The rising popularity of digital payment methods signals the need for back-end payment solutions that support scale.
Payment methods like contactless cards and account-to-account transactions have been around for years but have only recently seen explosive growth. These programs were launched in the market prior to the pandemic, but many payment companies did not introduce them at scale, likely due to the significant financial and technological investment necessary to implement them. As consumers continue to adopt and demand these payment methods at scale, merchants and banks must find ways to accommodate that demand.
Emerging payment methods require more advanced technology than many organizations currently support. Without digital transformation or modernization of legacy systems, aging infrastructures can hamstring organizations from staying on the cutting edge of payments.
And it’s not just a temporary problem; consumers are doubling down on the new technology. A Mastercard survey found that 79% of global respondents are now using contactless payment methods. This leaves payments companies with two options: update their software to support new payment innovations or fall behind.
Digital payment volumes are growing exponentially; unfortunately, payments companies often don’t have the infrastructure to accommodate the growth. Companies need to scale their processing power, but the challenge is that the most traditional option—hardware servers, can be cumbersome and time-intensive. With current supply chain issues, sourcing and setting up physical servers can take months that the banks don’t have to spare. It also means they need to plan far in advance.
The fluctuating volume of payments can also present a dilemma. Different times of day require different amounts of processing power; companies must be able to accommodate the busiest periods of the year, but this could leave them with a lot of wasted capacity during slower periods, unnecessarily draining resources.
Cloud technology solves both these issues. Cloud solutions can be deployed quickly as they require minimal hardware, and financial institutions only pay for the processing power they need, making this system far more cost-effective. With flexible scaling, companies can be confident about handling growing volumes consistently and efficiently.
The new wave of payment demands can be overwhelming, particularly for vendors with vertical-specific technology. This is because many software programs don’t have payment capabilities at all, let alone the ability to support the latest innovations such as contactless. To assure success in these situations, it is critical to have the right third-party solution that can integrate seamlessly into the existing software stack, which often means turning to a provider that has a proven track record in that particular vertical.
There is a clear need for cloud-based payments support and therefore a great opportunity for providers to carve out a market share. To succeed, there are several key considerations to keep in mind.
When building out a payments integration, consider how the end-user will be interacting with the platform. Determine the most critical needs and priorities for today while future-proofing solutions for tomorrow. By thinking ahead and anticipating what consumers will want to see in the near future, providers can make sure their customers are equipped for that inevitable behavioral shift. Convenience continues to be one of the most valuable features of a system.
Merchants are faced with the daunting task of integrating new technology into their already-complex software stacks. The provider that can alleviate the stress of this process will reap big rewards. More and more solution providers are offering comprehensive platforms available via APIs, making integration incredibly simple. The more full-service a provider can be, the more value they can add for clients—and the more in-demand that platform will be.
As mentioned above, traditional companies face difficulties with cloud-based payments today because of their sharp growth and fluctuations in volumes. Any third-party software must address these challenges in order to help the customer successfully launch new tools like contactless payments or account-to-account transactions. Customers do not want to pay for more capacity than they are using; they also want to have access to greater bandwidth as needed. A cloud-based solution should focus on addressing these needs with easy and reliable solutions.
The final piece of the puzzle is addressing fragmentation. Many merchants use software infrastructures specially designed for their vertical. Cloud-based solutions providers must therefore offer products that can integrate easily into these various verticals. If a payments solution does not align smoothly with existing software, it can create fragmented workflows within the customer’s platform. This in turn leads to incomplete visualization, disjointed business strategies, and an inability to react to changing market demands.
Cloud-based payment solutions have come to be the only viable solution that will help organizations scale with ease. Payment processing that is backed by the cloud promises greater flexibility which is imperative for businesses to remain competitive in a highly digitized and responsive payments landscape.
Talk to our team of experts to know how the cloud will help in solving the scaling problem for payment providers.
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