Customer Support vs. Customer Service

Customer Support vs. Customer Service

Understanding “Customer Support vs. Customer Service” is essential for businesses striving to enhance customer interactions and ensure a positive brand experience. While both domains aim to satisfy and retain customers, understanding their distinct roles and functions can significantly impact a company’s approach to handling inquiries, solving problems, and fostering loyalty. Customer support addresses issues and technical concerns, providing immediate solutions and assistance. In contrast, customer service encompasses a broader spectrum of customer care, including building relationships, offering guidance, and ensuring overall satisfaction. Businesses can optimize their customer engagement strategies and drive success by delineating the differences and synergies between these two crucial areas.

What Is Customer Service?

effective customer service

Customer service is a catch-all phrase that refers to all of your company’s contacts with its clients. It is all you do to satisfy your customers’ expectations and enhance their overall experience. Customer service is a feature of almost any organization.

Ensuring your clients receive extraordinary value from your product or service is the ultimate goal of excellent customer service. Additionally, it is a minefield of potential pitfalls for companies with disorganized customer service teams and inflexible phone infrastructure. Customer service is an ongoing process that starts when a potential customer expresses interest in your company and continues long after they’ve made a transaction. 

Responsibilities of customer service agents

At every point of the customer life cycle, customer service representatives are available to assist and delight clients. That could be providing a customer with guidance on avoiding unforeseen problems or reactively assisting them in solving a common issue.

Some of the typical customer service tasks include the following:

  • Assisting clients with billing and delivery concerns
  • Resolving issues with non-technical accounts
  • Suggesting the use of improved equipment and methods
  • Gathering client comments and reviews
  • Onboarding new clients
  • Responding to inquiries and comments on social media 

Customer service representatives know the company, its offerings, and customer interaction methods. Even though they lack specialized knowledge, they can respond to general inquiries and direct clients toward more knowledgeable assistance.

Sharp, soft skills are also crucial for providing excellent customer service. The most outstanding customer service representatives are attentive to the customer’s specific needs, patient, sympathetic, helpful, and straightforward. 

What Is Customer Support?

Customer Support

The goal of customer support, a subset of customer service, is to assist consumers in resolving any technical issues that may arise while using your product or service. The majority of customer support interactions are reactive and brief.

Typically, a customer contacts customer support with a problem they need assistance with, and the customer support representative offers a solution. The agent will then instruct the customer on resolving the issue, or the support staff may choose to apply this solution themselves.

Most customer support is found in SaaS (software as a service), IT, or eCommerce companies. Furthermore, not all businesses require customer service. While restaurants value customer service highly, they typically do not provide or need customer support because their patrons do not need technical assistance. 

Customer support agent responsibilities

Customer support staff are available to respond to users’ issues promptly and accurately. Support personnel are constantly exposed to client problems, which allows them to give product development teams insightful user input.

Support agents are expected to perform the following duties:

  • Creating support materials and product documentation
  • Performing usability tests
  • Assist clients with product or service installation, maintenance, disposal, and upgrades.
  • Real-time customer support via live chat and support emails

The skills of a top-notch support representative include technical proficiency, product knowledge, and speed. However, support staff members should have the same empathy and interpersonal abilities as customer service staff to provide the best experience for consumers.

Comparing Customer Support vs. Customer Service

best customer service software

It is evident that while customer support and service are distinct, they are intimately intertwined. Customer support is more narrowly focused on giving customers technical support. In contrast, customer service deals with the overall customer experience and a little more customer participation to satisfy customers throughout their journey with your business. 

The following are some significant variations:

  • Consumer support mainly applies to any technical issues a customer may encounter while using a product or service, whereas customer service covers the entire customer lifecycle.
  • A support agent is a specialist, as opposed to a customer service person who is a generalist.
  • While customer support is typically reactive, customer service is proactive and proactive.
  • Customer service is more long-term than customer support, which is short-term.
  • All companies must provide customer service, but not everyone requires customer support.
  • Support isn’t always a part of customer service, but customer service is always about customer service.

Consider a consumer who enters a store searching for yellow jeans to illuminate the distinction between the two further. This customer may be assisted in finding the jeans and charged for them, and a customer service agent could package the jeans for them. They might even create an upsell by recommending a T-shirt that would go well with the pants.

In this case, the customer has everything they need, but there is no extra input or data into the experience; it is just transactional.

Consider a client who contacts Dropbox via email to complain about a problem sharing a file with a friend. The customer service representative: 

  • Directly links clients to their created documentation and guides them through the necessary processes.
  • Sort the discussion into categories to make it easier for the product team to receive input on the share function.
  • Initiates a dialogue about enhancing sharing
  • Follow up with the client to discuss how to make their experience better

The role of a customer support agent is more about improving the customer experience than transacting with the client. Customer support specialists use customer service skills; however, that is just one aspect of their work.

Customer support teams frequently work closely with the product team and are included in discussions regarding product decisions. Support teams are typically more active in the customer experience than customer service teams.  

Tips for Delivering Excellent Customer Support and Service

Understanding how to deliver excellent support and service your customers will value is crucial since it significantly impacts how organizations grow.

The following tips will point you in the correct direction:

  1. Give your agents the tools they need

Giving your team the proper tools gives them more time to serve and support your clients in the best possible ways. High-quality support tools simplify the lives of customers and agents and convey the impression that your business is conducted professionally.

For instance, providing omnichannel customer support allows your clients to contact you via the channel that fits them, whether live chat, phone, email, or social media. 

Based on their experiences with your company across various channels, each customer’s profile develops a rich picture of that client, providing any agent dealing with that customer with a quick overview of that customer’s history and wants. Customers are also spared the hassle of repeating themselves to numerous agents, and agents can resolve issues more rapidly.

  1. Communicate clearly

Clarity is essential when communicating with clients since ambiguous language breeds misunderstandings and avoidable errors. If you don’t communicate with customers clearly, you risk making errors undermining their trust in your company.

Removing any industry terminology and communicating without technical jargon will help to reduce miscommunication. Instead, use plain language that anybody can understand. And when communicating with customers, avoid confusing them with too much information at once. Additionally, transparency is a crucial component of good communication. When a customer asks you a question, and you are unsure of the answer, be honest with them and promise to get back to them as soon as possible. 

  1. Define your philosophy and process

You should establish your strategy for providing support and customer service. Without a consistent approach, your customer service delivery will be disorganized and inconsistent.

To build up ideas that you wish to influence your company’s customer service interactions, such as speed, proactivity, and accessibility, start by defining your customer service principles and philosophy.

A customer care playbook that lists your team’s standard procedures and top ideas might also be written. That will include standards for recording client feedback and guidance for techniques like reporting problems and issues, when to develop support content, and how to do so. 

  1. Close conversations properly

Up to 91 percent of unhappy consumers won’t complain about poor customer service; they’ll just leave. Because of this, your customer support and service teams need to resolve all customer interactions satisfactorily. You can’t determine if a customer had a positive or negative experience unless you ensure they are happy with the exchange.

Always inquire if there is anything you can do to assist a customer when the discussion seems to be lagging. This shows the client that you want to resolve the problem and are willing to go above and beyond to ensure their happiness.

When a client confirms that they are finished and have no additional inquiries, you can end the conversation knowing they were happy with the interaction.

  1. Utilize positive language

Customers should not just comprehend your explanations and directions; you also want them to feel encouraged and driven to complete their goals. Speaking positively means focusing on solutions rather than problems. 

  1. Prioritize the first point of contact

Customers want their issues resolved quickly when contacting support or customer service. If problems are fixed the first time they arise, up to 65 percent of return complaints can be avoided. Therefore, it is crucial to prioritize first-contact or first-call resolution. 

  1. Demonstrate empathy

Awareness of customers’ wants is necessary to make them feel heard and understood. Support employees must remember this because clients who contact support are frequently stressed and frustrated, even though the issue is quite simple to resolve. 

Therefore, support staff should take the time to demonstrate empathy for the customer rather than rush to resolve the technical issue. Similarly, developing rapport with clients, speaking to them directly, getting to know them and their business, and expressing enthusiasm for their goals all contribute to creating a human-centered customer experience. 

  1. Get other teams involved in your customer service.

Engaging all staff in frontline customer service and support is one efficient way to develop a customer-centric strategy and culture throughout your company. That is also referred to as collaboration in customer service.

That could entail holding regular cross-team talks to discuss client feedback or requesting that members of various teams occasionally listen in on customer calls. For your team to continue putting the client’s needs first in all they do, each member needs to understand the customer’s pain.

  1. Improve KPIs and customer support results.

In the early days of support software, the number of tickets resolved was a gauge of support effectiveness. CSAT, NPS, and churn rates are some tried-and-true key performance indicators (KPIs) for assessing customer support. However, it is beneficial to analyze KPIs frequently to see where they can develop.

However, many organizations are altering how they define performance as conventional support roles become more intertwined with channels and business processes. This impacts how customer support employees engage with their customers.

The support team can also take their time and become adept at dealing with the clients by knowing how your customer base will most likely contact you for support. 

  1. Connect CRM and customer support tools.

Integrate customer support and customer relationship management (CRM) technologies to track changes in your customers and their lifetime value for a more individualized approach to customer service. 90% of customers will spend more money with companies that offer personalized customer care. Transferring data between different platforms allows it to find individualized, pertinent answers to client problems that could not have been thought of otherwise. Also, agents can predict customers’ demands by using information about their past support difficulties, purchases, and opened outbound emails, among other relevant customer contexts.  

Why Is Customer Support Vital to a Business’s Growth?

Customer support is crucial because it allows prompt and efficient customer query resolution. Additionally, this affects a customer’s lifetime value, brand reputation, and customer retention.

Asking yourself the following questions will help you better understand how to develop exceptional customer support for your company:

  • What are typical customer support requirements in your sector?
  • How can customer support improve the customer’s voice across your entire company?
  • How can essential business choices like product roadmaps or marketing strategies be shared with your support team?

Conclusion

Contrary to popular belief, customer support and customer services are separate but related components of a seamless customer experience and developing strong client relationships. Customer support primarily focuses on fixing technical customer issues, but customer service comprises all the best practices, methods, and principles that guide your interactions with consumers.

In smaller businesses, the same person will typically be responsible for customer service and support. However, the customer service and support departments will have specialized teams in other, more giant corporations. However your company is set up, your success will depend on how well you can understand the differences while delivering both in unison.

amazon prime

A Comprehensive Guide to Amazon Prime [2023 Update]

If you’re not a Prime member, you probably have questions about what it is and if it’s worth the subscription fee. The benefits of Amazon Prime go beyond merely faster shipment. Members of this subscription service have access to a number of Amazon benefits. For many shoppers, just the shipping benefits make Amazon Prime a no-brainer.

An Amazon Prime membership is required if you wish to shop on Amazon Prime Day. Prime has a lot of benefits, but a subscription is not free. For free 2-day shipping, a normal Amazon Prime membership costs $139 per year, or $14.99/mo, with students and qualifying government assistance recipients receiving up to 50% off. Due to this price, many potential subscribers want to understand all the benefits included before committing to join the 200 million existing Amazon Prime subscribers.

This article will explain what Amazon Prime is and all the benefits of membership to assist you in making a well-informed decision. Here is everything you need to know about Amazon Prime, from expedited shipping to access to Amazon discounts and services. 

What Is Amazon Prime?

Amazon Prime is a subscription service offered by Amazon. It offers discounts to its members, access to exclusive entertainment and shopping services, and more.

A premium subscription to Amazon Prime is available for $139 annually or $14.99 each month. There are many benefits available to Prime subscribers. The best reward, though, is free two-day shipping on the majority of Amazon’s merchandise. In 2021, Amazon said that they have more than 200 million paid Prime members globally. 

Brief History of Amazon Prime

When Amazon Prime first surfaced in 2005, the company initially charged $79 a year for a membership and provided members with perks like two-day free shipping. This was an incredible value, and it has continued to be a significant driver of people subscribing to Prime. However, Amazon has significantly increased the benefits that members receive over time, including fashion and entertainment, savings, and other benefits. 

The pandemic led to a sharp increase in Amazon Prime membership. Former CEO Jeff Bezos claimed there were more than 200 million Prime subscribers globally in a letter to Amazon shareholders in April 2021. However, the company has not given any revised membership figures since. Before that figure, over 150 million people throughout the world were Prime members of Amazon as of January 2020. 

The pandemic may have played a big part in the high number of Amazon Prime subscribers, though. In addition to being compelled to stay at home, people were becoming more and more reliant on delivery services to buy anything from food to office supplies. 

The Benefits of Amazon Prime

The top benefits of Amazon Prime are listed below. Shipping, entertainment, and shopping make up the three areas that account for the majority of benefits. 

Amazon Prime Shipping Benefits

The most popular benefit of Amazon Prime is that it facilitates and lowers the cost of shipping. 

  • Free two-day shipping: The Prime logo may be found next to the price of thousands of items on Amazon, letting you know that you won’t have to pay for shipping and that the item will arrive at your door in two days or less. Always keep an eye out for the Prime logo as it is the easiest method to save money while purchasing on Amazon.
  • Free one-day and same-day delivery: You might have the option of choosing Prime Next-Day or Same-Day delivery if you place an Amazon order before noon. Compared to the standard two-day delivery, these options allow you to order and receive your goods more quickly. Please be advised that not every item qualifies for expedited shipment and that it is not always free. $2.99 will be required for expedited shipping if your order is less than $25. However, there are no charges if it exceeds $25. 
  • Multiple deliveries scheduled for Amazon Day: You can choose to have your packages delivered on Amazon Day when placing a purchase. With this benefit, you can select any day of the week (other than Sunday) to get all of your orders at once. Amazon Day deliveries are available for almost all Prime items. Its flexibility is an additional wonderful benefit. Even if you’ve already ordered something on Amazon Day, you are able to select a different shipping method for the remaining items you place. You’re never obligated to get deliveries on Amazon Day.
  • Earn rewards when you use No-Rush Shipping: Consider utilizing the No-Rush option if you want to save even more money on delivery. This option will cause your delivery to be delayed for days, but once it does, you’ll get rewards like free music downloads, credit toward future Amazon purchases, and more.
  • Release date deliveries: Prior to their general release, several products are available for preorder to Amazon Prime subscribers. Amazon will reserve your order and send the item as soon as it becomes available (sometimes on the same day). Sometimes there are additional fees associated with shipping on release day, which vary depending on the product. However, Amazon will reimburse you for the delivery fee if your item doesn’t arrive at your address on the day of release. 
  • Free two-hour shipping: Amazon Fresh and Whole Foods are two distinct grocery store brands that are owned and run by Amazon. Having a Prime membership simply means that you can order groceries from either brand online and have them delivered in as little as two hours to your home. However, not all locations offer grocery delivery services, and you’ll need to place an order that meets a minimum requirement that varies by location.

Amazon Prime Shopping Benefits

In addition to lowering shipping costs, Prime also grants you access to special offers and items. 

  • Amazon Prime Day: Prime Day, an annual sale day with thousands of popular items, is the best time to shop on Amazon. Only Prime members are eligible for the discounts during Prime Day, which might result in single-day savings that exceed the cost of your annual membership. Prime Day is actually a two-day event despite its name.
  • Amazon Fresh: As previously mentioned, one of Amazon’s two grocery brands is Amazon Fresh. However, only Prime members can shop from Amazon Fresh online. From canned products to fresh produce and toiletries, Amazon Fresh has everything you’d find at your local supermarket. Additionally, if your order totals a particular amount, you can be qualified for free two-hour shipping.
  • Amazon Pharmacy and Amazon Prime Rx: With the help of the Prime Rx database, Amazon Prime members can identify their prescription drugs, shop around for the best deal, and pick them up from their preferred pharmacy. Additionally, customers can have it delivered by placing an order directly from Amazon Pharmacy. Note that any discounts you receive from Prime Rx cannot be combined with insurance. A choice between the two is required.
  • Earn VIP points with Zappos: Amazon’s online shoe shop Zappos rewards Prime subscribers with added benefits. In addition to receiving free delivery on every order, you will double your VIP points and be able to access exclusive offers.
  • Free Grubhub Plus subscription: Grubhub Plus is available to all Amazon Prime subscribers for a full year. This benefit typically costs $9.99 a month and includes periodic offers for free food or discounts, zero delivery fees on orders over $12, and other perks.
  • Prime coupon: Customers have an additional means of saving money thanks to Prime Coupons. You can get coupons for up to 30% off the price at the checkout for hundreds of Amazon products each day. If a coupon is available for the item you’re viewing, it will be displayed beneath the price.

Amazon Prime Entertainment Benefits

Shipping products quickly to its subscribers isn’t just what Amazon does; they also run a massive entertainment empire. 

  • Prime Video: You can watch thousands of movies and TV shows, including Amazon’s original series, for free with Prime Video. It also features a handful of shows that are available for purchase and rental but cannot be streamed. Subscribers of Prime can also purchase additional subscriptions to more than 100 premium channels, such as Showtime, HBO, and CBS All Access, for a fee. 
  • Prime Music: Amazon offers a streaming music service called Prime Music. More than 2 million songs are available for ad-free, on-demand streaming with Prime Music. Additionally, you can upgrade to Amazon Music Unlimited for an additional $8.99 a month, which boosts the selection to 60 million songs and enables you to download them for offline listening on any smartphone device. 
  • Prime Reading: Prime Reading offers unlimited access to a vast collection of comics, books, magazines, and more, making it ideal for Kindle owners. While you cannot rent physical books, you may download ebooks and read them on your iPhone, Android, or iPad via the Kindle app.
  • Prime Gaming: This benefit, which was formerly known as Twitch Prime, allows Prime members a free monthly subscription to any Twitch channel. It also includes free monthly games, free downloadable content for select popular games, and a unique badge for all of your Twitch messages.
  • Amazon Kids Plus: Amazon Kids Plus (formerly known as FreeTime Unlimited) is a subscription service that allows you and your kids access to kid-friendly books, movies, television shows, apps, and games. Each of the three age group categories that Kids Plus offers has its own set of applications and features. Kids Plus is available to Prime members for $4.99 per month or $48 per year. Amazon also provides a free trial of one month, or the first three months for $4.99, if you want to try it out. 
  • Amazon Book Box: Amazon gives you the ability to order a box of hand-selected children’s books every month through the Amazon Book Box service, which is available only to Prime subscribers. You have a choice between four different age groups, just like Kids Plus. Furthermore, you have the option of selecting a delivery schedule for your box, which can be monthly, bimonthly, or quarterly. The books you receive are yours to keep as well. Book Box is priced at $16.99 for the first shipment and $19.99 for each subsequent box.

Other Great Amazon Prime Bonuses

Highlighted below are two other excellent Amazon Prime benefits. Although these two benefits don’t fall under the other categories, they are nonetheless valuable.

Prime Household

In order for the entire family to benefit from Prime, two adults, up to four teens, and four child profiles can all be part of the same “Household.” These perks include free shipping, Prime Video, and Prime Photos, among others. Apps, ebooks, audiobooks, and games are among the other types of content that they can share.

Linking accounts also allows adults to impose parental restrictions on digital content (for kids) and approve orders before they are placed (for teens). 

Amazon Photos

You have unrestricted storage and sharing options for photos on your PCs, smartphones, and tablets. Additionally, up to five people may share this unlimited photo storage. Additionally, 5 GB will be made available for files and videos. Since Amazon devices already have Amazon Images loaded, your Fire TV and Echo Show may also be used to see your photos.

Amazon Prints offers free standard and expedited shipping on all picture prints and other photo gifts. 

Can Subscribers Share Amazon Prime Benefits?

It’s important to note that Amazon Prime subscribers can share their benefits at no extra charge. By registering for Amazon Household, two adults with different Amazon accounts can divide the monthly or yearly price in half.

It’s ideal to do this with someone you’re close to because the accounts are connected by address and payment methods, such as a spouse or close friend. 

Can I Offer Amazon Prime as a Gift?

Yes. Simply go to Amazon Prime’s gifting page, add it to your cart, and then follow the prompts to learn how to give a friend or family member a one-year subscription. Click the “This item is a gift” box in your cart before proceeding to the checkout process; the remaining fields can be filled in later when you pay.

How Can I Sign Up to be a Prime Subscriber?

Visit the Amazon Prime website and follow the instructions. You will require both a credit card and a free Amazon account.

After that, go to your account and choose Manage Prime Membership if you decide you no longer want the subscription. If you’re already a member and don’t want to start a paid subscription, click End Membership. Otherwise, click Do Not Continue if you’re a free trial user. 

What Is the Cost of Amazon Prime Subscription?

Depending on the plan you select, Amazon Prime will cost you money; however, you can test it out for thirty days without paying a dime. The payment plans are outlined below, along with what each one entails: 

  • Prime monthly subscription ($14.99 monthly): You will pay roughly $180 a year if you want to spread out your payments and still receive all of the perks of Prime. However, a Prime subscription costs $6.99 per month if you get certain types of government assistance.
  • Prime annual subscription ($139 annually): The entire membership is a one-time payment of $139 each year. Hence, paying this amount upfront will save money over time. 
  • Prime student subscription: With a verified school email address, students can sign up for a free six-month trial of Prime Student before paying a discounted annual membership fee of $69 (or $7.49 per month). 
  • Prime Video subscription ($8.99 per month): Your benefits are limited to streaming unlimited TV shows and movies on Amazon with this subscription. You should budget for about $108 a year. 

Please be aware that when you sign up, Amazon keeps a record of your credit card information. If, after your free trial has ended, you decide you no longer want the membership, be sure to log into your account and cancel it. Otherwise, the membership fee will be charged. 

Is Amazon Prime Membership Worth It?

Whether or not an Amazon Prime membership is worthwhile depends on your shopping habits, whether or not you’re buying for an entire household, and how much use you make of the aforementioned benefits.

Free shipping alone is often enough to convince folks that the price is worthwhile. That might be enough to sign up for the service if your annual shipping costs exceed $139. 

Another way to know is entertainment streaming. With an annual membership costing $139, Amazon Prime is less expensive than both the Netflix regular plan and the commercial-free Hulu plan. Amazon Prime Music, another perk of Prime, offers access to a rather feature-rich music streaming service. You’ll recoup the cost of Amazon Prime if the variety of videos and music is so wide that you’d think about canceling your subscription to other services.

Other factors to take into account include the convenience of having your products delivered in days as opposed to weeks or not having to go grocery shopping frequently. 

By signing up for the free trial, you can determine whether an Amazon Prime membership is valuable. After the trial ends, the decision to make the investment in the subscription service is yours.

echeck payments

A Complete Guide to eCheck Payments

Cash has been mainly replaced by credit and debit cards, not only because of the convenience they give but also because there has been a considerable increase in online shopping and online services. More than 80% of Americans now make online payments, and the number of people receiving paychecks from vendors is also increasing. This is where electronic checks (eChecks) enter the picture. 

The word “eCheck,” which might have come up in conversation at some point or another, refers to another common but less publicized type of electronic payment.This comprehensive article will delve into every aspect of eCheck payments to provide you with all the information you could possibly need.

What Is an eCheck?

An electronic check (eCheck) is a payment that is made electronically using a checking account. It’s an electronic replica of your paper check.

The purpose of eChecks is to be compatible with current banking norms and procedures. When a customer uses an eCheck to make a purchase, money is transferred via the Automated Clearing House Network to the merchant’s company bank account. This reduces the number of manual procedures required to receive payment and deposits funds into your account more quickly. 

How Does eCheck Work?

The Check Clearing for the 21st Century Act, also known as “Check 21,” was signed into law on October 28, 2003. By removing the legal restrictions that stopped many banks from using check truncation, this federal law greatly enhanced the use of electronic check processing. 

In a standard check payment, one bank confirms a physical check and sends it to the other bank involved in the transaction, and that bank also verifies the physical check. 

The data required for payment processing is the same regardless of how much faster eCheck processing is than traditional check processing. Your customer must begin an electronic check by providing their account number, bank routing information, and authorization, which would also be included on a paper check.

While no limitations stop businesses from accepting physical checks, eCheck payment processing must be enabled for businesses to accept this form of payment. 

The entire eCheck payment process can be broken down into four distinct steps, all of which are pretty straightforward:

  1. Authorization: The merchant needs the customer’s consent to proceed with the transaction at this point. This stage is often handled by the payment request system of an online payment processor, where the customer can easily approve the transaction with the click of a button. Nevertheless, eCheck authorization can be accomplished via a contract, online form, or even over the phone. 
  1. Processing: As soon as the authorization is granted, the payment processor can start the process of transferring the money between the customer and the merchant. Since the amount is usually pre-determined in the solution, this step is essentially unnecessary after authorization. This procedure is also easier when you use an online payment processor. The merchant will require a manual entry of the payment and the correct account information into an online form if there are no online payment options available.
  1. Finalize: Your processor checks the credentials once you have provided all the necessary information. The Automated Clearing House (ACH) Network transfers the money after verification. While eChecks are handled over the ACH Network, it’s crucial to remember that ACH payments and eCheck payments are distinct due to their various fees and processing methods. 

It’s also important to note that many POS systems can be integrated to seamlessly transfer the data your customer submits online or in an app to your virtual eCheck terminal, thus removing the need for you to re-enter this data.

  1. Funds Deposit: This last step involves depositing the customer’s money into the merchant’s bank account (after the transaction was successful). The eCheck transaction is now complete! Normally, a written or electronic receipt is sent to both parties as confirmation of the transaction.

Difference Between ACH Payments and eCheck Payments

Although they are relatively similar in many aspects, ACH payments and eCheck payments differ in that ACH payments necessitate approval for an ACH merchant account. Funds remain unclaimed in your ACH merchant account until settlement, thus causing a snag in your cash flow. Additionally, rigorous business analysis is needed for approval of an ACH merchant account, during which many companies are turned down.

However, using an eCheck payment processor allows businesses that don’t fit the criteria for an ACH merchant account to still accept payments into their business bank account without needing a merchant account.

How Are Paper Checks Different from eChecks?

The primary difference between an eCheck and a paper check is that the former is digital, whereas the other is printed on paper. They are both different formats of the same information. 

Since eChecks are processed digitally rather than physically, they process payments far more quickly than paper checks, which accelerates the approval process in general.

Paper checks need more manual labor than electronic checks to deposit, and they also take longer to process and hold than eChecks. 

Advantages of eCheck Over Credit Card

There are various benefits to accepting eChecks rather than credit cards because they bypass card networks, use their own systems, and adhere to their own rules. eCheck can:

  • Reduce processing cost (and it may also be lower than debit cards)
  • Change the payment option for your regular customers to one that is less expensive.
  • Lower the number of declined recurring payments caused by expired card information.
  • Make it more difficult to file customer chargebacks.
  • Provide a shorter time frame for customers to start chargebacks
  • Extend your reach to people who either can’t or won’t use credit cards
  • Offer an alternative payment option that your competition might not offer.

How to Deposit an eCheck

Depositing electronic checks is easy because they are primarily virtual versions of paper checks. Usually, your eCheck service provider will give you access to a virtual terminal where you may enter the check’s information to start the transaction. Simply follow the same steps you would for any digital payment. The only way this payment differs from others is that, rather than going through your merchant account, the money will be sent straight to your business bank account.

Additionally, if your POS system and eCheck payment processor are integrated, you might immediately cash your customers’ eChecks with little to no work on your end. 

Other Ways to Deposit an eCheck

Using the aforementioned procedure, an eCheck can be processed and automatically deposited into your company’s bank account. However, you can also use the following process to deposit an eCheck: 

  • Retrieve your eCheck: When you are informed that you have received an eCheck, you can retrieve it by adhering to the provided steps. 
  • Printing your eCheck: Print out your eCheck after retrieving it. An eCheck may also be printed into a physical copy, just like digital tickets for concerts, flights, or other events can be. 
  • Deposit your eCheck: You can proceed as you would with a standard check when you use the physical version of your electronic check. All you have to do is to sign the check and deposit it in your bank. 

Can an eCheck Bounce?

The customer’s checking account often has an authorization hold in the amount of the eCheck placed on it when an electronic check is launched. By doing this, it is certain that there will be enough money in the checking account to pay the transaction until it is settled.

Of course, there are unusual circumstances in which an eCheck may bounce, but measures have been put in place to make sure they do not, which is a significant advantage over traditional check processing. 

Are eCheck Payments Secure?

Any online purchase raises security issues. On the subject of eCheck safety, people frequently turn to Google. It makes sense when you realize that, unlike credit cards, paper checks are a form of payment that hasn’t experienced any innovation in a while.

Surprisingly, in many instances, electronic payments are regarded as being more secure than a physical check because there is no physical document that may be intercepted.

Over the years, thieves have discovered ways to exploit paper checks for identity theft and fraudulent transactions. 

To evaluate it in more detail, here are a few reasons why you should have no reservations about accepting eChecks.

eChecks Payments Are Safer Than Paper Checks Payments

As stated earlier, criminals are more likely to intercept paper checks because they are physically and symbolically handled more often than eChecks. eChecks, however, send the data straight to the banking institution.

Furthermore, a paper check that is incomplete or contains inaccurate information, such as the date or the signatory, can still be processed and passed. However, if an eCheck has a problem, the transaction won’t start until the problem has been fixed. 

eCheck Payments Can Detect Potential Fraud

Through a check acceptance service, the payment gateway provider confirms the identity of the individual entering a client’s checking account details to ensure they are authorized to use the account. 

The acceptance service ensures that the requested customer data matches what the issuing bank has on record for the account by comparing it to the information it already possesses. The payment is turned down if it doesn’t. You won’t receive fake payment information thanks to the eCheck authentication process, which also makes sure that only authorized users are accessing the account. 

Furthermore, a transaction will be flagged if an account has a history of fraudulent activity after the check acceptance service has searched a database of customer and business bank records. 

Listed below are some electronic check security measures that guarantee the privacy of both your company’s and your customer’s information:

  • Multi-factor authentication
  • Transport Layer Security
  • Advanced Encryption Standard
  • Continuous security monitoring
  • Cloud infrastructure technologies

Benefits of eCheck Payments Processing

Both the business owner and the customer can benefit greatly from adopting eChecks. These benefits include: 

  • The cost is lower: An eCheck is far more cost-effective than a credit card transaction for sending or receiving substantial payments from clients, such as mortgages, monthly rent, or insurance premiums.
  • eCheck offers quicker delivery time: The speed at which the funds are delivered to your business bank account is another advantage of using eChecks. Oftentimes, the funds are available the following business day. 
  • Funds are deposited in the bank account: With eCheck, money is transferred straight to your company’s bank account and not to your merchant account. However, you can use the money from electronic checks right away because it is sent directly to your business bank account. Payments made with credit or debit cards are sent to your merchant account, where they are kept until settlement, at which point they are transferred to your company’s bank account. Since these funds aren’t immediately available, this may cause a disruption in your company’s cash flow.
  • eCheck circumvents the need for a merchant account: A merchant account is not required for eCheck processing. Businesses that are having trouble getting a merchant account may find this to be particularly interesting. High-risk businesses often submit applications for merchant accounts, but traditional banking institutions typically reject them to limit their risk exposure. Even though there are many factors to consider when determining a company’s risk level, companies listed on Mastercard’s MATCH list are virtually always regarded as high risk and may benefit from eCheck processing. 
  • There is no monetary value limit: The amount that can be paid with an eCheck is unlimited. While transaction and daily spending caps may apply to credit and debit cards, an eCheck is only constrained by the amount of money in your customer’s checking account. Offering an electronic check payment option might be particularly advantageous for companies that sell expensive products or services.

How to Send an Electronic Check

You may receive an invoice for the items or services you are paying for, depending on who you are interested in paying by electronic check. Add your financial details to this eCheck invoice. The data that is most frequently required is as follows: 

  • Your name or the name of your company
  • The bank account that will be used to withdraw money
  • the required route numbers
  • The issuing bank’s name

The eCheck is authorized once this information has been sent to the appropriate person. Verification, processing, and payment all follow at that point. 

Cost of eCheck Processing

If your eCheck payment processor levies a flat fee, it will normally be somewhere around 1%. You’ll typically pay between $0.25 and $1.50 per check if you’re levied a flat fee. Compared to many other payment options, eChecks are typically more affordable. Please be advised that prices are often higher for businesses with significant levels of risk. 

Focusing just on rates while ignoring other significant costs is a common trap that merchants fall into. Pay attention to any one of the following additional expenses:

  • Monthly fee
  • ACH return fee
  • Setup fee
  • Payment gateway fee
  • Chargeback fee
  • Monthly minimum fee
  • Expedited processing fee
  • Batch fee
  • Refundable deposit
  • Equipment fee
  • Check verification
  • High ticket surcharge
  • Check guarantee

The Estimated eCheck Processing Time

The length of time it takes for an eCheck to be processed varies depending on how many organizations are involved, including the payer’s bank, the payment processor, the ACH Network, and the payee’s bank. Before clearing, this transaction runs via a number of channels, and the time it takes to clear depends on those channels. Nevertheless, the following factors must be taken into account when determining the time required for the settlement of an eCheck:

  • The associated banking institutions
  • Your payment processor
  • The time the transaction was initiated
  • Weekends and/or banking holidays

Considering these factors, verification can take up to 48 hours, which means it could be another 3 to 5 working days before an eCheck can clear. 

Payments to Make with electronic checks

You can accept an eCheck for any products or services your firm sells if you have an operational eCheck payment processor. That is if your client decides to pay using an eCheck. This is because credit cards are currently the most widely utilized form of payment. Therefore, you can discover that the majority of your clients like to pay with a credit or debit card. 

It’s important to note that eCheck processing is regularly used by merchants when ticket sizes are significantly greater than usual. For instance, a wholesale supplier might pick eCheck as an alternative to a credit card if their credit card processor does not support a $30,000 transaction.

Allowing electronic checks may give your customers more options for paying you. And even if only a small percentage of your clients use eChecks as a form of payment, there will still be some transactions which you might profit from. 

Final Thoughts

Professionals must start accepting eChecks, given their noticeable surge in popularity. In addition to giving you more options for receiving payment, eCheck processing strongly suggests to your current and prospective customers that payments can be made more quickly and affordably.

breakdown of the largest banks in usa

A Breakdown of the Largest Banks in the U.S

According to the FDIC, there are 4,844 commercial and savings banks in the U.S with over 22 trillion dollars in assets based on the latest data available as of 2021. The top ten largest banks in the country account for 59% of those total assets; over 13 trillion dollars in value. The top four large banks in the country, JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup, hold one-fifth of all US deposits. There are many factors that determine the best bank for depositors, such as whether one wants to go into a branch or prefers to bank online. There is also the factor of personal needs at various stages in life; do you need to buy a car and thereby need an auto loan. As such, there are numerous other products banks offer that may hold greater sway among certain consumers; home mortgages, credit cards, safety deposit boxes, business accounts, even insurance products.

Then there is the question of how many of these activities can be done online or through a mobile app. What consumers want from their banks shouldn’t be an enigma and is in fact quite simple. Customers want the process to be easy. There are many ways banks offer this for their customers. Eight out of ten customers want mobile banking as their top service priority. However, proximity to the bank’s branch is a close second. Since the Great Finance Crisis which led to the bailout of banks, and some of the largest banks to be considered Too Big to Fail (TBTF), more consumers flocked to such banks with their deposits considering them to be a haven. The large banks in the country are exactly that – large! These banks have amassed a massive deposit base, offer almost all tertiary services customers can need, and accrued a majority of the $263 billion in net income earned by the banking industry in the US last year.

Considering all these different factors, we learned that it is often the big banks in the country that tick the checkboxes for offering most of those options. Below we list the top ten banks in the U.S. and explore what makes each of these large banks in the country stand out. 

JPMorgan Chase – The largest of all banks in the U.S with nearly $3.5 trillion in total assets, JPMorgan Chase, or simply Chase, has been a banking behemoth for over two decades. The company has always operated with a sound risk management strategy, often a contrarian in that regard, which has allowed the bank to grow even in times of distress. 

Being one of few banks with a ‘fortress balance sheet,’ the 2008-09 financial crisis allowed JPMorgan to hobble up competitors and prized assets such as Bear Stearns and Washington Mutual. Today, unlike other big banks in the country which are shedding branches, JPMorgan has continuously announced an expansion of the company’s branch footprint throughout the US. Today, the company has the largest branch footprint with 4,814 branches all across the continental US. JPMorgan Chase’s plans to further expand the company’s branch network by an additional 400 branches are currently underway.

Bank of America – The second largest bank in the U.S with total assets of over $2.5 trillion, the Charlotte, North Carolina-based Bank of America has over 67 million customers, which was cemented by the bank’s robust digital product offering, including a very versatile mobile app. Bank of America has a branch network of 4,200 branches with over 16,000 ATMs across the US. 

Bank of America further entrenched the company’s position in investment banking and broker dealer operations after its acquisition of famed wealth management and investment management firm Merrill Lynch in September 2008, at the height of the great financial crisis. 

The company also allows customers seamless access to Zelle, a P2P payment app with which customers can easily transfer funds to the bank accounts of family and friends. Furthermore, Bank of America is one of the few big banks in the country that has an Artificial Intelligence-powered tool, called Erica, that serves as a virtual assistant to advise customers on expense tracking, money management, and budgeting.

Following the lead of other banks in the U.S, Bank of America recently announced plans to lower overdraft fees and do away with fees associated with non sufficient funds.  

Wells Fargo Bank – The third largest of the big banks in the country with nearly $1.8 trillion in total assets, Wells Fargo traces its roots back to 1852, headquartered in Sioux Falls, South Dakota. Wells Fargo Bank has had a history of very conservative risk management allowing the bank to double its size and branch footprint in the US when the company acquired Wachovia in the wake of the financial crisis in 2008. What has resulted is a bank with the second largest branch footprint in the US, with 4,786 branches in 40 states. 

Although the bank has sought to reduce its branch footprint in light of consumer preferences and has instead started focusing efforts on an intuitive app that has earned high ratings on both the Google Play Store and Apple’s App Store. Along with Wells Fargo Online, the bank also offers the Wells Fargo Mobile app, in addition to access to the Zelle app, which Wells Fargo owns along with a consortium of other large banks in the country.  

Citigroup – The fourth largest of banks in the U.S, the Sioux Falls, South Dakota-based Citigroup, or Citibank as it is commonly known by consumers, has nearly $1.7 trillion in total assets, only 60% of which come from US operations. The bank has the smallest branch network in the US among the big banks in the country, with 668 branches in the US as of March 31, 2022. 

For many decades, during the seventies, eighties and nineties, Citibank was the largest bank in the U.S. The company was the sole American bank among a global bank ranking composed mainly of Asian and European financial institutions. The company made an ill-fated bet on challenging the Glass-Steagall Act by announcing the bank’s merger with Traveler’s Group, an insurance company, looking to offer consumers a one-stop shop of financial services. Although successful in the merger effort after the repeal of the Glass-Steagall Act, the bank became too large to manage and was unable to mitigate risks associated with the company’s subprime lending operations in the runup to the 2007-09 financial crisis. Subsequently, the bank, along with other big banks in the country, became heavily regulated and Citibank began to cut costs and scale back operations and the company’s retail banking presence. 

Regardless of the bank’s small branch footprint today, Citibank has nearly 65,000 ATMs throughout the country that do not charge any service fees, along with thousands more spread across global operations in over 160 countries.  

US Bank – The fifth largest bank in the U.S, the Cincinnati, Ohio-based US Bank started out in 1863 and currently has a total asset base of about $578 billion. US Bank, like many other big banks in the country, has a history of using mergers and acquisitions to become one of the largest banks in the country today. 

The bank has leveraged technologies such as Amazon’s Alexa, Apple’s Siri, and Google Home to offer a more seamless and convenient product offering. An example of which is US Bank’s Amazon Alexa skill to pay outstanding card balances.

PNC Bank – Wilmington, Delaware-based PNC bank is the sixth largest bank in the country with almost $535 billion in total assets and nearly 2,700 branches. Although PNC Banks is ranked among the large banks in the country, it is mostly a regional bank serving specific states in the Northeast, Midwest, and some in the South. 

PNC doubled in size in 2008 after it acquired National City Corp., the Cleveland, Ohio-based bank which became embroiled in subprime lending troubles at the height of the great financial crisis. PNC Bank further expanded operations eastward after the 2020 acquisition of BBVA USA after parent company Banco Bilbao Vizcaya Argentaria exited US operations. 

Many large banks in the country leverage their size and perception of “too big to fail” and offer minimal rates on their savings accounts. However, PNC has been cited for offering some of the best savings deposit rates in the industry.

Truist – The seventh largest bank with assets of $531 billion as a result of the 2019 merger of equals between SunTrust and BB&T. The combined entity has about 3,000 ATMs and 2,500 branches across 17 states and Washington D.C. 

The Charlotte, North Carolina-based bank offers ten million customers access to Trust’s own mobile banking app as well as access to the Zelle app to both receive and send funds as it is a part-owner of the payments app. 

Goldman Sachs – The eighth largest bank in the US with nearly $475 billion in total assets, Goldman Sachs has only been a bank after converting to a bank holding company during the 2007-09 great financial crisis. The company was founded as an investment banking partnership in 1869 in New York City, where it is still headquartered today. In May 1999, Goldman Sachs filed for an initial public offering at the height of the stock market cycle of the late-nineties, shedding the company’s partnership structure after a multi-decade debate over the decision.

In September 2008, Goldman Sachs converted to a bank holding company for the company to access the Federal Reserve Discount Window, a liquidity facility only offered to banks. The move ended a nearly 140-year era as an independent security firm, one of the very few of its kind that still existed at the time but allowed the company to survive the great financial crisis in exchange for future and ongoing prudential regulation by the U.S. Federal Reserve. The move also allowed Goldman Sachs to receive a $10 billion investment by the U.S. Department of Treasury as a form of financial bailout via the Troubled Asset Relief Program during the 2007-09 financial crisis. 

In 2016, Goldman Sachs launched Marcus, named after the company’s founder Marcus Goldman, an online bank app to diversify the bank’s funding and revenue sources by expanding into retail deposit and loan operations.  

TD Bank – The ninth largest bank with $417 billion in total assets is Wilmington, Delaware-based TD Bank. It is the only one on this list of big banks in the country that has a foreign parent, the TD Bank Group of Canada. TD Bank has 1100 over 1,100 branches across the East coast, starting from Florida all the way to Maine. TD Bank has been a culmination of many smaller banks throughout the east coast states, from the Portland Maine-based Banknorth in 2004, to the acquisition of America’s Most Convenient Bank, Commerce Bank, in May 2008. 

It was Commerce Bank that really shook up the northeast regional banking scene offering fast food-like service in the banking space. With monikers like ‘no stupid fees, and no stupid hours,’ Commerce Bank was open seven days a week, until 8 pm every day, with actual human tellers answering phones rather than automated machine prompts. Unfortunately, the bank’s convenience tagline is all that survives now at TD Bank, with none of the service pedigree around days of operations, daily schedules, or the elimination of fees.

Capital One Financial – The last of the big banks in the country to round out the top 10 is McLean, Virginia-based Capital One Financial, with total assets of $385 billion. 1,157 branches and a network of over 70,000 cost-free ATMs in the US. 

Established in 1994 after a spinoff of the credit card operations of Signet Financial, Capital One remained a relatively obscure monoline bank offering only credit cards to customers, until it expanded operations to include auto loans in 1996 after gaining approval for a savings bank charter that year. Over the next decade, Capital One gobbled up various auto and credit card loan companies before embarking on acquiring other retail banks in 2005.

Today, Capital One Financial offers very customer-centric product offerings with no minimum bank balances, no monthly fees, no-fee ATMs, no longer charges non sufficient fund fees, and has limited itself to one overdraft fee per day per customer. 

Another differentiating feature available to Capital One customers is the above-average rates offered to them via the bank’s 360 Checking accounts. The accounts offer the first 50-page checkbook for free, pays interest on all balances at a tiered-rate, allows mobile deposits, as well as online payments for bills, without any minimum balances.

Conclusion

There has been tremendous growth in offering financial services to consumers. Not all of it is a result of efforts by the large banks in the country. The advent of smartphones, faster internet, improvements in payments technology by the latest entry of technology companies into the industry, improved customer experiences have all shifted demographic habits towards a great degree of financial inclusion.

There are many headwinds that the big banks in the country face. According to PwC’s 2021 Digital Banking Consumer Survey, almost 25% of banking customers would rather transact and open their accounts digitally but are forced to do so in a bank branch. As a result, American consumers are shifting their banking activity towards direct banks, banks that exist solely online. In the US, as much as 20% of primary banking relationships are conducted via direct banks as of 2021, twice the rate of just two years prior. 

Furthermore, according to McKinsey’s 2021 Digital Payments Consumer Survey, 30 percent of those surveyed said that they have utilized the Buy Now Pay Later option. Of this cohort that used the BNPL payment option, 29 percent said that it enabled them to either make a purchase they would otherwise not have, or it allowed them to spend more than they normally could.

Furthermore, according to the same McKinsey survey, nearly 20 percent of those surveyed reported either holding or having held cryptocurrencies, mainly for purposes of an investment asset rather than a transactable currency. 

Payment options, financing options, and currency exchange have all historically been the domain expertise of banks in the U.S, namely the big banks in the country. The industry which has experienced these shifts in consumer preferences for well over a decade has been successful in managing those challenges in the past. It was a consortium of banks that launched clearXchange in 2011 to offer payments services. That initiative was signed by many additional banks and subsequently became the Zelle app, a digital solution to send and receive funds and to rival P2P payments solutions from the likes of PayPal and Venmo.

However, current trends pose bigger challenges, especially as non-banking entities encroach into some areas of the banking industry with their own payments solutions, just as the industry has been slow to adopt in other areas.

retail payment trends

Important Retail Payment Trends to Watch in 2022

Payments trends have seen so many iterations over centuries, evolving from barter to coinage, to currency notes, then onto checks, charge cards, and debit cards. Fast-forward to today and customers can pay by simply swiping their smartwatch next to a point of sale device at a retailer.

Over the past few years consumers have noticed a trend in retail payments; it is much easier and quicker to process. This makes shopping a breeze and likely to encourage shoppers to come back into stores as they may no longer have to wait in long lines at the counter. The formula for payments innovation from a consumer perspective is very straightforward. Allow for the technology to be used in as many places as possible, make it simple and seamless to use, ensure that the user’s personal and financial data is secure, and make sure that it’s free, or as close to it as it can be. The payment’s innovation need not be the main product itself. It can be a simple add-on feature of another offering to drive stickiness for that product.

The payments sector and retail are both industries that have recently become crowded with competitors chasing the same customers. There are many forces driving these changes, including more individuals starting businesses that are at crossroads of retail and eCommerce, a broader trend among creatives looking to leverage their skills in eCommerce and the cloud enabling them to start businesses at a much quicker rate. Furthermore, customers flush with cash and unable to do much with it as they were locked in their homes have diverted disposable incomes towards retail goods purchases, primarily online. This in turn drove up prices, margins and profitability among retailers and payments companies which were positioned to capitalize on the trend and facilitate online ordering and contactless payments. This has led to a massive inflow of investment in the sector

Below we take a look at the important retail payment trends to watch in 2022. They are going to have a great impact on consumer behaviors and are likely to offer new conveniences and speed which will result in customers spending more, both in-store and online. 

Digital Payments adoption will grow

One of the biggest trends to unfold in retail payments in 2022 is something that will remain constant; digital payment adoption will continue its upward trajectory. Near field communication, or NFC, was intended for payments and patented in the early 2000s. It was the introduction of smartphones that presented a viable use for the technology. The introduction of companies such as Square and Stripe offered quick set up for merchants to start accepting card payments on the go ushering in the use of smartphones to accept payments, in the late 2000s. Slowly, in the last decade, as apps caught on as a standalone tool to deliver every kind of service, payment companies and technology companies began to leverage payments technology within smartphones. 

It did take some time for consumers to become comfortable with the trend, but once they experienced the convenience and speed of digital payments offered, there was no turning back.

Every entity collecting payments which has a stand-alone app offers a payments processing option. Furthermore, mobile wallets such as Apple Pay and Google Pay, or digital payments platforms such as PayPal or Zelle, all allow users to send payments, whether that is to pay bills or subscription fees. Even the IRS has the IRS2Go app to pay taxes. 

If that wasn’t enough, there are companies such as Plaid that serve as a conduit connecting financial institutions and fintech apps and digital accounts to enable the flow of funds between parties but without exposing consumers’ personal financial information.

These developments showcase the drivers of further adoption of digital payments in retail. Firstly, there was a massive technological infrastructure development push to boost digital payments adoption. The main aim of many of these technologies is customer convenience. This displays that Fintech companies are doing their because according to the most recent AmEx Digital Trendex Digital Payments report, convenience is the number one reason consumers use digital payments such as peer-to-peer payments (P2P).

Embedded Payments

Payment capabilities available natively to specific software, SaaS, or apps are another major trend within retail payments in 2022. Numerous companies are currently working to introduce solutions that embed a payment option within their platform. This is intuitive because it will not require consumers to exit the platform to process their payment, it can all be done directly within the platform. 

There are many benefits for retailers when implementing embedded payments. First is the convenience it offers. According to the AmEx Digital Trendex report cited earlier, consumers are growing more comfortable with sharing their financial information with retailers to store their payments details on file.

Saved payments details of consumers allow them to set up payments much more quickly and it  offers the retailer the ability to save the customer’s card information in their records, also known as card on file. This further enables easier checkouts and repeat customers as consumers are more likely to shop at retailers in which they have a card on file. 

Security is another benefit of embedded payments. Since consumers don’t have to enter data every time since their card is already on file, the payments are processed without leaving from the platform’s native environment, avoiding any data-entry associated mistakes.

Retailers will begin to start offering payments solutions 

Like many retailers launching store branded cards, the trend to watch in 2022 will be how many retailers will look to leverage their brand and trust with customers to start offering payments solutions on their own. In a tightening economic environment, new sources of revenue growth and areas in which they can further improve customer lifetime value are quickly drying up. Creating a payment solution offers the opportunity to quickly realize gains of as much as 10% by implementing this into a company’s product offering.

This is going to be an experiment that retailers will look at to gauge if creating a payment solution will save them money in the long run. However, this will pose a great headwind for those who take on this experiment. Although the payments industry is attracting a great degree of venture capital and interest from companies that are traditionally technology companies, it is important to have relevant expectations given how nuanced payments are. On the back-end, retailers still need to work with a financial intermediary to set up a merchant account. There is also compliance and a great deal of fraud protection initiatives that must be implemented as a minimum requirement of all card networks. 

The inability to master the niche compliance needs regarding security and fraud detection are one of the greatest hurdles that inhibit many new entrants from going through with their payments plans. Facebook’s Libra initiative is a perfect example of a very successful company in one industry who is having significant trouble translating that success into the payment industry. 

Different Industries will launch their own Buy Now Pay Later service. 

Buy Now Pay Later will play a big role in the success of many retailers. Apple is doing it, and others will soon follow suit. In an environment of tighter economic conditions, retailers will look at all options to expand margins. Many will question why they’re giving up a treasure trove of data and margins to a 3rd party when they can bring that operation in-house.

BNPL has had major ramifications for retailers, the Fintech industry, and consumers. Many consumers can now purchase something that they could not have dreamed of doing before by having good credit and then getting approved for a line of credit by a bank to finance the purchase. Now, no credit checks, no more long applications and longer wait times. Not even interest on those payments or late fees. Just pay four installments on time at the regular retail price and those Gucci jeans or that iPhone 13 Pro Max is yours completely in four months. 

It is the modern day version of the lay-away plan, except you get your goods now. Buy Now Pay Later basically lets consumers buy the product now with an agreement of four or five equal monthly installments to finance their purchase. There are currently payment companies such as Klarna and Affirm, that finance your purchase. 

However, many have sounded the alarm on how it is creating a generation of society debt trapped and unaware , kind of like the way pay-day loans have worked. Others are more tactful and highlight using research how BNPL is enabling buyers to make purchases they would otherwise not have, which is not always a good thing.

Say what you may about BNPL, but it is one aspect of payments that retailers have the highest probability of succeeding at if implemented. It’s the reason Apple has launched its own BNPL service, and many more will follow in 2022.

Everyone wants a Super App

One of the biggest reasons companies have started to embed payments into their platform or SaaS application as well as dabble with payment processing solutions in-house is their quest for a Super App. Once a company has super app status, it has complete rule over all smartphone activity in that region. 

One obvious trend we experienced is how commonplace smartphones have become. They are almost the modern day equivalent of having electricity. More and more, our daily lives revolve around smartphones. Everything we think of doing, we reach for our smartphone. Most of our routine is accomplished via specific apps on the smartphone, including going to a restaurant, making a grocery store trip, paying for anything, ordering a cab, studying, movies, music, dating, and about ninety percent of everything else humans do on any given day. 

The logic of a super app is that if it could address about two to four different daily routines, it would become the de facto app that consumers would open. So, think along the lines of using the Amazon app to order something online. Add to that an entertainment aspect, that’s where Amazon Prime comes in. One additional thing you can add to that is delivery service or ride hailing, which is typically done by the same app – but exactly the kind of deal you would sign with GrubHub if you had Super App ambitions. 

All major companies are in a race to become a super app. They all know that once they achieve that status, they will see an increase of potential trillions of dollars in market capitalization on top of their already multi-billion dollar valuations. That is because they will become a self-sufficient ecosystem to which all other apps and vendors must utilize to ensure their relevance. Can you imagine if the likes of Amazon or Google had to do that with Apple if it achieved Super App status first? Facebook is already experiencing this as it does not control the distribution channel to its customers and is beholden to Apple’s policies. The ultimate prize for a Super App is going to be adoption in the highest populated countries with the highest amount of disposable income.

And the great thing about super apps is that there are already case studies offered by successful super apps that validate this supremacy thesis. One only needs to look at China with its home-grown super app WeChat. With one billion users, the company commands eyeballs for almost all activities, whether that is to pay for food, use a bank, invest, hail a cab, or pay a government fine. Everything is done on WeChat and WeChat alone!

Payments will be faster

Speed at which customers pay has been the holy grail for payments solutions providers. Why? Customers don’t like to wait, nor do merchants receive their money. So, speeding up payment time is crucial. Checks take anywhere from 24-48 hours to clear. P2P platforms, such as Venmo and PayPal help merchants receive funds right now. Credit cards have some way to go. Although the payment is processed in a matter of seconds, merchants can sometimes still wait anywhere from 2-3 days to see the money in their bank account. 

There have been some innovations in the space over the last decade with the advent of next day funding and same day funding. But those are highly focused on transaction timings and not truly real time.

However, that is about to change with FedNow. Although the Federal Reserve will be utilizing a 50 year old technology already in place in many parts of the world, it is one that will now be implemented at a government level initiative in coordination with some of the largest financial institutions in the US. Originally launched as a pilot in 2019, the system is available 24/7/365 that collects payment details, authenticates the information, and settles it in a matter of micro-seconds. The system is being extensively tested in 2022 and expected to be completely operational by 2023.

Conclusion

The retail payments industry is the front line of testing the latest changes to payment methodologies among consumers. There a robust sample size of consumers with whom market research can be easily conducted is ideal to quickly gather feedback. As more retail payment options come online and new trends emerge, it is important for retailers to stay aware of all these changes. BNPL is becoming a more common offering and one that retailers are starting to believe can be easily incorporated into their service offered independently by themselves.

In fact, many types of payment systems are quickly becoming an area that retailers have begun to experiment with to see which option best suits their customers and business needs. Shopify is leveraging its brand name to capture a larger piece of the shopping experience by launching payment solutions. Based on positions opening up at Automattic for its WooCommerce division, it appears that the company is engaging in a similar strategy. 

Retail payments trends are important as they have the tendency to catch on and become sticky for consumers if they offer the right level of convenience and address a specific need. Currently, the need is for digital payments and with different forms with convenience built in, while the heavy lifting around security and privacy is done seamlessly, behind the scenes. These trends will shape the retail industry for years to come and will become as commonplace as the ATM machine once was or smartphones are today. It will serve retailers well to pay close attention to them and prepare.

payroll software

Top Free Payroll Software Choices for Small Businesses

Payroll software can help a business work out payroll calculations and deductions much faster, saving time and money. Not only that, but the right software choice can also help properly structure your business operations to maximize efficiency. However, some of the options available might be cost-prohibitive for smaller businesses. 

Luckily for you, there are some excellent payroll software options out there that are completely free.

The following article will go over five free payroll options with outstanding features, along with six paid payroll software options with free trials, and tips on how to choose the right payroll software for you.

Top 5 Free Payroll Software

In choosing these payroll software options, we considered their functionality, upgrade options, upgrade pricing, and advantages.

Here are the top 5 free payroll software options available today:

Payroll4Free

payroll4free
Source: payroll4free.com

As its name implies, Payroll4Free is a free payroll tool. You qualify for free access to essential services if you have 25 or fewer employees. Payroll4Free has a full set of functions that can make payroll processing easier, even at its most basic level.

It allows customers to pay both W2 and 1099 employees. Furthermore, the software can issue checks and calculate federal, state, and local taxes. Payroll data can also be exported for integration with accounting and banking software, such as Quickbooks.

Both employers and employees can use the Payroll4Free portal and reporting features to track sick days, vacations, and other PTO. Pay stubs and W2 forms can also be printed directly from the platform, saving small business owners time and resources.

For small businesses with fewer than 25 employees looking for a simple payroll solution that gives them the tools they need to succeed, Payroll4Free is the ideal solution. Small businesses that need to invest in other areas of their operations need free options that offer features like direct deposit and a self-service portal. Payroll4Free is the best overall payroll software option for small businesses that require minimal functionality and a user-friendly design. However, if your company exceeds the 25-employee limit, you may want to look at other paid payroll software options.

Features

By displaying advertisements within its software, Payroll4Free provides its basic services for free. With Payroll4Free’s free plan, you can process payrolls and direct deposits without upgrading to a higher-tier plan. Payroll4Free offers the following features for free:

  • Direct deposits and paper checks
  • Tax breaks
  • Tracking vacation and time off from an employee’s dashboard
  • Customer service
  • Employee enrollment

Pricing

Payroll4Free charges employers $25 per month if they don’t want to deal with submitting payroll taxes themselves. They provide free tools as a basic service to make this process easier. Despite its name, Payroll4Free hides two optional services behind a paywall.

Payroll4Free charges an additional $25 per month if you choose not to use your bank to transmit direct deposits to your employees. Bundling Payroll4Free’s direct deposit and tax services for $30 per month will save you money.

Pros

  • Tax calculations and direct deposits are provided at no charge.
  • Providing unlimited customer service
  • Strong security aspects
  • Pre-filled tax forms

Cons

  • Only available for Windows
  • Direct deposit through Payroll4Free’s bank is not free.

HR.MY

hr.my
Source: hr.my

For any company, managing staff around the world is a huge undertaking. HR.my supports 67 languages, so it is ideal for global teams needing basic payroll processing and management capabilities.

HR.my accepts payments by direct deposit, check, and cash. A company can assign payroll tasks to various managers using a role-based user access control tool. Employees can also use the portal to input their hours worked, request PTO, print pay stubs, and check vacation accrual, among other functions. Users can also import expense reports and timesheets and distribute documents using the software’s workflow capabilities.

Payroll software for small businesses and HR managers will appreciate HR.my’s support for dozens of languages. Firms without mature payroll systems will benefit from the program’s HR and payroll services, leave management, and expenditure reporting. Additionally, because HR.my offers unlimited user accounts, it is a viable payroll option for firms looking to expand staff numbers soon. The customer support provided by HR.my is provided via a user-supported forum, which may not be suitable for organizations that have never used payroll software before. New businesses should look for payroll software solutions that provide more comprehensive customer support.

Features

All HR.my features are free, and you do not need to subscribe to any plans to access additional perks. User community crowdsourcing enables it to operate for free, so you only need to sign up to take advantage of the service. Some of HR.my’s free features include:

  • Support for multiple pay intervals.
  • Attendance management tools
  • A time-tracking system
  • Self-service portal for employees
  • Software updates regularly

Pricing

HR.my is a great competitor to other purportedly free payroll software options, which often entail monthly fees and annual renewals. According to their home page, what you see is what you get when you sign up for them: Unlimited user accounts, time management, various pay schedules, a self-service portal, and more.

Pros

  • Support for 67 languages is available.
  • There are no restrictions on business size.
  • Flexible payment schedules
  • Strong security aspects

Cons

  • It does not comply with US labor laws.
  • Customer service options are inadequate.

eSmart Payroll

eSmart Payroll is a free payroll calculator that calculates payroll for hourly or salaried employees while taking into account 401k contributions and other deductions.

With eSmart, customers can print and download paychecks and pay stubs, which sets it apart from other payroll calculators. In states with more complex payroll taxes, such as Maryland or New York, you can use state-specific calculators to ensure that you withhold the correct amount.

eSmart is ideally suited for extremely small companies already capable of calculating payroll and filing taxes independently. eSmart Payroll may suit your needs if you are well organized and only need a solution for computing and printing payroll numbers. Most firms will find eSmart’s feature set too limiting, especially those expecting to grow rapidly. The tool may be a good fit for organizations new to payroll software if they want to test a simple payroll solution before moving on to a more complicated option.

Features

eSmart Payroll is more of a payroll calculator than a software package. Employers of small businesses can use eSmart to enter employee wages and administer their payroll. The eSmart Payroll calculator offers the following free features:

  • Printing of paychecks and pay stubs.
  • State-specific calculators
  • Pay cycles that vary
  • Easy access through the web
  • Withholding calculator for federal taxes

Pricing

Individuals and businesses can use eSmart Paycheck’s free payroll calculator. Users are encouraged to register an account when using eSmart Paycheck to avoid losing entered data, but you will not need to pay. Those who want tax filing tools must subscribe to eSmart Payroll’s premium service. The federal and state payroll forms are available through eSmart Payroll for a fee.

Pros

  • Withholdings can be customized.
  • Flexibility in the pay cycle
  • User-friendly interface

Cons

  • The features are limited.
  • The customer service is limited.
  • There is no assistance with tax filing.

Timetrex

time trex
Source: timetrex.com

Community Edition is a free alternative. It is an open-source platform maintained by volunteers from over 50 countries. Timetrex distinguishes itself by providing employees with online time and attendance tracking. Employees simply enter their hours online. Payroll data is directly linked to this data, making it easy to run the figures at the end of the pay period. Its ability to integrate time tracking with payroll software makes Timetrex a great choice for small businesses with hourly employees.

Timetrex’s Community Edition can calculate net pay, taxes, and deductions, among other aspects of payroll processing. As well as generating tax filings, Timetrex allows users to pay their employees via direct deposit or paper check. HR activities such as PTO requests and scheduling adjustments are also available.

TimeTrex’s free features are best suited to small, dispersed teams who require web access to time tracking. It is possible for businesses that use payroll software that they like to integrate it with TimeTrex and have it automatically sync with TimeTrex’s attendance monitoring. However, because TimeTrex lacks pricing transparency, companies needing urgent payroll solutions find it difficult to select a package that meets their needs.

Features

The most basic payroll features of TimeTrex are free under its Community Edition service plan. TimeTrex Community Edition is completely cloud-hosted, doesn’t require any downloads or installation, and offers several free features, including:

  • Payroll processing
  • Administration of human resources
  • Support for time and attendance in web browsers
  • Leave administration
  • Mobile app

Pricing

You must sign up for at least the Professional plan to use TimeTrex’s mobile app and on-site services in addition to its web portal assistance. The price of TimeTrex begins at $2.99 per month per user and goes up to a flat rate of $29.90 for organizations with up to ten employees. You will also need to schedule a demo with the company to learn more about the best plan for your organization since the company provides a plan comparison online but no additional price information.

Pros

  • ADP and QuickBooks are compatible with the software.
  • Assistance through the cloud for free
  • Web browsers allow employees to use the app quickly.
  • An automated multi-week scheduler is included for recurring or rotating shifts.

Cons

  • Tax preparation assistance is not included in the free community edition.
  • An opaque pricing structure
  • Payments to third parties and tax returns are excluded.

Excel Payroll

excelpayroll
Source: excelpayroll.org

Excel Payroll Spreadsheets are a time-tested and useful tool for setting budgets and performing calculations. With Excel Payroll, you can save money if you’re currently doing payroll with spreadsheets or Microsoft Excel.

Excel Payroll can calculate payroll when you enter employee information, including earnings and deductions. Checks and tax forms can also be printed, as well as records of workers’ compensation and 401k contributions.

Small businesses familiar with spreadsheets and who wish to use essential payroll services such as printing W2 forms and checks in a spreadsheet format should consider Excel Payroll. Excel Payroll integrates directly with the Excel app, so you don’t have to worry about developing a spreadsheet from scratch as Excel Payroll does it for you. Excel Payroll will behave like payroll software if your company has access to a licensed version of Office 365 or is willing to subscribe to a new plan.

Features

Excel Payroll aims to produce an Excel-based payroll solution that does not charge a monthly fee or impose any other charges. Installation is also free, so you won’t have to worry about extra fees. Excel Payroll offers a comprehensive range of dependable payroll tools, including:

  • Forms tax returns
  • Vacation accumulation
  • Pay deductions
  • Check printing
  • Time-tracking
  • Accounting entries

Pricing

While Excel Payroll isn’t free because you need to obtain a licensed edition of Microsoft Office Suite to use it, no further payments are required besides the Office suite license.

The Microsoft 365 Business plan, which costs $8.25 per user per month, is the most affordable of the cloud-based plans that include Excel.

Pros

  • Reporting features
  • Easy to use with Microsoft Excel
  • The customization options are extensive.

Cons

  • Handwritten entry
  • Taxes and benefits are not administered.
  • There is no compliance with the Affordable Care Act (ACA).

Best Payroll Software with Free Trials

Before purchasing a subscription, you can test the following payroll software solutions for free:

Gusto

gusto
Source: gusto.com

This outstanding payroll and HR software is free to use until you are ready to manage payroll. Gusto AutoPilot, a cloud-based system, can fully automate tax calculations and filings, providing 24-hour notifications and submitting payroll on time if you forget. The Core plan allows clients to manage payroll deductions, garnishments, and additional revenue with the most basic subscription.

Patriot Payroll

patriot payroll
Source: patriotsoftware.com/payroll/

Patriot offers two programs, the most basic of which costs $10 per month + $4 per employee. As well as payroll services such as direct deposit and W-2s, both programs have HR and Time and Attendance modules. The company’s clients, which also provide accounting software, can use their payroll platform free for 30 days. Patriot is completely online so that you can run payroll from anywhere you have an internet connection and a web browser. It also provides free U.S.-based customer support.

OnPay

onpay
Source: onpay.com

By presenting a single basic cost instead of many plans, OnPay’s approach eliminates confusing pricing systems. A 30-day free trial is available. OnPay’s robust payroll and human resources tools make it a suitable solution for larger companies and vertical industries. In addition to being powerful, user-friendly, and reasonably priced, OnPay is also a great option for small businesses.

Wave Payroll

wave payroll
Source: waveapps.com/payroll

This platform is known for its free accounting software, as well as flat prices instead of a variety of options. Customers can test its payroll software for 30 days for free. The accounting and payroll apps can be used independently, but the fact that they are integrated is a great benefit for small firms on a budget.

QuickBooks Payroll

quickbooks payroll
Source: quickbooks.intuit.com/payroll/

There is a free 30-day trial and a 50% discount for three months for those interested in purchasing this software. The Core Payroll feature of QuickBooks Payroll calculates paychecks and taxes and provides reports and next-day transfers. Enhancements to premium or elite include automated payroll, enhanced HR support, and time-tracking tools.

ADP

adp
Source: adp.com

You need to go beyond the Essential RUN plan to handle HR through payroll. Small firms with 1 to 49 employees can choose ADP’s RUN plan. This software includes tax filing, direct deposit, new hire reporting, and payroll processing. As pricing and add-on costs aren’t publicly disclosed online, ADP will need to contact you for an estimate.

How to Choose Your Payroll Software

When deciding whether to purchase payroll software, business owners should consider the complexity of their state’s tax rules, whether they intend to expand their company, how many employees they have, and how much time they can devote to administrative duties. Similarly, avoid characterizing free payroll software as a temporary option; transferring from one program to another is a hassle and frequently time-consuming. As the company grows, free payroll software won’t be enough, and it will be better to invest in a system that can accommodate growth and is automated.

The lack of time tracking or expense claim management functionality can usually be compensated for by working with external software that may be better suited for the job. Managing payroll taxes is another matter. Overall, several things are both great and essential for business owners. These include:

  • Calculation of taxes and, ideally, tax filing options
  • Calculation of benefit deductions.
  • Direct deposit is preferred.
  • Effective time management.
  • Management of human resources
  • The ability to claim expenses.
  • Cloud-based system.
  • Intranet for employees.
  • Customer service by phone.
  • Extra features

Conclusion

While paying for a license or subscription to a payroll software might provide you with additional features not found in free versions, you can accomplish a surprising amount of work with the options on this list. If you have a small business that only needs standard payroll reporting, you can get by with a free option, provided that you don’t need to scale your operations. If you think you might require more features down the road, try one of the free-trial options instead.

ecommerce storefront

Turbocharge Your eCommerce Store with These Growth Hacks [2023 Update]

More and more individuals have started their own businesses at breakneck speeds. eCommerce is one segment of the industry that has experienced tremendous growth over the past couple of years. After an increase of 50% last year, the United States eCommerce martket is worth more than 1 trillion dollars.

Of course, one of the biggest drivers of starting a business is the ease at which one can start. In the past, starting any business meant having to do the appropriate state-level registration filings, opening a bank account, procuring large scale technological infrastructure at huge costs, and then securing a merchant account via a lengthy and convoluted application process. This process served as a huge moat for wishful individuals looking to break into an most industries. Today cloud computing, software as a service (SaaS), and mobile technologies such as smartphones and tablets have greatly reduced these investment barriers and allowed businesses to form with minimal investments.

Furthermore, companies such as Host Merchant Services focuses on guiding merchants, including high risk merchants, to streamline the merchant account application process and advising businesses on how to quickly start accepting payments. This business formation process, particularly for eCommerce businesses, has been facilitated by specific platforms catering to them, including eBay, Shopify, Etsy, Amazon, to name a few.

Given these changing dynamics of quickly setting up a business to start accepting payments, coupled with the skyrocketing costs of rent of physical stores, result in eCommerce as a natural option for doing business.  However, beyond simply doing business as an eCommerce merchant, there are ways to focus on growth to further expand your operations. In this article, we look at ways merchants can turbocharge their eCommerce store with significant growth hacks.

The Growth Hacks

Virtual and Augmented Reality

virtual and augmented reality

Over the past two years, consumer demand has shifted to online shopping experiences in lieu of in-store visits.  As technology has facilitated contactless payments, the 3D virtual view of an entire designer showroom via investing in virtual and augmented reality allow consumers to experience full virtual rooms to “try” on outfits.

eCommerce businesses that invest in VR and AR technology will have a leg up on the competition allowing consumers a visualization of their product by trying on products via a hyper-realistic representation of a 3D fitting room. What AR and VR lets customers do is have a view of how certain apparel may look on them, within their space. Such capabilities can have tremendous benefits for merchants since, according to a survey conducted by UPS, 27% of all product returns were due to the product being “not as described.” According to ATLATL Software, a specialist of AR, VR and 3D software for eCommerce businesses, “two-thirds of shoppers say they have more confidence in their purchase as a result of the visuals rendered from AR and VR.”

Furthermore, according to research firm Statista, mobile commerce, the primary mode by which merchants implement AR and VR technology, is expected to surpass $430 billion annually in 2022. So, one of the best growth hacks eCommerce merchants can implement is to align their business to be an active participant in the mode of commerce that is likely to control a greater portion of consumer activity.

Finally, as large as eCommerce and mobile commerce are, online shopping still has many pitfalls. The online shopping cart abandonment rate is around 70%, according to research by Baymard Institute. However, the use of AR and VR increases conversion rates by 94% among merchants utilizing the technology.

Let Your Customers Know Their Payments are Secure

We’ve made great strides with the payment technology, with ecommerce first coming online with desktop, then mobile, and then via business’s own apps, along with consumer spending habits shifting to prefer eCommerce vs a traditional in-store shopping. As great as all these changes have been, they present their own set of challenges. Merchants are continuously faced with striking a balance between the customer experience and protecting those customers from security threats.

It’s hard to ignore these trends. Security experts are not ignoring them, and merchant services providers take these potential threats seriously. There are big expectations from merchants. According to the latest American Express Digital Payments Trendex Report, 90% of consumers already feel that their payment details are sufficiently secure given all the enhanced security protocol merchants implement. In fact, nearly 40% of shoppers feel that those protocols are making the checkout process cumbersome.

Nonetheless, the convenience of eCommerce and contactless payments not only pose threats, they’re resulting in real losses from nefarious activity. According to market research firm Statista, nearly 75% of all eCommerce merchants worldwide experienced some form of fraudulent activity in 2021, with total losses amounting to about $20 billion in total. As a result, the market for fraud prevention and security in eCommerce is expected to balloon to $70 billion by 2025.

There are specific actions merchants can take to inspire confidence in the security of their platform while also minimizing threats. According to the previous American Express report mentioned, more and more consumers are growing comfortable with the merchant saving their card information on their databases, a process called “card on file.” Today, 61% of consumers are comfortable sharing their payment information with the merchant to set up card on file. That is up from 43% in just two years.

With card on file merchants and consumers both save time and potential of error by eliminating data entry in every checkout. Furthermore, the payments can be processed via a secure tokenization mechanism. Tokenization does not use actual personal financial data but rather a meaningless set of characters generated in the form of a token which can be used to settle a transaction as the token will be accepted as a credible payment after it is deciphered by the token key at payment authentication.

Merchants should showcase this, and all other methods used in securing their payments, building confidence in their platform, which can also serve as a feedback loop for other customers to set up card on file with the merchant. Some ways merchants can accomplish this starts with their website landing page. Customer can see when a website is encrypted by a method called SSL, or Secure Socket Layer. SSL secures all financial information passing through various channels from the website when processing payments. Other ways to build trust around the security of a merchant’s platform is to showcase various trust badges on your website, such as a business which is ‘PayPal Verified’ or ‘Secured by Verisign,’ among many other options.

Urgency, FOMO, and Social Proof

A great way to increase sales in eCommerce is to implement certain initiatives that promote urgency among buyers, or some level of fear of missing out (FOMO). For consumers, FOMO can be instigated by marketing that appeals to their desire to clinch an opportunity before it’s too late and escapes them. Merchants will need to convince customers that time is of the essence, and there are hoards of peers vying for the same product, a concept known as social proof.

Social proof is one of the best influencers of consumer behavior. The book Influence by Robert Cialdini revolutionized persuasion and influence marketing with the concept that people look to others to decide what they themselves should do.

Sales, limited time offers, any promotions with the tagline ‘while supplies last’ are all a culmination of urgency, FOMO, and social proof. And it is in the best interest of all eCommerce merchants to employ all these psychological selling strategies.

Get Customer Testimonials

The best time for all eCommerce merchants to start building a portfolio of clients that can showcase their best features is as soon as they start their business. The second best time; right now. The aim should be to get other consumers to read about the benefits offered by your company.

There must be a plan for reaching out to customers and obtaining testimonials of your services. These efforts should include all platforms and major online review sites. You can have great copy and amazing graphics in your marketing, but customer testimonials of actual experiences using your goods or services will supersede that marketing any day.

Testimonials should be in the form of both text and video and should be available on your YouTube channel, Facebook page, Twitter feed, Instagram reels, Snap stories, Pinterest Pins, Google Reviews, as well as the Better Business Bureau.

Plan Your Campaigns

Maybe it’s the holiday season that draws the most buyers to your eCommerce site. Consider planning marketing campaigns using mailing lists and data on past purchases. Holidays are gold mines for merchants who plan accordingly well in advance. Consumers are happier, more altruistic, and open to spending. 

These seasonal campaigns need not always be discount promotions. Customer enticement can even be built around specific level of gift wrapping and holiday packaging that businesses can begin to be associated their brands with – think of Tiffany’s blue boxes.

Target Your Audience

There are numerous examples of creating multiple audineces by segmenting the clientbase. Permutations that can be used to set up client segmentation include age cohorts, gender, marital status, family size, spending habits, lifestyle habits, income levels, educational levels, alma maters, geographic base, psychographic details, cultural roots, religious beliefs, sports affiliations, and many more.

The biggest benefit merchants get by segmenting clients is hyper-focus on specific preferences, and potential buying behaviors at different times of the year. This data can be utilized to target audiences with different emailing lists, discounts, or recommendations for certain products. This level of audience targeting can also allow merchants to offer extremely specific options which may feel they are tailored specifically for the individual.            

Retailers such as TJ Maxx have historically employed a strategy to buy up inventory at a discounted rate for sports team jerseys and apparel only to offer them at full price once those teams start performing well. That strategy can be used to build out campaigns around performance of specific teams, targeting the fanbase of those teams.

Implement a Loyalty Program For Customers

Implementing a loyalty program is another great way for eCommerce merchants to turbocharge their growth. These programs are helpful not only in establishing loyalty among the client base but can also help quickly gain market share for new product lines.

Merchants haven’t been keen on implementing such programs, focusing solely on the commitment of both time and money that they require. However, this growth hack can be very effective and in helping accomplish other goals. The treasure trove of data that loyalty programs garner of merchants’ most steadfast customers allow businesses to quickly segment their clients, understand the profiles and preferences of this audience, and allow for effective targeting and outreach.

Among U.S. merchants, 75% reaped positive results by implementing a customer loyalty program, regardless of the investment of both human and financial capital to set up the program. Based on results from dual research conducted by Bain & Company and the Harvard Business School, client loyalty programs increase client retention by 5% and yield a 95% increase in profitability.

Human Resource Planning

All these hacks that we’ve listed so far are a great list of options for merchants to test, but they are not one man shows. Just as customers and marketing has to be segmented, so do your employees. Different groups of staff must focus on marketing, security, sales, and numerous other tasks, and they must do it effectively. Merchants need to consider specific strengths, skillsets, engagements levels, and motivations of their team members.

According to research by Gallup, employees who are engaged have a 41% lesser rate of absenteeism and exhibit an increased rate of productivity by 17%. According to research from the Glassdoor Economic Research unit, there is a correlation between customer and employee satisfaction. An increase of 1.3 points in customer satisfaction can be attributed to a 1 point increase in the company rating on Glassdoor’s website.

Expand Payment Options

Consumer shopping habits have shifted towards online, while eCommerce and mobile commerce, mCommerce, have flourished. Furthermore, newer options for payments have become available as demographic trends have also shifted towards contactless and digital. At the peak of the recent market cycle, the most valuable VC-backed firm was a FinTech company, valued at $95 billion. Shoppers prefer to pay via a digital wallet or other payments apps in lieu of a credit cards.

It significantly benefits merchants to start accepting payment methods preferred by consumers. That may include processing payments which include options such as P2P platforms such as PayPal and CashApp, or mobile wallets such as Apple Pay, Google Pay, or Samsung Pay.

Invest in all The Right Tools

Yes, investing in your employees, securing payments, setting up loyalty programs, planning campaigns, segmenting clientele, propagating urgency, using cutting edge technology such as VR and AR, and expanding payment options are all great hacks. However, having the right tools at your disposal can make life a lot easier and enable your employees to be much more productive.

Meta and Snap have long touted their hardware products for VR and AR. Netflix has gone to Microsoft to seek their help in implementing an advertising campaign and platform. All the major card networks such as Visa and Mastercard have their iterations of the 3D Secure payment security mechanism. There is a plethora of options for appropriate tools for human resource management, marketing campaigns and instigating FOMO, and at Host Merchant Services, we have robust options to help merchants expand their payment options.

Conclusion

eCommerce has grown by leaps and bound over the past decade. Just in 2021, the business segment was up by nearly 50% and in 2022, the industry will surpass $1 trillion in sales revenue, ahead of some initial projections by two years. Declining tech stack costs, improving internet and payments technologies, and the budding of numerous eCommerce platforms, and a natural demographic shift to shop online have all served as tremendous tailwinds for the industry.

Most people understand that eCommerce can sometimes be complicated. However, as with most entrepreneurial endeavors, optimal results from the above mentioned growth hacks will require a certain degree of experimentation. Some may not render many results, other may not work out for your specific industry or business. However, after experiemeting, you will find certain methods an absolute must to propel your business forward.

There are many challenges that still remain which merchants often need to confront in order to power through a growth phase. Areas such as the eCommerce checkout, vigilance towards security concerns arising from changing payments and technology infrastructure, embedded payments, marketing initiatives, employee training, and customer loyalty, all demand a business owner’s attention. As a result, merchants will have to invest both time and resources to continuously improve their processes to address these individual areas. If given the right attention, these initiatives can serve as incredible growth hacks to turbocharge your eCommerce storefront.

improve cash flow for business

Best Strategies to Improve Cash Flow for Your Business

If you run a business and your sales and profits are improving every year, it’s clear that you’re doing something right. However, you should remain alert because even big and lucrative organizations might face cash flow issues if their finance processes are inefficient. 

The foundation of your business is cash flow. While a negative cash flow is bad news for businesses, a positive cash flow indicates that you could build and run a successful firm. You can put some of the suggestions in this article into practice whether you’re having trouble with negative cash flow or are attempting to boost your positive cash flow to get your business where it needs to be. 

  1. Consider Leasing 

As leasing equipment, materials, and rental properties is often more expensive than buying, focusing only on your net income after expenses may seem paradoxical. However, unless your company is overflowing with cash, you’ll need to keep a steady cash flow for day-to-day operations. Furthermore, you can pay in smaller amounts by leasing rather than purchasing, which helps your overall cash flow. Another advantage is that leasing payments are deductible as a business expense when filing your taxes.

  1. Send Invoices to Your Customers Immediately  

Sales and invoices are the lifeblood of your company, and you can’t get paid (make sales) if you don’t submit invoices to your clients. Therefore, it is essential for you to track and maintain the billing of your customers because the faster you send an invoice, the quicker you’ll get paid, which will boost your company’s cash flow. Consider migrating to cloud-based accounting software with appealing and simple-to-create invoices if your present invoicing procedure is stressful.

  1. Improve Your Inventory

If your company sells products, make a list of the fast and slow-moving items. The second thing you want to do is stock more of the items that sell quickly and less of the items that don’t, as the latter tie up your cash and have an adverse effect on your cash flow. You don’t want your money to be tied up in a single product while running a stock-handling business; instead, you want to be able to sell more products quickly, which will increase your company’s long-term scalability. You can decide to sell them off at a discount if you have many products tying up your money. Although it may be challenging to give up on a product you firmly believe in, it’s essential for the sustainability of your company that you stay objective and unsentimental.

  1. Get Your Customers to Make Invoice Payments on Time

Another strategy to enhance your cash flow is encouraging your clients to pay on time. Here are some strategies you can employ to ensure your money is not held up in debt by your customers:

  • Follow-up 

Your consumers may forget to pay you from time to time, so you may need to remind them. Sending an email a few days before the scheduled payment date, on the day the payment is due, and/or a few days after the payment deadline is a good idea. You can also call them and continue sending emails to remind them if they don’t make payments or answer your follow-up emails. You don’t need to manually send these reminders when using accounting or invoicing software because the system will do it for you when a customer is past due on their payments. 

  • Offer incentive

Another strategy to encourage your customers to pay their invoices on time is to provide discounts to consumers who pay within a specific time range. If your billing terms require clients to pay within 20 days after receiving your invoice, and you wish to obtain payments sooner, you can adjust the terms to a shorter time frame or give incentives.

  • Consider late payment fees.

You might also include late payment charges in your invoice payment policy. To accomplish this, set a regular time for your invoices to be paid and keep to it. Having a policy for late payments will assist you in receiving your money when it is due while distinguishing you as an expert in your industry. To avoid confusion and maintain transparency with your consumers, ensure you are upfront about how much you will charge and when you will begin charging them. You should also research how much you can charge for a late payment fee, as this varies by state and sector.

  • Invoice factoring

If the tactics above aren’t successful, you can seek invoice factoring. Invoice factoring can be a great option if you’re experiencing cash flow problems due to unpaid invoices. You can trade your outstanding bills to a factoring organization in return for instant cash via invoice factoring. Even though the organization gets a small percentage of your earnings, the good news is that you won’t be trapped waiting for payments from late payers.

  1. Perform Credit Checks on Customers

If a client does not wish to pay you in cash, conduct credit checks to confirm that the customer is creditworthy. It is likely that a customer with bad credit will not pay on time. Even if you strongly want to make the deal, remember that doing so would affect your company’s cash flow. If you decide to sell to such a customer, make sure to charge a high-interest rate.

  1. Increase Your Prices

Consider increasing the price of your goods and services if you’re having trouble managing your cash flow. You should keep an eye on what your competitors are charging, consider any increases in the cost of the equipment you use for your operations, assess how many people you need for your inventory assembly and services, and make the required adjustments.

Maintaining competitive prices while ensuring that you and your staff are fairly compensated for your efforts is a tricky balance. If your rates are too low, you can be undervaluing your firm because sometimes lower pricing can give the impression that it is less qualified. Because you want to create sales, but you also want to turn a profit at the end of the day. 

Even if you still want to maintain competitive prices, you must raise your rates when necessary in order to boost your cash flow and expand your business. It is important to continue monitoring market developments and adjusting your rates as necessary, even if you now think your pricing is appropriate. Failure to make changes could be terrible for your company and significantly impact your cash flow. 

  1. Use Electronic Payment 

If you pay electronically, you can put off making payments until the morning of the due date. This buying period benefits your financial flow. Furthermore, if you use a business credit card to make payments, some provide a grace period of up to 21 days, which can help you enhance your cash flow and even gain cash back rewards. However, avoid piling up debt and pay as soon as feasible. 

  1. Expand Your Sales Market 

Finding a new revenue stream for your company is another tactic that can help boost your cash flow. Here are some suggestions to start moving in the right direction for your business:

  • Offer new goods or services

Consider the goods or services your company already offers, then brainstorm other products you could offer. Here, you have room to be inventive and think beyond the box. Additionally, you want to pick a service or product that will sell well and work well with your current products.

For instance, if you own a coffee shop, you may start selling lemonade in the summertime. Likewise, if you run an event planning company, you might provide cleaning services as a part of your services. You might even consider renting out your business’s spacious outside area for events and parties on weekends or when you are not using it.

  • Develop a fresh marketing strategy 

You might want to adjust your marketing plan if you don’t wish to provide new goods or services. Consider new strategies for marketing your company, and if there are any demographics you haven’t been focusing on that might profit from your goods and services, start focusing on them. You can significantly improve your company’s cash flow by acquiring new clients.

  • Encourage your customers to make additional purchases.

You can increase your cash flow by getting your current customers to make additional purchases. Offering product bundles, where you sell related things together to stimulate increased spending, is one way to accomplish this. Additionally, you could promote goods that fit your clients’ needs. For instance, if you use an online marketplace, you might promote additional products the customer might find exciting or products that other customers have bought. If you don’t want to sell a brand-new product, this tactic can help you increase sales and cash flow.

  1. Review The Operating Costs for Your Company.

Increasing the amount of money coming into your company is only one aspect of managing cash flow. You must cut back on the expenses your company incurs. Here are some pointers to assist you in reducing business costs and managing cash flow:

  • Limit unnecessary spending

When you examine your company’s cash flow and analyze your spending, ask yourself whether the money spent on your expenses was essential, if so, how crucial they are and whether there might be a less expensive alternative.

Consider your responses to these questions and, if you can, strive to reduce your spending or eliminate any unnecessary expenses. Managing your cash flow and expenses may seem difficult initially, but you and your company will feel better if you do it.

  • Buy more efficient equipment.

Investing in better and more sophisticated technology and equipment is one way to boost your business’s speed and efficiency. The equipment may be pricey, but it will save time and allow you to spend less on wages. Investing in more efficient equipment will boost your company’s productivity, resulting in more sales and better cash flow.

  1. Talk to Your Vendors and Suppliers

Your firm needs to purchase goods and materials, but you also need to consider whether you are overspending on them. Negotiating a bargain with your vendors and suppliers or, if necessary, looking around for other possibilities can help you reduce expenses and improve your cash flow. Consider the following tips:

  • Request for bulk inventory rates

If you buy things in bulk, some vendors, especially those with whom you have a solid working relationship, might be more than happy to give you discounts. Don’t overlook talking to your vendors about this possibility since it can be beneficial. 

  • Negotiate better credit terms and prices

Try requesting discounts from your suppliers and vendors if you have a long-standing relationship with them. You might also get other reductions, better prices, and conditions in addition to bulk inventory rates. 

  • Look for other options.

In some circumstances, if your existing provider is unwilling to renegotiate terms and pricing, it might be preferable to explore better possibilities from other vendors and suppliers. Look for a provider who will sell you goods at the required price and conditions.

  1.  Take Out a Small Business Loan 

A short-term loan is another option to improve your cash flow. A lender provides you money as part of a short-term loan, which you must repay in several installments over a limited time. The lender also authorizes you to withdraw up to that amount of money whenever you need it, and you are only required to make payments on the amount you spent.

If you find it difficult to borrow money, you might want to think about getting a cash flow loan for the following reasons:

  • Purchasing stock
  • Take on a lucrative new venture
  • Get new machinery
  • Grow your company

A cash flow loan may be the perfect solution if you’re having trouble with cash flow.

  1.  Open a Business Savings Account

Consider opening a business savings account to earn interest on your money if you don’t already have one. This tactic is a straightforward and efficient way to make some money and a great technique to guarantee that your company always has a cash flow cushion. Additionally, make sure to deposit your funds in a high-yield savings account so you may earn additional interest. The best high-yield savings accounts provide interest rates more than 17 times the national average, allowing you to make more money from your savings. 

  1.  Consider a Business Credit Card With Cash Back Rewards.

A cash-back business credit card may be wise to make money off your expenditures. A cash-back credit card is a simple way to gain money if you use it responsibly and can afford the monthly payments.

  1.  Pay Your Merchants and Suppliers at the Right Time. 

Think carefully about when to pay your suppliers and merchants. Make sure to pay before the due date if your vendor gives discounts for early payments so you can save some money. If the vendor doesn’t provide discounts for early payments, pay when it is most convenient for your company. For instance, let’s say your payment is due on February 2nd. But, you know that February brings in more business than January does for your company. To report positive cash flow in January, pay your bill on the final day it is due. Nevertheless, you may want to use your company credit card if you require additional time to pay your payments. In this manner, you can gradually pay your bills instead of everything at once.

Conclusion

The outcome of efficient and effective operations is a healthy cash flow. By tracking your cash flow and taking steps to improve and maintain it, you’ll be on track to running a successful business. Even though you can increase your company’s cash flow by putting some of the above strategies into practice, you also need to ensure that you’re choosing the best course of action for your company in terms of marketing, customer service, product, or service development and acquiring new clients. Regularly reviewing and updating your business plan will ensure that you anticipate trends and challenges before they affect your profitability.

digital payments

Top Payments Industry Trends 2022

Many quickly recognize that the payments industry had an exceptional decade and a half, often citing how innovative and exciting the industry has been during that time. However, a closer analysis will easily showcase that innovation is a part of the payments industry’s DNA. Going back to the late 1940s, the introduction of the first credit card led to subsequent iterations offering new conveniences to consumers worldwide. Individuals today cannot be bothered by carrying cash. Now, a person simply swipes a phone next to another machine, and viola, a payment has been made.

Now the payments industry is on the cusp of the next iterative era. We have different technologies. Societies at large are shifting away from cash. In fact, everything seems to be moving towards a single device, the smartphone. These tiny devices pack the power to put someone on the moon into your pocket. Simultaneously, the economy has been in an expansionary phase for well over two years, with consumers looking to spend, confident from the ensuing wealth effect. As a result, money has flowed freely into the payments industry driving tremendous change by entrants equipped with technological prowess, spawning a new industry; FinTech.

In this article, we explore the rapidly developing payment industry trends of 2022 that are likely to shape consumer behaviors for decades to come.

Further adoption of digital payments

further adoption of digital payments
Further adoption of digital payments

Another trend that will likely continue in 2022 for the payments industry is the ongoing adoption of digital payments or cashless transactions. Consumers had been slowly shifting away from cash for some time. Block, formerly known as Square, PayPal, and Venmo, all addressed specific pain points allowing the smallest of transactions to be processed via non-cash means.

Just as these innovations were becoming mainstream, smartphones were also becoming ubiquitous and more powerful. Companies had started to take advantage of technologies such as near field communication (NFC) and tokenization that now allowed for the safe storage of financial details. Merchants had also started upgrading their systems with the pertinent point of sale terminals equipped to handle NFC payments.

Then, to command more consumer attention, companies traditionally classified as technology started encroaching on the payments industry. Apple, Samsung, and other major tech companies began developing digital wallets that customers can use to make payments. Then in 2015, Google announced  that it had hired Ruth Porat, a finance industry veteran, as the company’s next CFO. Universities began to notice a growing trend among MBAs to work for tech companies rather than Wall Street.

Consumers’ preference to not use cash is the payment industry’s supply-side economics. The majority of Generation X, 56%, would rather shop online than go into a mall. That percentage goes to two-thirds when looking at just the Gen Z demographic. Overall, more than 80% of the 25-44 age cohort prefer NOT to use cash.  Of course, the last couple of years forced people to shop online rather than go out. Once individuals were introduced to the convenience and ease with which they could shop online without cash, it had a lasting impact on their shopping habits. After growing 50% to $870 billion in 2021, eCommerce is expected cross $1 trillion this year.

Buy Now Pay Later

buy now pay later

Although the air has come out of some of the most highly inflated valuations of buy now pay later (BNPL) companies, the payment trend is increasingly gaining traction among customers. The drop in values is motivated by both headwinds experienced by the overall market and increased competition in which retailers and strategies by companies that aim to start offering their BNPL solutions and cut out the middleman.

BNPL is precisely what the name suggests. Customers can buy a product now and pay up later. A third party, such as Klarna, serves as an intermediary between the buyer and the seller, offering the financing to the customer, paying for the product thoroughly to the manufacturer, and usually extracting a small discount on those products. This trend has been a win-win-win. Companies like Apple and other major businesses experience increased sales while allowing consumers of all types to facilitate purchases they may not have otherwise been able to make. Meanwhile, an entirely new subsection in the payments industry has been launched.

But there are risks. Many industry watchers point to the dark connotations of BNPL solutions. Many may equate it to a less exploitive pay-day loan industry of the digital era. Also, there has been limited oversight of the industry. Although BNPL allows consumers to punch above their weight class by letting them make purchases they would otherwise may unable to afford, those sounding alarm bells warn of individuals being put in debt traps without any traditional guardrails. There is no reporting of BNPL transactions, so creditors cannot effectively foresee the liquidity clouds that are gathering for households.

For BNPL, 2022 may be the year where there is a fundamental change in regulation. Consumer Financial Protection Bureau may start mandating centralized reporting of BNPL transactions like other credit transactions to the credit bureaus.

The payment industry heavyweight incumbents are looking to expand their product offerings to include BNPL. Last Year, Block paid $29 billion for Australian BNPL solutions provider Afterpay. A few months later, PayPal bought the Japanese firm Paidy for $2.7 billion. This year, Apple announced its own BNPL service through Apple Pay. With all these dynamics in play for the payments industry, BNPL is expected to continue to thrive in 2022.

Integrated Payments will be the game changer in Customer Experience

The customer experience will be the biggest game-changer. Apart from technology, the most significant trend percolating organically within the payments industry is the focus on the customer. That has led to the survival and growth of companies that have shunned long wait times, sordid sales practices, and convoluted legalese in their terms and conditions.

Social media and online reviews have been responsible for this phenomenon. However, the technology companies have not modeled this customer-centric behavior. As a result, existing tech giants or even new startups looking to leverage their tech expertise that foray into payments this year must have the customer front and center.

Language preferences will need to be considered. That means that payment methods accepted by merchants must conform to how customers want to pay, not vice versa. As a result, payments will begin to start integrating into SaaS environments. So the likes of Salesforce.com and Automattic, which have large customer platforms offer integrated payments, leveraging their existing trust with customers to easily showcase the convenience of that process. Payment settlement without having to leave that SaaS environment after entering your payment credentials once is agnostic of the payment type, whether that’s a card, a digital wallet, a P2P account, or any of the numerous mobile wallets.

Banks will also leverage this trend to offer their version of a one-stop shop for account management of cash, any number of cards, possibly even cryptocurrencies, while providing financing, insurance, forex, or trade financing through their app. Every company, whether JPMorgan or Adobe, will look to embed payments to offer a holistic customer experience.

The Super App

There is a more significant reason for companies trying to embed payments into their environments. It is the same reason that the likes of Apple, Google, and other tech companies have a great interest in the payments industry. It is a race for platform supremacy. These companies want to be the first to become a Super App in a region.

A super app is an app that combines the most commonly used functions of a smartphone into one app. To become a super app usually requires three main parts, social media, shopping, and payments. Once these three main common uses are combined, super apps become a self-sustained and self-contained ecosystem that guarantees an indisputable level of eyeballs that the super app can control at will.

There are already examples of Super apps outside of the US. Tencent’s Wechat app in China commands over 1 billion users[MF1] . Another example is Singapore-based Grab. The company used to be a ride-hailing app and then evolved into offering other services and becoming Southeast Asia’s juggernaut Super app.

The Super app decides the best vendor for any tertiary service customers need. The super app decides which is better for the consumer: Uber or Lyft, DoorDash or GrubHub, UPS or FedEx, Walmart or Amazon. So, one of the best chances one has to ensure their app doesn’t get voted out by the kingmaker is to become the kingmaker yourself quickly. That’s why Facebook wanted to launch a digital currency[MF2] . Shopify has its own Payment solution. As do HubSpot and Salesforce.com . Even Adobe has an integrated payments system.

Apple, PayPal, and Block already have many pieces of the puzzle. PayPal has payments processing, a peer-to-peer payments app (Venmo), and has now entered the foray of BNPL with the acquisition of Paidy. Block is similar. The company processes payments and lets customers trade cryptocurrencies, has a P2P payments app called CashApp, and has also waded into BNPL with its purchase of Afterpay. Apple has the iPhone that controls the app store ecosystem, thereby the eyeballs of the billion most influential people in the world with significant discretionary incomes. The company has Apple Pay and just launched its own BNPL solution.

All these three companies now need the social media peg of the Super App stool to become a lifestyle mainstay. Jack Dorsey, the co-founder of Block, is also the co-founder of Twitter. Some have contemplated [MF3] he should turn these step-children companies into conjoining twins. Also, PayPal was rumored to be buying Pinterest [MF4] late last year.

To become a super app in China or other parts of Asia or Europe would be great. But the ultimate prize is to do it in the US, the largest economy in the world. Becoming a super app here would be the equivalent of the next trillion dollars in market capitalization unlock for that company. 2022 will be the year in which these payment industry heavyweights, which are so very close to that unlock, will look to cement super app status.

Real-time payments

Speed of payment processing and completing a transaction has been at the forefront for several years now. We started to shorten the time of peer-to-peer transactions within specific platforms such as Venmo and Cash App to almost real-time. Even time for retail payment processing has improved to next-day funding and, very recently, same-day financing. These are indeed exceptions at present, and the rule is still payments take almost three days to settle and have payments received by the merchant.

The good thing is that real time payments have become the norm rather than the exception and seem to be on the horizon. The technology behind real time payments has been in place for 50 years. It is already implemented in many parts outside of the US. In 2019, the Federal Reserve launched an initiative called FedNow. The program will let merchants, consumers, and financial institutions carry out business as usual. The backend rails work in tandem to share payment details, authenticate them, and settle payments in real-time. FedNow will be available around the clock, every day of the year.

The benefits of real-time are clear. The lines between cash and cashless transactions blur while eliminating cash handling headaches for both merchants and consumers, especially since the system is always available. But there are risks that will need to be considered and mitigated. We already hear of the swath of the population that is unbanked. By inviting technology into payments, those problems may be exacerbated. Also, the costs associated with implementing this infrastructure for financial intermediaries are unclear. As a result, it may be unclear how the adoption of FedNow may be impacted.

FedNow is expected to be fully operational in 2023, and over 200 financial institutions are currently working with the Federal Reserve on the project.

Security

security

Security sounds like one thing that tops the list of trends every year. Each year brings an additional set of new trends and challenges, risks, and at least one major security scare that keeps everyone at the edge of their seats. 2022 was ushered in with a warning by the US President to beware of Russian cyberattacks in response to economic sanctions levied on the country by the international community, led by the US. Cyberthreats emanating from Russia is not new. The government has for years engaged in cyber attacks on Ukraine. The country is believed to be behind the 2020 SolarWinds hack, which, over several months, compromised sensitive data of significant firms worldwide as well as the largest government agencies, including the US Department of Homeland Security and the US Treasury Department.

Cyber espionage at a sovereign level is not the only threat. Year after Year, major business and technology titans report of security lapses compromising data impact millions, if not billions, or personal records. In 2021, Facebook reported a data breach affecting 533 million people [MF5] worldwide. The year before that, the world learned that Microsoft had accidentally leaked the company’s customers’ online records of more than 250 million. In 2019, the 11th largest bank in the US by asset size at the time, Capital One Financial, disclosed that the company experienced a data breach in which over 100 million customers’ personal account information was hacked.

Some of the largest, most technologically advanced companies and government agencies succumb to often small-time nefarious actors who identify and exploit obscure technology loopholes. As a result of these ongoing and persistent threats, security remains at the top of mind for governments, businesses, and consumers alike. This is even more pronounced as the payments industry wades into technologies and trends still in their infancy, such as cryptocurrencies, mobile wallets and payments, and mass adoption of cashless transactions.

The payments industry has been fashioned by decades of innovations. The trends that brought the industry to this juncture are likely to continue at an exponential rate. Society adopts digital payments at an accelerated pace, and merchants continue to adjust their business models to these changing dynamics. You wouldn’t be wrong if you believed the spending habits of consumers had changed dramatically. The truth is that consumers’ living habits have changed. Both living habits and working patterns have converged into a single device. Technology has propagated that, and the resulting payment advancements have further facilitated it. The payments industry in 2022 will further cement trends that have been developing over the past decade and have started to really flourish in the past couple of years. However, companies must remember that feedback from the consumer will be vital to their success. Those consumers will form the trends, so market research seeking their feedback will be critical.


 [MF1]https://en.wikipedia.org/wiki/WeChat

 [MF2]https://www.ft.com/content/cfe4ca11-139a-4d4e-8a65-b3be3a0166be

 [MF3]https://www.economist.com/business/2021/03/13/should-jack-dorsey-combine-twitter-and-square

 [MF4]https://www.bloomberg.com/news/articles/2021-10-20/paypal-said-to-explore-purchase-of-social-media-firm-pinterest

 [MF5]https://about.fb.com/news/2021/04/facts-on-news-reports-about-facebook-data/