Is your payment process helping cash flow and margins? Is it keeping up with advertiser payment preferences? These are important questions to ponder, as the payment industry has experienced significant changes. What that means for your station is that there’s an opportunity to streamline and maximize the process to drive the best outcomes.

Keeping up with what’s happening in payments is critical for a business. With revenue unpredictable in 2023 (or any year), you can focus on payments to keep cash stable. Let’s look at the evolution of the payment industry and why you can’t afford to ignore the changes.

Payment Preferences in B2C Go Digital

Consumers are the start of any major shift in an industry. Businesses will then adopt it. In looking at how consumers want to pay, the pandemic had an impact that’s not reverting. According to data, 67% of people make payments on mobile devices, and it’s their preferred channel. Additionally, 50% of U.S. consumers are more likely to use digital payments now than before the pandemic.

They appreciate the convenience of these options but expect the payment platform to be user-friendly, easy and secure. Businesses seek the same benefits.

B2B Online Payments Follow B2C Trends

Businesses are following the trend of digital payments. Pre-pandemic, 42% of payments were by check. Post-pandemic, 73% of companies transitioned to online payments. Companies use credit cards for payment 69% of the time. Thus, electronic payments must be an easy option for your clients. You’ll also see many benefits.

Key Benefits to Shifting to Electronic Payments

Making it easy for advertisers to pay you has several advantages. You’ll improve days outstanding, streamline workflows, get funded faster and demonstrate that you’re easy to do business with.

All these things are great for your margins and keep you out of the paper check business. Paper checks, on average, cost you $1 to $2 to process. It’s also a drain on time, with 40% of small businesses spending up to three hours on this weekly.

If you want to adapt your payment ecosystem to meet the market, reduce costs and boost efficiency, you can — just make sure you have all the facts on fees.

The Facts on Fees

There are many fees associated with electronic payment processing. It can get confusing fast, and you may be paying much more than you should. So, here are some quick facts on fees.

  • Payment processing charges: You pay these to your merchant processor, which is the intermediary between banks, your business and customers.
  • Assessment fees: You pay these to the credit card network to accept payments.
  • Interchange fees: These are the costs paid directly to credit card companies and can vary depending on many factors, including the card brand, your processor, type of card and how you accept payments.

These costs and more can add up quickly. The best way to understand them in totality is by calculating your effective rate. Here’s how to do it:

Total Monthly Fees ÷ Total Monthly Transaction Amount = Effective Rate

A “good” effective rate is 4% or less. So, how can you reduce fees? It has a lot to do with tiered versus flat rates.

Tiered vs. Flat Rates

Tiered rates are what many processors use. Rates fluctuate depending on the level, which can be:

  • Qualified: These are the lowest fees and include debit cards and non-reward credit card transactions.
  • Mid-qualified: These are midrange and consist of standard credit cards.
  • Non-qualified: These are the highest payment fees, usually for business and reward cards.

Other things impact tiers as well, including card-not-present transactions.

Flat models are easier to understand. The price is the same regardless of the transaction type or card used. Knowing all this information will be crucial in choosing the best payment solution.

Evaluating Payment Solutions

We’ll leave with you some considerations to use in assessing your options.

  • Understand the real costs of electronic payments.
  • Opt for a platform that accepts all electronic payment types.
  • Ensure that the highest level of security and compliance are standard.
  • Seek out an integrated platform that streamlines all aspects of the payment cycle.
  • Ask about funding, with next-day being preferable.
  • Find a solution that easily integrates with your traffic system.
  • Choose a platform that has quick and easy implementation and responsive support.

Get More Insights into the Payment Industry

If you want to simplify payments and deliver easy options for advertisers, your payment solution may need an upgrade. Learn more about how to transition strategically and effectively by reading our white paper, Modernizing the Payment Ecosystem for Media Companies.

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