Why centralized payment management is key to subscription transactions

Digital transactions have become the backbone of the modern consumer’s purchasing journey. While this shift has created a wealth of new opportunities to drive revenue, it has also created a new challenge for businesses — the need to optimize their digital payment strategies without adding friction to the customer journey.

Solving this hurdle was the focal point of the recent Zuora webinar, “Simplify and Succeed: Optimize Your Digital Payment Strategy.” The webinar shed light on the evolving digital payment landscape and introduced Zuora Payments as a game-changing solution for today’s subscription businesses.

In this article, we’ll review the key takeaways from that webinar, discuss the importance of payment orchestration, and demonstrate how Zuora can help companies resolve the complexities of managing payments for one-time and recurring transactions.

The rise of digital payments: a consumer-driven revolution

Customer preferences have shifted rapidly toward digital payments, driven by the convenience, speed, and security they offer. The increasing demand for digital payments presents both an opportunity and a challenge for your business, particularly if you operate in sectors like SaaS, media, publishing, and e-commerce.

But these days, simply offering digital payments is not enough. Consumers want you to provide a safe, secure, and frictionless experience. They also expect plenty of transaction options, including digital wallet-based payment accessibility.

If you’ve already expanded your digital payment offerings, you know firsthand that this expansion creates an entirely new set of challenges.

Scaling presents challenges with maximizing payment success rates

As companies expand, they need to incorporate digital payment options into their business models because ensuring instant access to payments and an ongoing customer experience are essential to revenue growth.

On the surface, adding new payment methods is a straightforward way to meet customer demand. However, if you don’t revamp your underlying infrastructure, you’ll find that doing so introduces challenges to your digital revenue cycle, especially when it comes to maximizing payment success rates. These challenges involve:

1. Lack of payment methods

According to a study by the Baynard Institute, 1 in 10 customers abandon a transaction due to a lack of preferred payment methods. This statistic illustrates that customers not only want options but demand or even require them and will shy away from your brand if you don’t deliver. Adding just a few payment methods isn’t enough; you need a wide range of options to suit every customer.

2. Higher routing costs

Interchange fees range from 1.4% to more than 3%. These routing costs can make launching products unprofitable in some scenarios, and merchants don’t often have the flexibility to route to a cheaper gateway. By modernizing digital payment strategies, your business can more accurately account for these expenses and determine where — and where not — to launch products.

3. Balancing fraud prevention with convenience

If you drop the ball when it comes to fraud prevention, you’ll suffer potentially irreparable damage to your reputation and lose the trust of your customers. But if you go too far in the name of security, you’ll create a tedious and slow checkout process that’s frustrating for customers, who want a frictionless checkout experience. You need to strike a balance between the demand for security and the desire for convenience. To do this, you must make fraud prevention a part of your culture, not simply treat it as a box you’re checking.

4. Revenue leakage

As much as 7% of business revenue is lost because of failed payments. By revamping your digital payment strategy with modern protocols and technologies, you could recapture much of this lost revenue and also reconnect with the 10% of consumers who abandon transactions due to a lack of payment methods. That could mean a significant boost in sales for your brand through digital payment modernization.

Related: Retain subscribers in any economy by taming electronic payments and revenue leakage

The need for centralized payment management

To review, consumer preferences are driving greater demand for digital payments. As companies grow, they need to incorporate digital payment options into their business models, but scaling presents challenges related to cost, risk, customer experience, and more.

Enter: centralized payment management. Let’s take a look at some of the main reasons why centralizing payment management can help maximize success:

• Catering to diverse payment preferences improves customer accessibility.
• Streamlining the customer experience eliminates friction and reduces churn.
• Building trust and facilitating seamless payments requires frictionless payment security.
• Efficient payment operations are important and depend on how businesses work with providers.

In the interest of adding payment methods and bolstering customer engagement and conversion — while at the same time managing costs — businesses often make the mistake of trying to add every possible payment option with bolt-on solutions that don’t truly integrate into their digital ecosystem.

The problem is that this turns the checkout process into a resource-intensive, disjointed amalgam of tools that’s hard to manage and even harder to pull data from. Unfortunately, it also introduces complications to the checkout process, resulting in a cluttered and frustrating user experience and potentially leading to incomplete transactions.

On the other hand, an all-in-one payment provider can intelligently and dynamically serve the right payment method to the right customer. This ensures your checkout experience is holistic, quick, and easy — expanding your payment processing capabilities without cluttering the user experience with layer after layer of integrations and software.

Centralized payment management also solves the problem of weighing down the checkout process with excessive fraud prevention measures. While it’s tempting to ensure your back end is thoroughly equipped with multiple countermeasures that guarantee customer privacy, this approach can block legitimate transactions, slow the customer experience to a crawl, frustrate the customer, and negatively impact revenue. It’s also unnecessarily expensive to rely on multiple fraud solutions.

Instead, merchants should aim to match the sophistication of their fraud solution with the level of risk they face. For example, if you’re an e-commerce merchant that focuses on accessible consumer goods, you don’t need a bespoke platform geared toward high-end luxury brands.

Finally, even if you can justify the complexity of managing multiple payment processing gateways, you’ll have a tough time justifying the costs. By adding even just one or two additional gateways, you’ll likely rack up plenty of back-end maintenance costs, staffing expenses, and software licensing fees. On the other hand, a centralized solution will slash your operational expenditures while helping you better serve your customers.

Zuora Payments: an orchestration hub for subscription transactions

Zuora is more than just a billing and revenue recognition platform, providing a base level of digital payment management services. Indeed, Zuora Payments is the one-stop payment orchestration platform for subscription and consumption transactions, standing out by addressing the specific needs of business-to-consumer subscriptions.

With Zuora, your company can centralize payment management for subscription transactions and achieve real-time visibility into the customer journey.

Key features and benefits of Zuora Payments

Zuora is a complete payment orchestration solution that was purpose-built for B2C subscription transactions. With Zuora, you’ll enjoy:

• Multiple gateway connections. Zuora offers connections to more than 40 gateways, handling billions of transactions annually. This allows your business to cater to a wide range of consumer preferences and geographic locations, so that customers can pay the way they want and you can accept more of those payment methods.
• Purpose-built APIs. Zuora handles all integration and maintenance with APIs, which enable connections to payment service providers (PSPs), solutions, and payment methods. This gives you the ability to add or swap providers easily and without customer impact, as well as more leverage over PSP rates.
• Smart retry capabilities. With Zuora’s configurable payment retry (CPR) feature powered by machine learning, you can recover up to 20% more failed payments. This smart capability is critical in minimizing revenue loss due to failed transactions and also helps improve customer satisfaction.
• Optimized fraud protection. Zuora offers gateway-agnostic fraud protection services that safeguard against fraud and boost payment authorization rates. This reduces customer churn and maintains a trustworthy payment experience without adding undue friction to checkouts.
• Flexibility and PCI compliance. Zuora Payments is a PCI-compliant payment platform that ensures your customer data is stored securely, maintaining the integrity of transactions. It’s also designed with flexibility in mind, making it easy to add or swap PSPs.

Solving industry-specific challenges with Zuora Payments

For SaaS businesses, Zuora simplifies recurring payments and facilitates global transactions. The platform includes bespoke solutions for media and publishing brands, where content consumption patterns are fast evolving. Zuora also enables flexible billing models that cater to varied customer preferences.

If you operate in the e-commerce space, Zuora’s ability to handle a multitude of payment methods and currencies will prove invaluable. You can leverage these features to expand into new markets and create a more frictionless journey for your customers.

Simplify and succeed with Zuora Payments

Zuora is a strategic partner in your journey to optimize your payment processes. By offering a comprehensive suite of solutions, from gateway connections to fraud protection, we empower your business to navigate the ever-changing digital payments landscape.

Whether you work in finance, IT, or product management, Zuora has the solution you need to thrive in the payment ecosystem of tomorrow.

Zuora Payments can transform your digital strategy and enable your business to orchestrate payments, reduce fraud, and boost acceptance rates, allowing you to recapture lost revenue through frictionless transaction processes that optimize the customer experience.

To discover how Zuora can help your business streamline payment integration and centralize management for subscription transactions, talk to one of our experts today.