparent.

“The leading brands that are outsourcing their payments are the ones that quickly protect their business flows,” Limerick noted. “They are quickly enabling the supply chains. And they’re winning in their own space and keeping the competitors at bay. Being able to support parties with credit lines [and] rebate mechanisms also allows these leading companies to invest in the marketplaces where they need to innovate, and to win when the pressure is on.”

Limerick cautioned that when partnering with a payments provider, all enterprises should weigh and understand how much flexibility and scalability they achieve – and, ideally, if the providers are operating in the cloud.

“Do these brands need local payments – and how much automation can really remove the backend processing of payments and the pains that they feel in those areas?” she asked. “Can you quickly match your buyer and supplier relationships? And do [the payments processors] have all the compliance and licensing in place to manage the jurisdictions in which you operate?”

As Limerick told PYMNTS of the best partnerships: “It’s not just about the payment, but about how providers help balance the buyer and supplier economics.”