Payments Orchestration Playbook: SMBs Embracing Digital Payments Framework

Almost 1 in 5 small to medium-sized business (SMB) owners (19%) say they’re planning to move to a fully digital business model, up from 12% who said the same thing just a year ago, according to a recent study.

Consumers are also becoming increasingly fond of subscription services, with November 2021 PYMNTS data showing that almost one-quarter (24%) of Americans use at least one retail subscription and the average consumer uses four of them regularly.

Publishing and news-based businesses have tried for decades to navigate the subscription model and are finally figuring out its nuances, while those in the wine and liquor space have also become leaders in getting their customers to subscribe to their services.

Almost 4 out of 5 commercial news or publishing entities (79%) expect subscriptions will play a critical role in their companies’ success this year, according to another study.

In the February 2022 edition of the Payments Orchestration Playbook: Bringing New Products To Market Edition, PYMNTS looks closely at the challenges businesses are facing as they look to bring new products and services to market in an increasingly digital-first world, as well as how payments orchestration can help.

“Experimenting with new business models like these will only lead to future success if companies can make such transitions seamlessly,” the Playbook says. “In practice, this means ensuring that both their internal and customer-facing payments operations run smoothly. Consumers are becoming less tolerant of frictions and more discerning about what methods and channels they wish to use to pay.”

PYMNTS research from April 2021 found that most consumers consider how they can pay for their purchases before deciding where to spend their discretionary income, with 57% of consumers saying they are more likely to shop with merchants that offer digital payment options.

“Reducing any hiccups or pain points during the purchasing process is also critical for companies seeking to keep their customers engaged and satisfied,” the Playbook says.

That April 2021 report also shows that 58% of consumers would shop from merchants less often — or stop shopping with them entirely — if their payments were declined.

“Slow or cumbersome payments processes can also keep companies from launching the products and services they need to expand into new markets and drive sales,” the Playbook says. “This makes it essential for businesses to ensure that their back-end operations can easily support the payments capabilities required in their newfound business models.

“Enlisting help from third-party providers, including PSPs, acquirers and gateways, can help businesses circumvent the costs and frictions of developing new payment capabilities from scratch,” according to the Playbook.

Almost three-fifths of merchants (57%) work with more than one payments processor to manage cross-border and domestic transactions and that same percentage also work with multiple acquirers. Data from April 2021 PYMNTS research shows that companies were seeking to innovate various parts of their payment operations, with 36% of businesses noting they want to implement new spend management or expense controls.

Companies are also reporting higher interest in automation and other technologies that can allow them to aggregate disparate systems or tools into one place, with more than one-third (34%) of companies seeking to incorporate rules-based decisioning solutions to help automate payments, according to our research.

Another 25% of firms are interested in APIs, indicating a rising desire to streamline their back-end operations in the future, PYMNTS data shows.