5 critical limitations of traditional payment gateway services
Customer payments are the lifeblood of any business. As such a business’s payment gateway is crucial, as it processes, verifies, secures and authorises customer payments.
Over the past ten years, the payments landscape in Australia has undergone tremendous change with new market entrants, and fintech startups disrupting the space and providing alternatives to traditional payment gateway services.
These have come off the back of changes in consumer demand, advances in technology, and increased competition in the merchant space. Many of these providers offer pros and cons.
Payment gateways are now a critical part of the customer experience – and are viewed as such. They must allow instant payment processing, access to payment channels, cross-border connectivity and enable flexible integration options that work for both businesses and customers.
Unfortunately, many organisations are still held back by traditional payment gateway services which present these fundamental limitations.
Not Bank Independent
Traditional payment gateway services are provided by and tie businesses to a single bank, limiting your ability to improve performance and control of your payment experience. Unfortunately, this can lock a company into paying higher transaction costs, accepting poor customer service and unable to process transactions if the banks’ payment service goes down. This service stickiness with the bank is often in the banks best interest and not the merchants.
Modern payment service providers such as IPSI avoid lock-in to acquiring banks by delivering multi-bank connectivity and bank independence. This independence puts companies back in control of their payment strategy enabling them to access a wider variety of benefits providing the flexibility and control they require.
One of the main challenges faced by traditional gateways is the pain associated with trying to change their acquiring bank. A modern payment gateway avoids the front-end re-engineering required to switch to alternative banking gateways, putting businesses in a much stronger position to control their payments destiny.
Lack of Support
Banks aren’t known for a high level of customer support when it comes to payment services. Unfortunately, if the acquiring bank is underperforming, and you are locked into a banking contract there isn’t much you can do about it.
With a modern payment gateway, the power is reversed. It is now in the hands of the merchant, rather than the bank. Previously, changing gateways and banks came with a high cost, allocation of internal resources and long-lead times that were a significant barrier to change. Now, organisations can easily switch between banks to ensure the optimum mix of innovation, services, bank fees and support.
Lack of Flexibility
Customer expectations and payment technology are changing rapidly, and with this comes the need for flexibility. Something traditional banking payment gateways often don’t have.
A rigid, inflexible payment gateway can be costly and limit your ability to migrate to a different financial institution, add new features or access reduced financial institution costs.
A flexible payment service will also give you the ability to scale. Rapid growth and expansion can be difficult and come at a high cost if you are locked into a traditional payment gateway service. Additional investment is often required for new integration capability and re-engineering which can be avoided with a more flexible payments service.
Built for the mass market, not individual customer needs
Unfortunately, most traditional payment gateways won’t suit the customised needs of a larger enterprise. Services are sold to merchants based on the ‘type’ of business they are, rather than the unique requirements of the customer.
This can restrict the number of features you can access and often result in a low solution fit, requiring internal investment to bridge the gap. As an example, an off-the-shelf gateway specifically for a retail business may not support custom page designs and configurable real-time notifications which limits a merchant’s ability to tailor the user experience to meet customers evolving expectations. IPSI’s services allow you to customise and add features as your business requires, giving the flexibility to adapt and scale.
A modern payment gateway will also be able to adapt to change. In the payments industry, companies are continuing to invest in new authentication technologies and explore alternate payment channels such as contactless and wearables. These will open up new possibilities that should be easy to integrate with any payment gateway if it has the flexibility to adapt.
More Reactive Than Innovative
Change within the payments industry is constant. The emergence of new payment channels and the ever-present threat of data breach require an innovative approach. Unfortunately, traditional payment gateways cannot adapt and scale with changing needs. They often react slowly, rather than being proactive and innovative.
Increasingly, payment infrastructure comes under pressure to change, requiring increasing speed and the ability to connect easily with new players and technology. This change will only serve to enhance the customer experience through better and faster payment solutions.
Payment gateways are now an integral part of the customer experience. Customers expect fast, seamless payment processes when and where it suits them. These demands make it incumbent on large organisations to have payment gateways that are flexible, easy to integrate and able to scale with changing customer demands.
Highly flexible dynamic payment service providers such as IPSI offer the benefits associated with strategic bank independence and flexible customer-centric processing. This puts merchants back in control of their payments strategy which is a win for them, and a win for customers.