Efficient, secure, and customer-centric payment systems are important parts of an overall business strategy. With the global digital payments market expected to exceed $12.5 trillion by 2027, it’s clear that the way businesses manage transactions can profoundly impact both their bottom line and future stability and growth.

In the age of global commerce and technological innovation, businesses must reassess their payment strategies. Optimizing your business’s payment operations cuts costs while streamlining processes, enhancing security, and improving the overall customer experience. Below, we’ll explore some of the most effective strategies businesses can use to refine and reinforce their payments, from mobile optimization and local acquiring to fraud detection and more.

What’s in this article?

• How to figure out the right payment optimization strategies
  
• Payment optimization strategies
  
  • Optimize for mobile
    
  • Embrace local acquiring
    
  • Be aggressive about fraud detection and prevention
    
  • Automate wherever possible
    
  • Enable contactless payments at scale
    
  • Create a unified commerce experience
    

How to figure out the right payment optimization strategies

Before a business can make use of a strategy, it must first build it. Therefore, before we explore the specific strategies that can help you improve payment ecosystems, let’s cover the process that businesses can use to create a tailored list of payment optimization strategies that fit their unique needs, goals, business model, key markets, and growth opportunities. Here’s what that process looks like:

• Assess current payment landscape
  Begin by evaluating your existing payment processes, systems, and technologies. Understand your current challenges, inefficiencies, and areas for improvement. This assessment should include analyzing transaction volumes, payment methods, transaction costs, customer feedback, and any identified security risks or fraud incidents.

• Define business objectives
  Articulate your payments-related business objectives and goals. These may include reducing costs, improving customer experience, increasing cash flow and predictability of financial models, expanding into new markets, or mitigating fraud risks. It’s important to align your payment optimization strategies with your overall business objectives.

• Identify key market factors
  Consider the specific markets in which your business operates and where you plan to expand. Each market may have unique payment preferences, regulations, and infrastructure. Research payment trends, consumer preferences, local payment methods, and any regulatory requirements that may impact your payment strategy.

• Analyze industry best practices
  Study the payment practices and strategies employed by successful businesses in your industry. Look for case studies, research reports, and success stories for insights into effective payment optimization strategies. Identify practices that align with your business model and objectives.

• Engage stakeholders
  Involve relevant stakeholders—such as finance, IT, operations, customer support, and marketing teams—in the decision-making process. Gather their insights, perspectives, and pain points related to payments. This collaboration will help identify opportunities and ensure that the final payment optimization strategies are aligned with the broader organizational goals.

• Consider scalability and flexibility
  Anticipate future growth and scalability requirements when designing payment optimization strategies. Evaluate the scalability and adaptability of different solutions to accommodate increasing transaction volumes, expansion into new markets, and evolving customer needs. Choose strategies that can be adjusted and scaled as your business grows.

• Evaluate costs and benefits
  Assess the costs, both up-front and ongoing, associated with implementing each payment optimization strategy. Consider factors such as integration costs, system upgrades, staff training, and potential savings in transaction fees or operational efficiencies. Compare these costs against the expected benefits, such as improved customer loyalty and lifetime value (LTV), increased revenue, reduced fraud risks, and streamlined processes.

• Prioritize and develop an action plan
  Based on the assessment of your needs, goals, market factors, industry best practices, stakeholder input, scalability requirements, and cost-benefit analysis, prioritize the payment optimization strategies that align with your business. Develop a detailed action plan that outlines specific steps, timelines, responsible parties, and key performance indicators (KPIs) to measure each strategy’s success.

• Implement, monitor, and iterate
  Implement the selected payment optimization strategies, ensuring proper integration with existing systems and processes. Continue to monitor the impact of the strategies on your business metrics and customer experience. Collect feedback from stakeholders and customers to identify areas for further improvement. Make adjustments as needed to improve the effectiveness of your payment strategies.

By following this process, businesses can develop a thoughtful list of payment optimization strategies that not only address their specific needs but also capitalize on growth opportunities, cultivate better customer experiences, and drive business resiliency and efficiency.

Payment optimization strategies

Below are a list of six strategies that reflect the most significant shifts in how businesses and customers are approaching transactions—and commerce itself. These strategies dovetail with the evolution of payment technologies, changing consumer preferences around payment methods, and the globalization of commerce. Again, the exact suite of strategies that your business invests in should reflect your unique needs and goals.

Optimize for mobile

Smartphone usage continues to surge globally. Juniper Research suggests that by 2024, mobile wallets will be responsible for over $9 trillion in transactions. Businesses must adapt their payment strategies to stay relevant. Optimizing for mobile payments isn’t just about convenience—it’s about meeting customers where they are and providing a frictionless payment experience. With digital wallets like Apple Pay, Google Wallet, and others becoming increasingly popular, businesses can cater to a larger demographic, especially younger consumers who prefer digital transactions. This, in turn, can lead to increased sales and customer satisfaction. Moreover, mobile optimization typically provides strong security features, fast transactions, and simplified recordkeeping.

Starbucks is a strong example of a business that optimized in the direction of mobile payments. Its mobile app, which integrates payment, loyalty rewards, and order-ahead features, accounts for around 25% of the business’s US transactions, illustrating the power of a successful, mobile-optimized payment experience.

Stripe provides comprehensive support for mobile payments. Using Stripe’s SDKs for Android and iOS, businesses can integrate Stripe into their mobile applications, providing their customers with a smooth, secure, and convenient payment experience. Stripe also supports digital wallets including Apple Pay and Google Pay, which enables customers to make quick and secure purchases using this increasingly popular payment method.

Embrace local acquiring

For businesses operating across borders, embracing local acquiring can be a powerful way to mitigate the risks that come with accepting payments internationally. Local acquiring allows a business to process payments through a local payment gateway in the country where the payment card is issued, which can significantly reduce transaction costs and improve payment success rates. This strategy also reduces the chances that payments will be declined, as local banks are more likely to approve transactions from local acquirers. Furthermore, it can improve customer experience by supporting local currencies and payment methods, thereby removing friction in the checkout process.

According to a study by CMSPI, businesses can boost their approval rates by using local acquiring banks. Consider Airbnb’s payment strategy: to accommodate varying payment preferences across different countries, Airbnb adopted local acquiring, making the transaction process smoother for both hosts and guests. This has allowed Airbnb to tap into local markets more effectively.

Stripe supports local acquiring through its global payments and treasury network. With Stripe, businesses can process payments in over 135 currencies and access local payment methods in key markets around the world. This can result in improved authorization rates, lower costs, and a more seamless payment experience for customers.

Be aggressive about fraud detection and prevention

Fraud is a major concern in today’s digital landscape, and businesses must be proactive in detecting and preventing fraudulent transactions. This risk goes beyond protecting the bottom line—it also has a direct impact on customer trust, which affects word-of-mouth reputation, customer referrals, retention of existing customers, and LTV. By using advanced technologies like machine learning and artificial intelligence, businesses can detect and analyze suspicious activity in real time, making it easier to stop fraud before it happens.

For example, American Express uses advanced machine learning algorithms to detect fraudulent transactions. This aggressive approach to fraud detection has allowed it to maintain a fraud-to-sales ratio that is among the lowest in the industry.

Stripe Radar, which is included with Stripe, is a suite of machine learning–powered fraud detection and prevention tools that uses data from millions of global transactions processed by Stripe to help businesses identify and prevent fraudulent transactions. It allows businesses to set custom rules for more nuanced control, providing well-rounded, automatic fraud protection.

Automate wherever possible

Automation in the payment process can offer multiple benefits: it can reduce manual errors, streamline operations, save time, and decrease costs. For instance, automated invoice processing can ensure timely payments, avoid late fees, and improve relationships with suppliers. Furthermore, automation also enables better tracking and reporting, which can provide valuable insights for business decision-making and strategy. By embracing automation, businesses can focus their resources on core competencies and strategic initiatives, rather than repetitive administrative tasks.

According to a McKinsey report, businesses that automate their processes can see a 20%–35% increase in efficiency. This means fewer manual errors and less time spent on mundane tasks. Stripe provides a powerful API and webhooks that enable businesses to automate a wide range of payment tasks, from creating recurring billing and subscription plans to handling refunds and chargebacks. Stripe Sigma is an SQL-based data analysis tool that can automatically generate financial reports, aiding in business decision-making and strategy.

Enable contactless payments at scale

The COVID-19 pandemic dramatically accelerated the adoption of contactless payments, and this trend has not shown any signs of slowing down. According to a recent study from Visa, 48% of customers say they will not shop at a store that doesn’t offer a contactless way to pay. For businesses, offering contactless payment options is important. By implementing contactless payments at scale, businesses can provide a safe, quick, and convenient way for customers to make purchases, which can result in faster checkouts, increased transaction volumes, and improved customer experiences. Contactless payments can also provide better data for analysis and personalization efforts, offering businesses the chance to better understand their customers and improve their offerings accordingly.

Apple Pay is one market-leading example. By making transactions fast, secure, and contactless, it has grown to one of the most widely accepted mobile payment platforms, with a user base that’s expected to surpass 60 million by 2024.

All of Stripe’s payment solutions, including Stripe Terminal, are enabled to accept in-person contactless payments. With precertified card readers and a robust SDK, businesses can build their custom payment experiences for in-person transactions. Stripe Terminal supports EMV chip cards and contactless methods like Apple Pay and Google Pay.

Create a unified commerce experience

Unified commerce involves integrating all sales channels—physical stores, online platforms, mobile apps, etc.—to provide a seamless shopping experience. This means a customer can start their shopping journey on one channel and finish it on another, with their data integrated across all platforms. The benefits of this approach are multifold: it can increase sales by removing barriers to purchase, improve customer satisfaction by offering convenience and flexibility, and provide businesses with a holistic view of customer behavior.

Stripe helps businesses create a unified commerce approach by fluidly integrating online and offline payments. Stripe’s unified Dashboard allows businesses to manage payments across all channels in one place, providing a comprehensive view of their business performance. Businesses can also use Stripe’s APIs to sync customer data across platforms, which provides personalized and intuitive customer experiences across all channels. To learn more and get started, go here.