As business models and consumer payment habits rapidly shift in the COVID-19 era, there has never been a more opportune time for businesses to pivot their approach to payments.
With a new spike of COVID-19 occurring in Victoria and parts of New South Wales, Australian businesses need to be prepared for any future crises (health or otherwise) that could cause further disruption.
For many organisations, payments systems are an important part of this equation.
A different kind of crisis
While some similarities have been drawn between the impact of COVID-19 and the global financial crisis (GFC) in 2008, we are currently navigating a whole new environment.
In fact, one of the biggest differences between today and the height of the global downturn in 2008 is the growth and sophistication of the virtual world. In many cases, the virtual world can complement or entirely replace aspects of the physical world in ways not possible more than a decade ago.
For example, we’re now seeing gyms migrating their services online.
From a business payments perspective, one of the main challenges of today includes the ability to monetise goods and services amid growing health concerns about touch payments.
While payments often fall into the too-hard basket, there are some simple measures businesses can adopt to improve and crisis-proof their payments systems.
1. Leveraging more efficient payment structures
For businesses dealing directly with customers, one of the most effective steps to take is connecting to the New Payments Platform (NPP).
Businesses encouraging customers to pay via the NPP are seeing huge benefits, including lower transaction costs and more efficient, seamless payments.
The other advantage is the platform’s PayID capability which helps businesses identify who has paid them, allowing for easier reconciliation of payments.
Despite being the most efficient payment method available, many businesses continue to rely on traditional payment systems such as credit cards and PayPal.
Recent figures from the RBA reveal the NPP is steadily taking market share from other payment methods. Both the value and volume of NPP transactions in Australia has increased significantly compared over the past year — by 166% and 120% respectively.
Getting on the NPP is as simple as creating a PayID using an email address or phone number. Businesses should also practice paying via the platform with $1 transactions to ensure it is optimally set up for customers.
2. Consider offering discounts for full or partial upfront payments
Through a faster payments system enabled by the NPP, businesses can accept partial payments from customers before the delivery of a good or service.
In an uncertain economic climate, implementing partial billing is one way businesses can effectively minimise their exposure to loss, as some of the costs of materials or delivery are already covered.
Businesses also can encourage upfront and on-time payments by prioritising service delivery or offering an enhanced service experience or discount to customers. For our part, we’re seeing more businesses offer partial and upfront payments to customers and expect this to continue.
3. Accompany payments systems with the right accounting software
Having the right accounting software for your business is even more important in the current environment, given many businesses can no longer afford a lengthy debtor list.
Being able to identify where each payment is from and practice good administration on debt is key to business sustainability during this period, especially as inflows and outflows vary according to customer demand.
For instance, we’re seeing a growing trend across many sectors of micro-wholesaling where businesses make smaller, more frequent transactions with suppliers.
4. Offer customers diversified payment options
Despite the growth of contactless payments, it’s still important for businesses to have a diversified system catering to a variety of payments habits.
The latest RBA figures show the NPP has a long way to go before it’s considered an everyday alternative to cards, processing just 5% of the number of card transactions in May 2020.
Although it’s hard to predict how long the current period will last, businesses who take the time to invest in the right payment systems are giving themselves the best chance of success in weathering this crisis and beyond.
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