But as Mehret Habteab, SVP and head of products at Visa Europe, told Karen Webster, there’s been no easy path toward making changes during the process, to redefine what a consumer might be paying, or when, and the digital path that governs communicating with those merchants is a friction-filled one. In the U.K., the rise of open banking has led to heightened consumer expectations of choice and power over their transactions, said Habteab. The ability to manage and control how they set up their “mandates” with their service providers is one of the key aspects of Visa’s new A2A offering, an open system that seeks to bolster the use of, and protect account-to-account payments.

Digital account-to-account payments have been a hallmark of open banking but are not limited to that format. Faster payments in the U.K. have grown 15% over the past year, driven by consumer demand for speed and convenience. However, this growth has been accompanied by a rise in fraud. As Habteab told Webster, open banking initiatives have shown promise in enhancing security, but newer payment methods like variable recurring payments have yet to reach their full potential. Visa’s new A2A service aims to address these challenges, leveraging the company’s brand, capabilities and expertise to secure payments between accounts.

According to Visa, the new A2A framework will be based on an open system available for all eligible banks and other industry partners to join. It introduces standards, rules and a dispute management service to help protect consumers and further modernize open banking-based payments. It is being designed in partnership with leading FinTechs in the U.K., including Banked, Modulr, Moneyhub, Salt Edge, Vyne and Yaspa, and will be delivered by key U.K. industry players working with Visa.

Visa A2A also benefits businesses, as near real-time settlement through Pay.UK’s Faster Payment System gives them greater visibility over payments and makes cash flow management simpler. Businesses can also take advantage of digital messaging capabilities, including notifications if a consumer changes or cancels payment permissions. It also provides them with the ability to include more transaction data for reconciliation.

From early next year, banks and businesses in the U.K. will be able to offer Visa A2A to consumers making bill payments such as utilities, rent and childcare fees. In the future, it will expand to managing subscriptions of products and services including digital streaming, gym memberships and food delivery services.

‘A Great First Step’

At a high level, said Habteab of the Thursday (Sept. 5) announcement, the payments network is standardizing APIs and connectivity, and by extension is transforming the user experience as individuals interact with merchants and billers. Any payment method — in this case bank-to-bank fund flows — needs guardrails, protections and easy connectivity, said Habteab.

The greenfield opportunity is significant. “But the speed — and the benefits that speed brings,” said Habteab, “have been outweighed by the fraud that we see in the faster payments space.”

There are efforts to make consumers feel more at ease with these payments. In the U.K., for example, regulators have notched the liability for payment service providers and banks for push payments fraud at tens of thousands of pounds. Banks are tasked with safeguarding consumers’ data and vetting merchants and billers.

“What the regulators have done is a great first step,” said Habteab, “but it doesn’t take us where we need to be in order to conduct secure commerce with confidence.” Value needs to be unlocked for all players on all sides of the commerce equations, she told Webster.

These concerns are being integrated into the existing Visa infrastructure, said Habteab, including tokenization and biometrics, to offer account to account functionality when making bill payments via one click options, as consumers can also set spending limit amounts. There’s also a formal dispute resolution process to provide transparency in the merchant/consumer relationship, with a clear delineation of liability.

The natural progression, said Habteab, will be for Visa to roll out A2A to billers already in its network, and then to make the service more broadly available to open banking providers. Along the way, she said, issuers and merchants improve their payments collections, with a minimization of the costs tied to those payments via a more direct relationship.

“There’s something in this for everybody,” said Habteab, who added that “consumers need to feel safe and confident that they have choice and control surrounding their payments.”

The post Visa’s New A2A Offering ‘Opens’ Choice and Security Via Direct Bank Transfers in the UK appeared first on PYMNTS.com.

Along with the rituals of putting away the summer wardrobe and sending kids back to school comes the strategic reflection: what’s now, what’s next and what becomes part of the 2025 business plan.

And the onramp to the second half of the decade.

Those plans have rich context to consider.

New data from PYMNTS Intelligence finds that consumers in the U.S. engage in an average of 14 different digital activities each month: paying bills online, conducting telehealth visits, streaming music and videos, and shopping and paying for groceries and retail products using digital payments and apps.

The U.S. may not be as digitally-forward as Brazil, according to our 11-nation study about How the World Does Digital, but its consumers are embracing a digital-first economy. Digital-native generations like Gen Z and Zillennials will fast-track that reality for the businesses they shop with and work at — bringing their parents, grandparents and corporate colleagues along for the ride.

New cutting-edge technologies are a part of those plans, especially GenAI, and innovations in digital payments change where and how consumers and businesses find each other and do business; making those transactions faster and more efficient. Our connected, soon smart voice-enabled, digital economy is moving commerce to any internet-enabled endpoint, anywhere in the world. That will force business models to change and foster an adapt-or-die subtext in strategic plans.

As digital becomes the DNA of business, success won’t be measured by the products a business makes or sells, but how well they create and monetize ecosystems that connect activities across traditional industry sectors.

As I have written many times, payments is the cornerstone for this digital transformation.

Networks will become the catalyst for growth, profits and scale because they have the power to connect stakeholders and simplify and monetize value exchange. Networks give innovators a way to enrich their value. Those themes run through the PYMNTS Intelligence findings we’ve reached based on tens of thousands of surveys and millions of data points.

This is not an altogether new story, but the combination of cutting-edge technologies and payments makes it a different one.

We see evidence of new networks being formed or contemplated as businesses take stock of their customer assets. Payments introduce new ways to create and monetize engagement.

Technology paves that path.

Business models become the source of competitive differentiation, scale and platform ignition in a timeframe that works for customers, investors and the network operators. It’s the challenge that has vexed platform businesses for millennia. It remains the siren song that beckons business executives and innovators to try anyway.

Looking back at the summer of 2024, and the strategic plans that will soon grace the pages of a thousand PowerPoint decks, here are nine trends that businesses should consider as cornerstones for planning for success in an economy undergoing intense disruption from new technologies.

One: Embedded Everything

Embedded is the prefix for most of the innovations we talk about now in payments. We embed payments into software (something we’ve been doing ever since the dawn of eCommerce), identity into payments, lending into checkout flows, banking into virtual accounts, point solutions inside of tech stacks, GenAI into software, offers into banking apps, and networks into networks.

According to PYMNTS Intelligence, nearly all software platforms, PayFacs and marketplaces have plans to either embed or enable embedded solutions inside of their ecosystems either this year or next.

A lot of what was called invisible at the dawn of the 2010s with the introduction of Uber is now described as embedded. I guess we’ve evolved. Embedded is a given, tablestakes, the key to conversion. But it’s not enough to just “embed” something into something else. Embedding should be almost invisible and frictionless.

Looking ahead, embedding is the beginning, not the end — making the application of embedded about the how and the what instead of just the why.

Two: Power Shifts to Issuers

Payments processing is a commodity — a low-margin race to the bottom. Regulators in the U.S. and worldwide want to see it commoditized further, threatening the economics of the traditional four-party model. At the same time, banks and corporates watch every day as payments are a one-way ticket out of their customer’s bank accounts and into someone else’s — billions, and even trillions of dollars a year.

Those dynamics should force a shift in the conversation about payments towards a strategic source of value, an opportunity to create and monetize new account relationships, turning a one-way ticket out of one bank account into an opportunity to create a new account relationship with added value. Non-banks will become issuers of virtual accounts with feature-rich functions that go well beyond a one-time-use virtual card that is just a way to complete a transaction.

New payments economics beyond interchange — and new ways to incent the right behaviors and stickiness — will matter as much as the technology that makes all this possible. That will shift the power to the issuer, who holds the deposits and can monetize them inside of these closed-loop ecosystems. And the business models that bring it to life.

Three: The Monetization of Instant

We live in an on-demand economy: What we want, we want right now. And when it comes to money, right now means in an instant.

Yet there is an assumption that, when it comes to money, “right now” also means free — even though consumers pay for “right now” in almost every other part of the on-demand world.

It costs money to order food from Uber Eats or aspirin from Door Dash to get it delivered in 30 minutes. Amazon’s same day or overnight delivery isn’t free — there is an annual subscription fee and often a minimum basket size. Consumers can binge watch movies or TV shows on Netflix, on demand, provided they are a subscriber.

For consumers and small businesses, instant payments become much needed cash flow. We have plenty of evidence that both will pay for speed because it is cheaper and more predictable (and safer) than filling cash flow gaps any other way.

Maybe they won’t pay for instant all the time, but they will when it is most necessary or when it gives the receiver peace of mind that the money is there just in case; PYMNTS Intelligence finds that to be the case for medium-size small businesses as well as parents who are constantly juggling the expenses of raising a family, to take two examples.

Instant is offered to consumers and small businesses much less often than they’d like, according to our research. Nearly 80% of consumers and SMBs would pick instant if they could, it’s offered less often than receivers say they’d like.  Finding ways for payors to monetize instant could change that.

 Four: From Cards to Credentials

Ten years ago next month, Apple Pay was launched. It was hailed as a digital payments innovation, a new form factor that would make plastic cards irrelevant.

It hasn’t.

Far more important than turning a phone into a form factor was the tokenization of card credentials, the mobile wallet superpower that transcends using the mobile “Pays” to complete a transaction at the physical point of sale.

Tokenization makes online checkout easy, secure and customer-friendly and recurring payments reliable. It expands payments acceptance to all end points that accept cards, overcoming wallet POS acceptance barriers.

Tokenization breaks the consumer, issuer and merchant dependence on wallet acceptance and wallet fees, creating a more inclusive environment for distributed commerce — cross-channel, cross-platform, cross-operating system.

We see innovators using tokens to reinvent user journey and flows, making it one-click, and sometimes no-click. And embedding shopper identity and preferences into those credentials to make them smart, personalized and relevant.

The shift from cards to credentials isn’t just a consumer play. It is also a powerful B2B innovation that creates frictionless commerce opportunities between trading partners. It is already changing the utility of wallets and how they are used, making them less about payments and more about the digital hub for doing business in a digital world, giving corporates new ways to engage their stakeholders across complex financial supply chains.

 Five: Fraud Forces Focus on Finding Source of Truth

Good data delivers new insights that help businesses see around the corner. Here is one of them. The fear of “getting it wrong” slows company growth for businesses of all sizes, when getting it wrong means deciding not to enter new markets or segments for fear of fraud.

Businesses have every reason to be wary.

AI-powered fraudsters create sophisticated schemes to trick consumers and businesses into funneling money their way. The risk of getting it wrong is now very high, and unless something is done, it could get worse as AI rapidly improves.

The battle lines are being drawn over the source of truth: what is it and who has it?  Businesses want answers.

What is the source of truth for consumer and business identity? The UnitedHealthcare hack, combined with the hack of background check database National Public Data, gives fraudsters nearly everything necessary to create an identical, digital twin of sorts on the web.

For customer data, what is the source of truth about preferences and use cases? The water is muddied by ad blockers and far too many paper-based records and data silos in businesses.

For lenders, what is the source of truth for assessing the risk of a consumer or a business? Credit scores for consumers are a rear-view mirror look, and for businesses there is a lack of standardization for business credit reporting.

Networks and consortia are emerging to create certainty about people, businesses and transactions in a world where onboarding speed is critical and face-to-face is either impractical or illusive. For the nearly half of businesses that turn away new business, solving that problem will help them drive top-line performance.

Six: GenAI Moves Up and to the Right, Even Without Knowing the ROI

PYMNTS Intelligence has studied roughly 450 C-Suite executives since January to get a read on GenAI sentiment across the enterprise, its application, and the ROI of those efforts. CFOs, especially, say that GenAI is the most significant technology innovation of their lifetime. That’s pretty good news, since they ultimately sign the checks for those investments across the business.

More interesting is how the enterprise uses GenAI. Here we find that large corporates apply it to more strategic areas of the business – moving from GPT-ing emails and reports to fraud (where AI has been a force for many years), product innovations and process improvements.

Source: PYMNTS Intelligence

These execs are committed even though we’ve seen a shift over those eight months in the importance of ROI when making those investments. We’ve observed a simultaneous increase in investment and application of GenAI to the business in support of more strategic initiatives, and the decrease in expectations for a more immediate payback.

The C-Suite recognizes that GenAI and AI more broadly will change their business and the competitive landscape. Not being able to measure outcomes right now, or estimate ROI reliably, isn’t stopping them from using it, and investing in it, and rethinking how their own business will do business in the years ahead.

Based on the conversations I’ve had with C-Suite execs, they believe that the return on not-investing — waiting to get all the answers first — could be highly negative, maybe fatal, to their business.

Seven: Uncertainty Is the Invisible Tax on Business

Uber’s biggest innovation in 2009 wasn’t making payments invisible, it was monetizing certainty. Not knowing how long it might take to find an empty taxi during rush hour, or any hour, or wondering whether one would show up at 5 AM for a ride to the airport was its central value proposition — eliminating the uncertainty that defined the taxi industry for decades. Certainty (and invisible payments) is the foundation for the $154 billion business that is Uber today.

More generally, not knowing costs businesses money, opportunity and confident decision making. Data in real time creates certainty, but getting data ready is complex; data silos are hard to crack. Decision makers devolve into “analysis/paralysis” – as they pore over incomplete data and make risky assumptions to fill in the gaps.

The PYMNTS Intelligence team has been running The Certainty Project study since January to size the cost of uncertainty for middle market companies.

It’s not nothing.

We estimate that uncertainty costs about 4% of annual sales and 8% of sales for the middle market firms on the smaller end of the sales spectrum. Waiting, not knowing, cost middle market firms opportunities, clients and staff.

Not surprisingly, uncertainty’s ripple effect can be felt up and down the financial supply chain. Companies with higher degrees of uncertainty pay slowly — creating cash flow issues for receivers that then create cash flow for their suppliers.

CFOs will invest in workflows and tools to reduce uncertainty, giving them visibility in the data and payments flows that offer a clear line of sight into their business and market dynamics, and the tools to help them fill the gaps.

For most businesses, the greatest source of uncertainty is not knowing when they’ll be paid, when the money will hit their bank account. Knowing, with certainty, when money will arrive is almost, with the emphasis on almost, as good as getting it. At least those CFOs know when and can plan.

Eight: Legacy Has a Renaissance  

Legacy is a funny word. When the world lost Berkshire Hathaway’s Charlie Munger at the age of 99 earlier this year, the media spoke of the rich legacy that he left behind. His writings, his investment theses and his authentic called-it-like-he-saw-it approach are all part of  Munger’s indelible imprint on business strategy and investing.

His legacy.

When we talk about legacy in payments and financial services, it isn’t usually that flattering. The conversation is about tech debt and slow movers, systems that are out of step with the times. The expiration date for legacy is also getting shorter. Tech that is 60 years is prehistoric. Tech that is 20 years old might as well take its final victory lap right now before riding off into the sunset.

What’s missing in the conversation about legacy is the part that isn’t about the tech. It’s the part about the rules of the game. The regulatory and compliance part. It’s the unit economics of the business part. It’s the complexity of building a financial network part, and coloring within the lines that regulators have drawn and keep redrawing part.

We were forced to take another look at legacy as the payments and financial services industry melted down over the antics of several bad actors playing in the Banking-as-a-Service sector.

You all know the story.

Durbin-exempt banks could be part of the cool FinTech ecosystem, get those deposits and change their business. FinTechs could work with those banks, offer banking services to consumers and businesses, share in the interchange fees, without being one. Everyone could live happily ever after.

A few really didn’t. And the happily-ever-after story is looking less happy for a large swath of BaaS innovators forced to change their models and hope for the best. Even more fallout is expected. Consolidation is inevitable.

Regulators aren’t shy now about aggressively examining and sanctioning FinTechs and FinTech models. Banks and payments ecosystem reassess FinTech partnerships. Sponsor banks turn down more deals and take longer to look at the ones that they’ll green light in the end.

Legacy is starting to look like the wise elders — but now with better tech and rock-solid compliance. And more heavily-regulated FinTechs aspire to look like the best parts of legacy — with better tech and buttoned-up compliance. There is a new happily-ever-after-story in the making, as FinTechs are embracing their inner legacy to help those wise elders innovate outside of their core.

Nine: Simplicity Is the New Business KPI

Inertia remains a seemingly incurable disease in many pockets of business today.

Take checks. In 2023, there were 3.1 billion commercial checks written and cleared in the U.S., according to the Federal Reserve, worth about $8.4 trillion. The average check amount was $2,662. That’s about 7% fewer than the 3.3 billion checks written in 2023 and the $8.9 trillion in value they represented.

Here’s the stunner.

Businesses in the U.S. are writing half as many checks as they did in 2012, but the average value of the checks has more than doubled. The average value of a check then was $1,273; in 2023 it was $2,652. That’s been the trendline ever since: smaller numbers of checks, higher value of the checks being sent.

What?

Well, mobile deposit and mobile check cashing makes depositing a check easier for consumers and businesses. They may not want to get them, but it’s money all the same.  Corporates need a better reason to kill the check, and a less complicated way to do that without killing their payments workflow in the process.

Complexity powers the status quo.

When something is too hard or takes too long or has an uncertain payoff, it’s easy for a business executive to say no, not now. Easier for a customer to find an alternative that’s easier to do business with.

Simplicity is the appeal of embedded everything — making four steps into one drives conversion, satisfaction, trust and preference. It’s the value proposition of everything from payments orchestration to PayFacs, neobanks to new payments flows.

Intermediaries will use new technology and business models to make complexity invisible to the user and to the bank or business that wants to make it possible for their customers. Digital economy winners will make commerce a one-touch experience that abstracts the complexity of identity, eligibility and payments for key stakeholders. Millennials and Gen Z will force that change.

KPIs are the linga franca of the board room and strategy decks. They measure every aspect of business performance. Except one.

How easy is it for people and businesses to do business with me?

Answering that comes back to an understanding of the frictions that get in the way of “doing business,” which becomes an opportunity to make it easier. And an assessment of the capabilities that exist or could make yours an attractive option to consider.

Cool tech and embedded everything are one part of the answer. Keeping it simple is ultimately the one that will get you the business.

A Final Thought

C-Suites and Boards that account for these nine trends in their 2025 plans can ride through the turbulence caused by disruptive innovation and the emergence of new critical technologies in the second half of decade. They stand a chance of coming out on top. Those who don’t may not have much to celebrate in 2030.

The post Nine Things Payments Execs Need to Know for Their 2025 Business Plans appeared first on PYMNTS.com.

At its core, pay by bank allows consumers to make payments directly from their bank accounts, bypassing traditional intermediaries such as credit card networks, Trustly Chief Revenue Officer Frederick Crosby told PYMNTS. The process could transform the payment landscape by reducing friction for consumers and merchants.

“Introducing open banking payments removes the friction that exists in a very card-heavy world online and allows people to cut through all the middlemen and use their bank to make payments,” Crosby said.

This direct payment method uses the open-banking framework, where consumers can authorize third-party providers to access their bank information securely.

However, while the conversation — and convenience — around open banking in the United States has evolved over the past few years, driven by both technological advancements and regulatory developments, the path toward widespread adoption has not been straightforward.

Understanding Pay by Bank in an Open Banking Ecosystem

For consumers, pay by bank offers a more streamlined payment process, eliminating the need to manage multiple payment methods such as credit cards or digital wallets. It provides a direct link from their financial accounts to the merchants they trust, ensuring transactions are both secure and straightforward.

On the other side of the equation, Crosby explained that merchants benefit from lower transaction costs, as they avoid the fees typically associated with credit card payments. In an increasingly competitive market, where margins are often thin, this fee reduction can be a game-changer.

As with any new technology, the adoption of pay by bank will likely follow a gradual path, beginning with specific use cases where the benefits are most evident. Crosby highlighted subscription services as a prime example. For recurring payments — such as utilities, media subscriptions or government services — pay by bank offers a “set it and forget it” solution that simplifies the consumer experience and reduces costs for merchants.

“Cards allow commerce to happen that never could happen before,” Crosby said. “And to do that, they put this interchange rate, this 2% to 3% tax to protect people from fraud … But do you always need that beyond the first transaction? No, particularly when it comes to subscriptions … We see these repeat use cases as the perfect spot for open banking payments, whether it’s utilities, media services, even things like taxes.”

Unlike credit cards, which can expire or get misplaced, bank account details remain consistent, providing a more reliable method for ongoing payments. This reliability is particularly valuable in scenarios where interruptions in service due to payment issues can lead to customer dissatisfaction. By adopting open banking payments, consumers can avoid the hassle of updating payment information, and merchants can reduce the administrative burden associated with managing failed transactions.

Looking Ahead: The Future of Open Banking in the US

As consumers become more comfortable with this payment method, Crosby said he anticipates its expansion into other sectors, such as retail, where the appeal lies in the potential cost savings for merchants who operate on thin margins and are eager to reduce their reliance on credit card networks. For retailers with established customer accounts or loyalty programs, integrating pay by bank could provide a seamless and cost-effective payment option.

Crosby pointed out that unlike across Europe, the success of open banking payments in the U.S. will depend on consumer comfort with sharing their financial data and their trust in the security of these transactions. While younger generations, such as millennials and Generation Z, have shown a greater willingness to adopt open banking solutions, there is still a portion of the population that may need more reassurance before fully embracing the technology.

The regulatory environment in the U.S. is also evolving to support open banking, with the Consumer Financial Protection Bureau (CFPB) playing a role. As Crosby explained, the CFPB is working on standardizing the rules for open banking, which is critical for the widespread adoption of pay by bank.

Ensuring that open banking solutions are secure, user-friendly and aligned with consumer expectations will be key to achieving broader adoption, he added. If these hurdles can be overcome, the U.S. could see a shift in how payments are made, with pay by bank emerging as a viable alternative to traditional payment methods.

The post Trustly CRO Says Pay-by-Bank Solutions Benefit From Regulation and Shifting Consumer Preferences appeared first on PYMNTS.com.

Open payments platforms could be the key to managing this diversity of payment options and preferences, offering access to a broad spectrum of transaction tools through a single platform. By adopting such platforms, merchants and aggregators can connect with the right mix of providers for their needs and improve the performance of their payments. Moreover, this approach allows them to achieve these benefits with minimal investment and faster time to market.

• Merchants Require Open Payments for Rapid Scaling
• Open Payments Improve Authorization Rates
• Payments Orchestrators Become Open Payments Platforms to Facilitate eCommerce
• Harnessing the Benefits of Open Payments

Merchants Require Open Payments for Rapid Scaling

Open payments platforms are fast becoming a necessity for merchants as customer payment preferences diversify. Unifying payment protocols through a single API allows merchants to use the right mix of tools without having to build separate integrations for each.

Open payments platforms enable merchants to meet customer payment preferences.

Restaurants are serving up open payments benefits to their customers.

Olo, a leading restaurant digital ordering and delivery platform, recently adopted Spreedly as its open payments solution. This integration enables customers to use mobile wallets and other third-party payment options at restaurant brands on Olo’s platform. For Olo, partnering with Spreedly simplifies the development of new digital offerings because payment options are managed through the open payments platform, which eliminates the need for complex integrations. The collaboration serves as a prime example of open payments’ ability to facilitate rapid scalability and growth for aggregators.

Open Payments Improve Authorization Rates

One of the most frustrating experiences for customers and merchants alike is a declined payment, especially when it stems from a failed back-end connection that is challenging to resolve. Adopting an open payments platform can alleviate this friction and dramatically improve authorization rates.

Customers will abandon purchases if payments fail.

FlexPay’s collaboration with Spreedly addresses authorization rates.

The expanded partnership between payments company FlexPay and Spreedly aims to improve authorization rates by recovering failed transactions and reducing involuntary churn for subscription customers. In subscription-based businesses, a single failed transaction can quickly spiral into lost business if the subscriber is unaware that their subscription is not renewing. This collaboration will allow Spreedly customers to access FlexPay’s Advanced Vault, a solution designed to increase transaction success rates, lower payment vault management costs and enhance the customer experience.

Payments Orchestrators Become Open Payments Platforms to Facilitate eCommerce

Open payments platforms represent the next level of payments orchestration, providing firms with all the back-end efficiencies they need to optimize eCommerce.

[Open payments are] an evolution of payments orchestration. As eCommerce has evolved over the last 10 to 15 years, consumer expectations have grown around how seamless their embedded payments experiences are. The best payment experience is one that a customer doesn’t even notice.”

Open payments platforms can help improve digital commerce firms’ operational efficiencies.

In a recent interview with PYMNTS Intelligence, Spreedly Senior Director of Product and Market Strategy Andy McHale explained that open payments platforms represent the next step along a continuum from payments orchestration. These platforms offer a more flexible, secure and efficient approach to managing transactions by seamlessly connecting and facilitating merchants’ payment flows. This flexibility is especially advantageous for subscription services, streaming content providers and marketplaces, enabling them to adapt and scale their operations with ease.

The evolution of payments orchestration to open payments, McHale continued, is driven by the need for solutions that not only handle payments but also offer support tools for merchants and enhance the overall payment flow. While orchestration focuses on facilitating transactions from point A to point B, open payments platforms aim to integrate additional value-added services and provide a more seamless experience for consumers and merchants alike. For example, open payments platforms provide enhanced security and fraud protection capabilities by integrating tools for payment card industry (PCI) compliance, tokenization and secure payment method management. This not only minimizes merchants’ exposure to sensitive data but also connects them to third-party fraud prevention vendors.

McHale advised that most firms would benefit from taking a “crawl, walk, run” approach to integrating open payments capabilities. Even small integrations can have a significant impact.

“You can start small and grow into other things,” he said. “And you don’t have to go get another integration to add the next piece; you can do it through the existing platform. [Often,] it’s a low-code, perhaps a toggle, or something very simple to add to a workflow. If a merchant starts as a U.S. business and wants to expand to another region, they can very easily add a second provider through their existing platform.”

McHale noted that as these platforms continue to evolve, they will likely play a crucial role in optimizing authorization rates, reducing loss rates and accelerating time to market for businesses expanding into new regions.

Harnessing the Benefits of Open Payments

Open payments platforms provide merchants and aggregators with a flexible and scalable infrastructure that can quickly adapt to changing business needs. Connecting to multiple banks and payment services through a single, unified API, these platforms enable merchants and aggregators to expand their payment offerings rapidly, without the complexity of managing numerous separate integrations.

One critical benefit of adopting open payments platforms is improved authorization rates. With advanced routing capabilities and access to multiple payment processors, merchants and aggregators can optimize transaction flows and increase the likelihood of successful authorizations. By utilizing real-time data, these platforms can intelligently route transactions to the most suitable processor, thereby reducing decline rates and maximizing revenue.

Open payments platforms also enhance eCommerce efficiency by featuring robust fraud prevention tools, real-time reporting and automated reconciliation processes. This streamlines operations and reduces manual workloads while supporting various payment methods and currencies, eliminating the need for multiple integrations or complex setups.

Furthermore, built-in compliance and security features help merchants and aggregators meet regulatory requirements and protect sensitive customer data. This reduces the burden of developing and maintaining a comprehensive security infrastructure.

By embracing these technologies, merchants and aggregators can focus on growing their businesses and delivering superior services, rather than getting bogged down in complex payment infrastructure management.

The post Open for Business: Unlocking the Power of Open Payments appeared first on PYMNTS.com.

Traditionally, cash application — the process of matching incoming payments to outstanding invoices — was relatively straightforward.

“Fifteen years ago, most payments in the U.S. were made by check, which would be sent to lockboxes or directly to offices,” Aaron LeHew, director of invoice-to-cash at Esker, told PYMNTS.

However, organizations face a complex landscape filled with challenges that can hinder financial efficiency.

“Over the years, cash application has become more and more complex, more labor intensive, and more prone to error,” LeHew explained, noting that organizations are transitioning to more diverse payment methods, including ACH transfers, wires, credit cards and virtual cards, and that this shift has added layers of complexity to the cash application process.

Payments now come from multiple sources in various formats and are often decoupled from remittance details.

As a result, businesses must deal with data scattered across bank portals, payment platforms and email inboxes, making it difficult to reconcile payments accurately and promptly. This complexity can lead to several issues, including unapplied cash, delayed payment posting, and reduced customer satisfaction due to improper credit holds and faulty collection calls, LeHew said.

Streamlining Cash Application

The inefficiencies in cash application have a direct impact on finance teams and their key performance indicators, such as days sales outstanding (DSO). LeHew explained that if payments are not posted the same day or by the next business day, it can artificially extend DSO, affecting the company’s financial metrics and cash flow management.

At the same time, delayed or incorrect payment postings can strain customer relationships.

“Customers expect their payments to be applied correctly and on time,” LeHew said.

When this doesn’t happen, it can result in disputes, short payments, and other complications that affect the finance team and the customer experience.

Given these challenges, businesses are turning to cloud-based applications to streamline their cash application processes. According to LeHew, Esker’s own platform aggregates data from various sources, including enterprise resource planning software, banks and remittance platforms, to create a unified view of payment information. This consolidation enables straight-through processing, where payments are posted quickly and accurately, reducing the need for manual intervention.

“Organizations are seeing better [key performance indicators (KPIs)] and overall results by automating cash application,” he added.

One of the key benefits of turning to an automated cash application solution is the ability for firms to minimize unapplied cash. By automating the matching process and handling exceptions more efficiently, businesses can reduce unapplied cash by 70% to 80% within six months, LeHew said. This not only improves financial metrics like DSO but also enhances overall workflow efficiency.

Artificial intelligence is another component in modernizing the cash application process. Esker’s platform, which LeHew cited as an example, uses AI to predict and resolve payment discrepancies. In scenarios where remittance details are missing, AI algorithms can analyze customer payment behaviors to suggest likely matches, which can then be validated by the finance team. This reduces the manual effort required to reconcile payments and allows teams to focus on more strategic tasks, such as analyzing disputes and identifying upstream issues that may be causing payment discrepancies.

LeHew added that unlike older template-based systems that require manual coding, AI systems can adapt to changing document layouts, ensuring that payment data is captured accurately even when formats change. This flexibility speeds up the onboarding process for new customers and reduces the time and effort required to maintain the system.

Finance’s Impact on Business

For finance teams, the key to success lies in adopting a proactive approach to cash application, using technology to handle routine tasks and focusing their efforts on strategic analysis and decision-making.

For businesses looking to assess the effectiveness of their cash application processes, LeHew suggested focusing on key metrics such as the speed of payment posting and the amount of unapplied cash. If payments are not being applied on the same day or next day, or if unapplied cash levels are consistently high, it may be a sign that a firm’s system is not working efficiently.

Another area to examine is how the company handles disputes and short payments, he added. By coding these issues correctly and analyzing their root causes, businesses can identify upstream problems, such as pricing or delivery issues, and make necessary corrections to prevent future discrepancies.

Finally, LeHew highlighted the importance of flexibility in payment acceptance. Some companies resist accepting certain payment methods, such as virtual cards, due to the perceived complexity. However, embracing a wider range of payment options can improve working capital and increase customer wallet share by allowing businesses to operate on terms that are more favorable to their clients.

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.

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“Customers are looking for financial operations that work in concert with their business needs, combining the latest technology with legacy systems in a way that’s both seamless and secure,” Albert Acevedo, senior vice president of treasury services at Priority, told PYMNTS.

The concept of integrated payments is not just a force reshaping how businesses operate, but also a new paradigm to unlock efficiencies, enhance security and drive strategic decision-making.

In today’s data-rich environment, the ability to integrate and use data across various business functions is a game-changer. For chief financial officers and treasurers, having real-time access to financial data is critical for making informed decisions and strategic planning. Acevedo highlighted the importance of integrating data within a native platform like Priority’s own Passport solution.

“With integrated data, you have real-time information at your fingertips,” Acevedo explained. “This means you don’t have to wait for batch processes or worry about delays. It’s all about turning that data into something useful — whether that’s real-time reporting on deposit usability or managing investments on an intraday basis.”

Unified Approach Through Integrated Payments

Acevedo explained that Priority has coined the term “unified commerce” to encapsulate its approach to integrating payments and banking.

This integration is not just about streamlining processes, he said, but about providing businesses with the tools they need to thrive.

“Our tech stack connects with APIs and automates processes like reconciliation, funds flow and even account opening,” Acevedo said. “This allows us to offer a solution that’s unique in the marketplace, with real-time capabilities that can make a significant difference for our customers.”

Custom real-time dashboards can provide a single source of truth, allowing businesses to track revenue, manage investments and monitor fraud across their operations.

“The real power here is in the business intelligence we provide,” Acevedo explained. “Customers can create dashboards that reflect their specific needs, whether that’s tracking revenue by store location or managing risks across their entire portfolio.”

As consumer expectations evolve, so too must the strategies of businesses aiming to meet these demands. Unified commerce is not just about integrating payments and banking; it’s about creating a customer experience that’s fast, seamless and personalized.

“Customers today expect a curated and unique experience,” Acevedo said. “They want to be empowered to manage their cash flow with tools that work in concert, whether that’s receivables, payables or investments. … It’s about offering a holistic solution that’s seamless and integrated.”

Future of Integrated Payments and Banking

Acevedo stressed that he sees the concept of integrated payments and banking only growing in importance.

“It’s all about being quick and easy to use while offering a comprehensive suite of tools,” he said. “Customers want one window into their entire financial world, and that’s what we aim to provide.”

Looking ahead, Acevedo emphasized the importance of partnerships and modularity in the future of integrated payments and banking.

“It’s not about being a one-stop shop for everyone,” he said. “It’s about giving customers the flexibility to choose the tools they need and integrating them in a way that’s seamless and efficient.”

One of the most significant advancements in this area is Priority’s ability to provide visibility into financial information in a way that’s tailored to the needs of each customer.

“We control our own [know your customer (KYC)] processes and can open accounts organized the way our customers want them,” Acevedo explained. “This allows us to offer unique automation and ledger capabilities that make managing money more efficient and effective. … That’s the future of integrated payments and banking, and we’re excited to be at the forefront of it.”

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This inherent complexity, arising because today’s payments sit at the intersection of technology, finance, regulation, and end-user behavior, can impede businesses’ ability to maximize revenue.

“The payments industry has moved faster, technology has changed, consumer needs and experiences, and innovation have all changed significantly, not just along the last 20 years, but in the last three to five years,” Laura Miller, chief revenue officer at Nuvei, told PYMNTS.

Miller said the complexity of payments, payment analytics and risk management represent the three “most significant” pain points that businesses must overcome to unlock revenue potential through payments optimization.

But navigating the labyrinth of options, regulations and risks composing today’s payments landscape is far from easy, even for the most sophisticated and forward-thinking firms.

Managing the Complexity of Payments

One of the most significant hurdles in payment optimization is the sheer complexity of the payments industry. Over the past few years, particularly accelerated by the COVID-19 pandemic, consumer expectations have evolved. Customers now demand the ability to pay anywhere, anytime, in a safe and secure manner. However, with this convenience comes a host of challenges.

“The payment experience can be daunting for consumers,” Miller said. “From error messages to internet stability, and the vast array of payment options, each of these factors can either enhance or hinder the customer experience.” The proliferation of global payment methods adds another layer of complexity, making it imperative for businesses to approach the payment process holistically.

Nuvei recognizes these challenges, Miller said, noting the company has developed pretransaction tools such as smart routing and adaptive approvals to streamline payment transactions. These tools not only reduce complexity but also improve transaction success rates, with some clients seeing a 5% increase in successful transactions.

At the same time, the vast array of payment options available today presents a double-edged sword for businesses. While offering multiple payment methods can attract a broader customer base, it can also lead to confusion and inefficiencies. Striking the right balance between choice and operational efficiency is crucial.

“There’s always a trade-off,” Miller said. “The more choice, the more confusing it can be for consumers.”

She added that by embracing a localized approach and identifying the optimal alternative payment methods for their specific markets, businesses can present the right payment options to the right consumers, enhancing the overall customer experience.

Power of Payment Analytics

In the digital age, data is abundant, but leveraging this data effectively remains a critical issue for many businesses. According to Miller, nearly a third of businesses report that limited data visibility is a missed opportunity to boost revenue. The key lies in using this data to improve payment processes and, ultimately, customer satisfaction.

Risk management remains a cornerstone of payment processing. As the industry evolves, so do the risks, particularly in the form of fraud. “Businesses face substantial financial losses due to fraud, which can amount to billions of dollars annually,” Miller warned, noting that fraud not only impacts the bottom line but also erodes customer trust and loyalty.

Looking ahead, Miller highlighted three key trends that are set to revolutionize payment optimization: artificial intelligence (AI) and machine learning, biometrics and contextual payments.

AI and machine learning are already playing a role in enhancing fraud detection and personalizing payment experiences. By automating processes, these technologies enable businesses to realize revenue faster and with greater accuracy. Meanwhile, biometrics, particularly in authentication, promises to simplify and speed up payment processes while enhancing security.

Perhaps the most exciting development is the rise of contextual payments, which Miller described as a way to enable and automate payments during personal moments.

“Contextual payments create an emotional connection for consumers, making them feel confident in their purchases,” Miller said, citing as an example an end user watching their favorite show and instantly purchasing items featured on screen, or seamlessly paying for services through a mobile device while on the go. This trend has the potential to transform the way consumers interact with businesses, she added, making payments a more integrated and intuitive part of everyday life.

The post Gain Without the Pain: Nuvei Head of eComm on What’s Driving Payments Optimization appeared first on PYMNTS.com.

To that end, the payments company announced Wednesday (Aug. 7) that it is introducing adaptive pricing for businesses in Asia Pacific and Latin America, letting businesses automatically show pricing in local currencies for buyers in more than 150 countries.

“Online shoppers are purchasing more goods internationally, but it’s difficult for them to pay how they want and are often in the dark about how much they’ll be charged,” the company said in a news release provided to PYMNTS.

“And it’s complicated for merchants to show their customers how much they’d be paying in their local currency and with their preferred payment method. For example, to enable some local payment methods for their buyers, merchants must show prices in those buyers’ local currencies.”

Stripe said it has tested the effectiveness of adaptive pricing in the U.S., U.K., Canada and the European Union, and found that it led to an average 17.8% increase in cross-border revenue for businesses. And 90% of customers checked out in their local currency when given the choice.

Offering people more choices when it comes time to pay can help cultivate relationships with consumers, research by PYMNTS Intelligence has found. 

According to last year’s “Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers,” 16% of consumers cited the ability to use their preferred payment methods as a factor influencing their decision on where to make their most recent purchase.

“Whatever calculus the user performs to determine the payment methods that they want to use, they want more options across more merchants,” Drew Olson, senior director at Google Pay, told PYMNTS CEO Karen Webster in December.

And that calculus isn’t just happening online. In another 2023 interview, George Hanson, then chief digital officer at Panera Bread, said the fast-casual eatery’s addition of biometric payments was critical to meeting diners’ demand for frictionless transactions.

“We’re leveraging what the guests have told us and what they continue to show us, which is that they’ve increased their digital adoption,” Hanson said. “They expect their phone to be a part of every interaction at every access point. We’re looking at all the areas that traditionally have been offline and adding value to the experience, leveraging our digital capabilities, and the guest is responding very favorably.”

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Here are some of the most notable quotables for the week ending Aug. 2 in case you missed them.

We started the week with the latest installment in our “A Day in the Life of a CFO” series featuring an interview with CSG Chief Financial Officer Hai Tran, who told PYMNTS in “CSG CFO: ‘True Decision Support’ Is Digital Transformation’s Holy Grail” that the digital transformation sweeping across industries has impacted the finance function.

“The holy grail for digital transformation is to get to true decision support, where we’re really providing data-driven optionality and information and choices; where we fully analyze the implications of the path that we select,” Tran said, noting that “most companies don’t get there … you have to bring institutional knowledge to bear, and that’s where experience matters.”

Then we went for a deep dive into our “What’s Next in Payments” series with

In an interview for “Maverick COO Says Embedded Finance Drives Growth and Personalization in Digital Ecosystems,” Maverick Payments Chief Operating Officer Ben Griefer told PYMNTS that the integration of financial products and services into digital ecosystems is transforming commerce.

“With the advancements of technology and the platforms businesses rely on to run their operations, they are looking to integrate financial products to give their customer base more value,” Griefer said.

“On the flip side, it ultimately drives more revenue,” he added.

Data found its way into our series as well. In “All Signal, No Noise: How Item-Level Data Brings Retail and Banking Intelligence Together,” we found that unification is the key to unlocking maximum data potential, according to Banyan Chief Commercial Officer Mike Minelli.

“Unifying data views starts with recognizing that both banks and merchants are dealing with the same customer, but from different perspectives,” Minelli said. “The key is that they’re starting to realize they can help each other by providing signals.”

Embedded finance is shaping up to be one of the most talked-about trends of the year so far. In “Mastercard Sees Embedded Finance as Revolutionizing Digital Payments,” Jennifer Marriner, executive vice president, Global Acceptance Solutions, at Mastercard, said: “Embedding [payments and financial products] across the value chain and within all of the experiences that a customer is going through in that commerce environment is incredibly important.”

“B2B transactions have traditionally had a slower approval process, and B2B players have been slower to adopt new technology,” she added. “But what we’re seeing with a shift to digital is that there is now more data, more controls, stronger authentication coming into that B2B space, all the while bringing down the cost and improving the risk models. We’re definitely seeing on the B2B side a realization that there’s a way they can streamline their business through embedded finance.”

We picked up the international action later in the week with Debo Sen, head of payments at Citi Services. In “Citi Services Head of Payments Says Instant Is In as Global Dynamics Shift,” Sen highlighted the rapid adoption of these new payment rails in regions like Asia-Pacific and Latin America, with India and Brazil leading the charge.

In India, about 85% of all payments are made in real time, thanks to the Unified Payments Interface (UPI) system, a testament to the country’s leap in digital payments infrastructure. Brazil follows closely with nearly 80% adoption. But this trend is not limited to emerging markets, she added, noting that the United States and the European Union are also advancing regulations and infrastructure to support real-time payments.

“We’ve been tracking the momentum in instant payments, or real-time payments, for a long time,” Sen said.

“The interesting thing is there is always a lot of conversation as to whether instant payments will cannibalize other methods of payment — but in fact, it is digitizing cash in those economies and eliminating cash in many cases,” she added.

And we ended the week with taxes. In “Mind Your B’s and P’s: IRS Notices and Penalties Loom for Unprepared Firms This Fall,” Wendy Walker, vice president of Regulatory Affairs at Sovos, said when information is missing or doesn’t match IRS records, hefty fines can accrue — and the administrative burden of keeping track of all those details is considerable. A proactive approach can help head errors off at the pass.

“If you’re in a company that does anti-money laundering practices or know your customer and you’re collecting a bunch of that information, unless you are actually verifying that TIN to the IRS database, verifying to [any] other database doesn’t matter from an IRS perspective,” Walker said.

The post They Said That: Notable Quotables for the Week of July 29 appeared first on PYMNTS.com.

Tokenization is a tech-enabled way to safeguard sensitive information by replacing it with non-sensitive, scrambled strings of information.

The practice of tokenization within the financial services realm might be most readily apparent with the tens of billions of tokens issued by payments networks, where progress is charted in announcements, as well as management commentary on quarterly earnings calls.

Visa crossed the 10 billion token mark in June. The company noted that replacing sensitive consumer-level data with a cryptographic key, or token, saved $650 million in fraud in the prior year while driving over $40 billion in incremental eCommerce revenue for businesses globally.

In terms of being a business driver, “in Acceptance Solutions, third-quarter growth was driven by increasing utilization across both token and eCommerce-related services,” Visa CEO Ryan McInerney noted on an earnings call.

Mastercard, for its part, notched its own milestones. During an earnings call, CEO Michael Miebach told listeners that replacing payment credentials with a digitally secure token has had a positive impact on commerce.

“When deployed, fraud rates decrease, and approval rates improve,” he said. “So, launching a decade ago, the technology has been broadly adopted around the world. In fact, we surpassed 22 billion tokenized transactions in the first half of 2024, up 49% versus a year ago.”

The Monetization Potential

Tokenization, Miebach said, also “makes checkout more secure… We are working with our merchants and bank partners to drive adoption. Click-to-Pay transactions more than doubled year over year in the first half of 2024.”

The advent of tokenization, he said, gives Mastercard “an opportunity to build a whole set of services on top of the basic token that we can price for, and that we feel we should price for, because they drive a better outcome in terms of better approval rates, lower fraud and so forth for our customers.”

Thredd CEO Jim McCarthy told PYMNTS last month that tokens, once device-specific or wallet-specific (as had been the case with Apple Pay) have evolved “into not just the digital credential, but the programmable one.” The token can now take on different “characteristics,” depending on where and how it’s being used — as a credit, debit, or buy now, pay later (BNPL) option.

The programmable nature of tokens, underpinned by blockchain and smart technologies, means that data, assets and even payments can be executed with improved security and sets of rules governing what’s changing hands and when across verticals as diverse as real estate, gaming and commodities markets.

Last summer, Mastercard launched its Mastercard Multi-Token Network to help foster the creation of these tokens (and conduct screening and transaction monitoring) to support new business models across various sectors using tokenized bank deposits.

Tokenization platform OpenEden announced in a Thursday (Aug. 1) press release that it will bring tokenized U.S. Treasury bills to the XRP Ledger. Ripple is investing $10 million into OpenEden’s TBILL tokens as part of a larger fund that will allocate the Treasury bills provided by OpenEden and other issuers.

The ledger offers automated market maker functions, which improve the liquidity of the trading itself, and simplify, in general, the exchange of assets, which in turn can open new revenue streams for financial services firms.

Earlier this year, the Bank for International Settlements announced its joint efforts with seven central banks — including the Federal Reserve Bank of New York — to test tokenization to improve cross-border payments.

J.P. Morgan Chase is one of the largest financial institutions making forays into the tokenized space. It said last year that its tokenized collateral network facilitated its first collateral settlement for a live client over-the-counter (OTC) derivative transaction. The company said in a paper issued jointly with Oliver Wyman that “deposit tokens could further support economic activity in the digital space, including in a ‘Web3 economy’ where significant economic activity happens on shared ledgers, with tokenized asset transfers settled via deposit tokens. This digital economy would be facilitated by direct, instant and atomic exchanges between peers.”

For payments networks in particular, tokenized deposits represent an opportunity. Visa said the tokens in this case are “the digital representation of bank deposits where money deposited with a bank is minted on that institution’s own blockchain ledger with the backing of that financial institution’s balance sheet.”

In tandem with HSBC and Hang Seng Bank, Visa embarked on a tokenized deposit trial to settle a high-value real estate transaction and merchant/acquirer fund flows.

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