THE PAYMENTS TRIANGLE: ACHIEVING EQUILIBRIUM

Introduction

Christoph Tutsch
Christoph Tutsch

Establishing the core properties of a truly fit for purpose payments solution is an exceedingly complex and challenging task. There are innumerable factors to consider, many competing and requiring painstaking reconciliation; yet, it is the greatest challenges that inspire the greatest innovators.

The necessity of a complete payments solution cannot be overstated; it is the life blood of modern economy, serving merchants, banks, agents and PSPs around the world.

Success here depends on the ability to take a holistic view of payments solutions. By doing this, we are able to see payments as a whole process and improve our understanding of what drives it and what it consists of. This is what we call the Payments Triangle.

Made of three sides, the Payments Triangle establishes the characteristics that any payment solution must have at its core:

  • Simplicity
  • Speed
  • Security

These must work for and with each other, under a harmonious relationship that strengthens the process.

However, all too often the triangle is dysfunctional, with one side being sacrificed for the sake of others; it is secure and speedy but not simple. It is simple and secure but not speedy. It is simple and speedy but not secure.

One under-sourced side of the triangle could spell disaster for the merchant, or possibly even the consumer.

This article will explain how the three sides can work together in harmony and why none have to be left out or neglected.  Throughout the article, we will refer to two distinct stakeholders – the customer and the consumer. The customer is any business using a payment platform such as a merchant or bank. The consumer is just that – a member of the public making a payment in exchange for goods and services.

Simplicity

Fundamentally, an electronic payments process must be simple, quietly and diligently operating without undue consideration or intervention.

Yet the plethora of global currencies and payment methods can add a huge level of complication to this landscape. Combined with the fact that many of the payment solutions used to navigate this landscape are, themselves, complex; payments can seem far from simple. For the customer, this simplicity has to be threefold – simple to integrate, simple to manage and simple to use.

The first hurdle of payments integration is the integration itself. Businesses cannot afford any down time – any time when payments cannot be accepted. If a payments platform is not easy to integrate then it is going to fall down at the very first step.

Maintenance is equally vital. A payment platform’s success depends on its ability to run smoothly and with minimal customer user interface. From processing to transaction reconciliation and account management, the best payments systems offer minimal complexities to the user.  This requires high quality, easy to analyse data being produced by the system.

For the consumer, simplicity is equally key. With minimum concentration the consumer should be able to accept payments in multiple currencies, multiple channels and multiple devices. Consumers should remain unconcerned about the complexities of the system.

Speed

It may be an old and well-used cliché, but the phrase ‘time is money’ has never quite been so accurate. For the modern customer operating in the ‘instant’ age, speed is an essential feature.

Vast volumes of research highlight speed to be of equal, if not more importance for the customer. Abandonment, where shoppers do not complete online transactions, is the scourge of internet retail. Figures vary as to its true extent, but findings from 2014 suggest that only three in ten online transactions are completed[1].

The key driver of abandonment is broadly regarded to be the time it takes to complete a purchase or a transaction. No bricks and mortar retailer would make their customers wait in lengthy queues to make purchases and the same should be true online. If the payment provider isn’t speedy, it is pushing consumers out of the door.

To achieve this speed, the payment solution needs high performance and high availability. High performance to make sure that the processes are carried out swiftly and high availability to ensure that there is little or no downtime. Underpinning this has to be scalability to allow technical processing.

Security

Critically, a payments platform must be secure. Breaches are notoriously costly, time consuming and damaging to reputations.

Security must therefore be watertight. The payment solution must be PCI DSS compliant. It must offer end to end encryption and must comply with EMV protocols for POS support. Beyond this, it must also comply with the laws and regulations of each territory it operates in.

For the consumer to complete a transaction, it is important that the platform is not only safe, but that it also looks and feels safe. Abandonment is not only caused by idleness but also by a wariness of unauthentic looking payment mechanisms.

Conclusion

For the perfect payments mechanism, these three components must not only function impeccably in their own right, but must also be perfectly balanced against one another.

In a truly harmonious relationship, there will be no sacrifice here from one side to another, each works to complement the next.

Ensuring that your payments system achieves the right equilibrium between speed, security and simplicity is key to business success.

[1] Fortissimo, 2015

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