Why Your Business Needs Digital Payment Options
October 21, 2021
We’ve all had “that customer” before, the one who refuses to do things any differently because “That’s the way we’ve always done it.” Or, perhaps you’re a business owner who operates that way. The reality is that the world has changed dramatically around us in the last ten years, especially since March of 2020. If you’re still doing business the way you did pre-pandemic, you’re missing the boat with your customer’s expectations, and you’re likely doing more work than you need to be doing. Nowhere is that more true than in the way you get paid as a business owner. Keep reading to find out why your business needs digital payment options.
But first, let me start with a practical example of how this can work.
A practical example of making payments easy
Here’s a quick example for all of you who doubt what I’m saying about digital payments: Disney World.
In 2013, Disney World rolled out an initiative (much to the chagrin of their investors) called “MagicBands.” MagicBands are small devices, about the size and shape of a wristwatch, that guests at Disney hotels and resorts get. Visitors to the park only can also get them.
MagicBands allow people some peace of mind: they’re your room key, pass into the park, and ID for reservations at park restaurants. They’re also tied to your credit card, and you can just “tap” the MagicBand at stores and restaurants across the park to pay for things.
- This represents a 13% increase in spending.
- There are over 36,500 guest rooms at Disney hotels and resorts at Disney World, and the average stay is six days.
- This means that Disney World had the potential to increase spending by over 1.3 million dollars every six days, or over 81 million dollars a year.
The only substantive change in their business strategy was that they made it easier for people to pay them for stuff. That’s it. They didn’t add new product lines, and they didn’t change their services. They just made it easier for people to spend money and, as a result, saw a 13% increase in customer spending.
Your customers will spend more money on your services
It’s a well-established fact: people spend more with credit cards than with cash or check.
There’s a couple of reasons for this. One, people tend to overspend because there’s less pain involved at the moment. If you have only $50 in cash to pay for dinner and a movie with your date, you’re more likely to choose a place to eat that fits your budget and perhaps sneak some food into the theater. The reason is simple: if you go over, you won’t be able to pay for the stuff you want, which isn’t very comfortable. If you’re paying with a credit card, you’re less likely to be publicly embarrassed if you go over that limit; no one will know but you and your credit card company.
The research into this behavior also shows something else. Consumers using cash immediately see the value of what they’re purchasing. It’s leaving their hands and going into someone else’s hands, right? Conversely, when paying with a credit card, consumers can focus on the rewards of what they’re purchasing. They don’t have to deal with the “value” part until much later, allowing them to enjoy their purchase at the moment. This phenomenon leads to higher satisfaction with the purchase, too!
Get paid faster with digital payment
There’s a straightforward principle at work here: when you make things easier for people, they’re more likely to do them. Paying their bills is no different.
With checks (or even cash!), you’re waiting on other things to happen before you get your money. You’re waiting on the mail (if it’s a check), and you’re waiting on your bank to verify your deposit before you have access to your funds. If you’re running a business with slimmer profit margins (design/build landscapers, for example), that wait time could be making a huge difference in whether you can pay your bills, payroll, and insurance.
According to Repay, a Payment as a Service (PaaS) software, “Merchants who accept card payments are generally funded for those transactions within 24 to 48 hours – much faster than the funding time for paper check scenarios.”
Spend less time working on Receivables
This point is a trickle-down effect offering digital payment options for customers, but it makes sense. Suppose your office staff spends less time manually verifying the proper check amounts, adding them up, and reconciling them against a specific invoice. If they spend less time doing that, they’ll have more time to work on OTHER initiatives. Check out this case study where a business owner talks about how offering digital payment drastically reduced its time to receive payment.
Do you have some research that needs to be done into switching your CRM, phone system, or uniform vendor? What about revamping a process to improve the experience your customers have with your business? Have you been neglecting to document your onboarding process for new hires? If your office staff spends less time on A/R matters, they’ll have MORE time to work on the strategic initiatives that help your business get to the next level.
Making your customers happy builds loyalty. No one is in business to be “meh” at what they do – we all want to delight the people we’re working for and serving. Making your customers happier should be a no-brainer, and digital payments help with that.
Here’s why this makes people happy: we all want something easy to do and easy with which to work. The more you make it seamless for people to do business with you, the more you’ll see your business grow.
No one enjoys the collections process. None (or almost none) of your customers are out to stiff you on the bill. They WANT to pay their bills. The phone calls and letters and time you’re investing in collecting money from your customers only frustrate both you and them.
Here are two statistics that might help you get your head around this:
- According to ACI, “In fact, 31 percent of consumers would consider changing their payment channel or method if it meant the payment would process faster, an increase from 2020 (26%).”
- Per Fiserv’s research, “In 2018, Fiserv found 51 percent of households made an automatic, recurring online payment in the last 30 days, up from 45 percent in 2017.”
Almost a third of consumers would change the way they pay if it was faster. In 2018, over half of households set up automated payments for their services. I don’t imagine that number has decreased since the COVID pandemic.
Making it easier for your customers to pay you makes sense for your cash flow, it makes sense for your staff, and it makes sense for keeping your customers happy.
That begs the question – why aren’t you doing this yet?