Crisis breeds innovation, and we saw this during the pandemic as point solutions and digital Band-Aids kept millions of businesses afloat when they were at their worst.
However, a collection of plug-and-play (PnP) solutions that seemed like a good idea at the time — and were — are now starting to accumulate as debt as systems have evolved rapidly.
Not to throw the baby out with the bathwater, Jason Hofmann, senior vice president of customer success and partner enablement at Digital River, told PYMNTS that PnP solutions are “optimal for a small subset of the population out there looking to get a quick hit and that might be small in size.”
Those patches have a brief window to get the low-hanging fruit before seeing diminishing returns. Over the years, Hoffman said, he’s seen plug and play work for only a small subset of customers — and even those have quickly run into limitations once they’ve gotten up and running.
Describing issues that attend basic online payments solutions, for example, he invokes a kind of you-get-what-you-pay-for effect where branding and other important elements of the transaction experience are shortchanged by solutions that were not designed (or priced) for perfection.
In many cases, Hofmann explained, out-of-the-box solutions don’t do enough to help a brand stand out from the competition beyond allowing logo placement. Different customers demand different features, even if it’s something as seemingly unimportant as the placement of payment options or the shopping cart
An overly simplistic solution also tends to crimp meaningful interactions between consumers and brands, along with other vital information flows. Hofmann noted that “if you think about … communications, there’s an extensive amount of flexibility that a lot of brands look for so they can speak to their customer in the way that suits them and based off of how the customer wants to interact with that brand.” The PnP crowd isn’t getting that.
Sellers are now looking elsewhere as these limitations become more apparent and impede the smooth flow of business rather than enabling it as intended.
See also: One-Size-Fits-All Solutions Fail to Keep Pace With Rising Payments Fraud
The ‘Why’ of Tech Choices
Hofmann recalled the wild ride of 2020 and 2021 when many brands jumped headlong into eCommerce without giving much thought to finding a workable long-term solution, even as the pandemic stretched out. And as we learn to stop worrying and live with COVID-19, he said brands don’t want to be bogged down because their systems can’t keep up.
“You have this customer base that has been quite successful,” he said. “They’re not staying stagnant in the revenue that they’re driving,” he said. “They’re on this hockey-stick-like growth [up and to the right]” and that’s true from fast fashion to software-as-a-service.
As to the new thinking behind systems and partners, companies need to assess how needs have changed since 2020 and trends in the broader market.
In short, “You have to have a plan, the ‘why’ behind it,” he said, adding that many companies feel stuck with what is in place and believe it’s too costly and burdensome to change now.
Hofmann told PYMNTS that isn’t true. Employing extensible application programming interfaces (APIs) can help companies adapt and scale with the right strategy. And if they don’t have the technical expertise in-house, finding the right systems integrator (SI) can be a cost-effective way to get rolling quickly.
“I’ve seen very small brands with limited resources take an internal developer to light that up and be able to migrate from a plug-and-play experience to more extensible, flexible, API-driven experiences that allow for [merchants and brands] to do all you want,” he said.
See also: Digital River Debuts Drop-in Checkout, Allows Payment Acceptance with Global Compliance
Forget Solutions, Think Experiences
As part of this next phase in the digital shift, merchants and brands need to think more about the experiences they want to offer and less time managing backend systems.
Working directly with platform partners like Digital River simplifies this somewhat agonizing decision on technical investment in a highly volatile economy.
Hofmann said, “When we talk to customers, we want to forget technology, forget brands and everything else. Talk to me about what experience you want, what flexibility you want. Then it’s quite simple to be able to say we can solve this problem.”
There’s also moving clients and prospects away from in-the-moment crisis reactions and long-term planning, which many businesses have delayed as they dealt with a crisis. Often, he said, that’s a significant stumbling block.
Urging companies to pivot to long-term strategy planning, he said, “make sure you have the right resources, the right partners, the right vendors and the processes for when things go wrong. And when things go right, you’re focused on growth opportunities because both scenarios are always going to present themselves if the law of eCommerce holds true.”
Digital payments are growing in Latin America as companies like Mercado Libre and TerraPay rapidly advance digital banking and digital wallets in the region.
Central bank instant payments mandates and modernized infrastructure in Brazil have also moved the needle to the point where the region is arguably moving faster toward digital transformation than anywhere else in the world.
PYMNTS Intelligence’s “How the World Does Digital” report surveyed 67,000 consumers across 11 different countries. It found that Brazil was far ahead of all of them — including the United States — in digital engagement. Drilling down into the results, in 2023, 66.8% of Brazilians used mobile banking apps on their phones at least once a month, and 46.8% used these apps at least weekly.
Consumers in Brazil are embracing digital payments as well. The report found that by 2023, two-thirds of consumers in Brazil had smartphones and 75% had debit cards. In the same year, 77% of consumers in Brazil were using Pix, the instant payments app for mobile phones launched by the country’s central bank.
“After many decades of the status quo in payments, Latin America is going through a major transformation,” Marcelo Moussalli, managing director and Latin America product head executive at Bank of America, told PYMNTS.
That transformation is being driven by the two largest economies in the region — Brazil and Mexico — representing roughly two-thirds of the total GDP of Latin America, he said. Regulators in those countries launched new payments initiatives aimed at modernizing their respective banking systems.
The top-down, mandate-driven approach has been focused on boosting competition while lowering transaction costs, increasing transaction security and fostering wider financial inclusion. Beyond the commonality of the goals, the governments in Brazil and Mexico took different approaches to get there.
Brazil, for its part, introduced the Pix real-time payments network. Mexico’s innovations have included a peer-to-peer (P2P) network and a digital collection capability underpinned by QR code technology.
“In both countries, these innovations are improving [payments] speed, visibility and the overall user experience,” Moussalli said.
Against that backdrop, the adoption of real-time rails and new payment modalities has, in some cases, exceeded expectations, but there is still a robust greenfield opportunity, he said.
By way of example, in 2020, Pix’s first year, the network captured 16% of Brazil’s electronic payments volumes; that tally has grown to 40% as recently as this year. Mexico’s real-time payments network has grown 6% year on year as measured in 2024, with 60 million individuals using the network, although the QR codes and P2P networks have notched less adoption than originally anticipated.
The trend is inexorable, however. Although some businesses have been hesitant to pivot more fully to these new payment modalities and may cling to traditional methods such as cash, as time goes on, “it’s going to be hard to do business in Mexico or Brazil” without connecting to these rails, Moussalli said.
“They’re going to miss out on opportunities if they don’t adopt new digital payment options,” he said.
That’s especially true in commercial payments, where suppliers will increasingly demand to be paid in real time.
Asked by PYMNTS about how traditional financial institutions can help enterprise clients embrace change, Moussalli said Bank of America launched support for QR codes, which clients can access through the CashPro banking platform. Clients scan codes from paper or electronic invoices, and within seconds the platform retrieves the invoice details from the beneficiary bank and displays those details for review and confirmation of payment.
“This dramatically speeds up the payments process” beyond the confines of paying suppliers and into the realm, for example, of mandatory transactions that companies make for employees’ retirement benefits, Moussalli said. That “helps eliminate bureaucracy in processing payments.”
The feature has been so well-received in Brazil that it is being explored for use in Europe, he said.
Although regulators initially drove innovation in financial services in Brazil and Mexico, the central banks are well connected to their respective markets and are working with banks and merchants to foster the shift to digital transactions, Moussalli said. Cash withdrawals from banks have plummeted in the double digits. There’s particular promise in pivoting to digital payments in Mexico where cash is still tied to 85% of all retail transactions, especially for transactions below the U.S. dollar equivalent of $50.
“The impact of these changes is ongoing,” said Moussalli, adding, “there’s no going back.”