Payments Teams Strive to Balance Growth With Optimization

PYMNTS asked industry executives across the payments and digital commerce landscape to give us their take on the pivotal shifts, technological advancements and strategies that have shaped business in 2023. Spreedly CEO Justin Benson says 2023 was the year that merchants pivoted from top-line growth to bottom-line optimization.

2023 was the year that merchants pivoted from top-line growth to bottom-line optimization.
This shift in focus proved to be the dominant factor that helped drive product and technical winners and losers.

Bottom-line optimization resulted in several notable shifts in the payments industry. This included price wars at the largest processors in the United States and the resulting fallout for major industry players. Technologies like network tokenization, with their promise of higher authorization rates, lower interchange and other cost-saving tools, moved to the forefront of interest for many merchants.

We also witnessed a wane in enthusiasm for alternative and local payment methods. Although they were typically thought of as helping capture incremental revenue by offering multiple choices to consumers, the complexity of managing so many different payment methods for a relatively small percentage of total revenue came under scrutiny in a more resource-constrained world.

In terms of payments orchestration, our customers moved from a primary focus on using orchestration for global expansion to honing in on creating the right set of routing and rules to maximize the success rates of payments already in hand. Many of our customers use failover to re-route transactions when a preferred gateway is down, alongside customizing routing logic to increase acceptance rates, lower costs and develop effective payment architecture across geographies.

Looking ahead to 2024, we believe the year will be a lessons-learned blend of the last two years — with the focus shared between growth and optimization. This careful calibration will be done with an eye on our more resource-constrained reality.
Payments continue to grow and remain highly complex and critical to businesses everywhere. Enabling payment technology, like orchestration, will continue to play an essential role in helping payment teams focus on optimization, payment method vault management and connectivity.