Merchant Feedback: The Not-So-Secret Key to Success

Payments providers must move beyond merely transactional relationships to build lasting business.

The global payments market is becoming an increasingly attractive space for competition. In 2019, global payments revenue was a massive $2 trillion, which is drawing increasing attention from new players that wish to rapidly jump in the payments and fintech space to grab market dominance.

Just within the U.S. merchant-acquiring space, the shift to electronic transactions has brought success to marketplace platforms like Amazon, eBay, and Etsy, increasing the pressure on traditional payments and fintech players to provide their merchant customers with exceptional customer experience and digital selling options. That, in turn, will allow them to better compete and thrive in a cutthroat marketplace.

Merchants traditionally have not been closely involved in a fintech player’s strategy and product-development process. But there is now an opportunity for payments-technology providers to work closely with their customers to develop solutions that meet merchants’ expectations and help them grow. Fully understanding merchants’ needs will help payments providers build superior products and create a technology strategy that allows them to solidify their relationship with the customer as well.

A Reliable Roadmap

In today’s increasingly digital marketplace, payments providers can look to merchants for invaluable insight and implement a product-development approach that delivers a reliable roadmap for market leadership.

According to a Harvard Business Review survey, it is up to 25 times more expensive to acquire a new customer than to retain an existing one. But, more important, pleasing direct users helps businesses to advance their product-development strategy while strengthening the customer relationship. By improving customer retention rates just by 5%, businesses can boost their bottom line by as much as 95%.

Investing in existing customers has long been recommended as a top strategy for business success. By allowing merchants to share feedback that guides the product-development process, payments vendors can build deeper and stronger relationships with their customers, who will enjoy getting the opportunity to contribute in the development of the very solutions that they’ll be using every day.

Building customer intimacy and loyalty that goes beyond today’s transactional relationships between merchants and payments vendors will create long-term revenue opportunities and enable the creation of superior payments tools. This will help traditional and smaller fintech and payments players to compete with their larger marketplace-platform rivals, which already benefit from their ability to invest heavily in technology and tap into vast resources to grow their business.

Technology, especially payments technology, is rapidly changing, which means payments processors need to keep up to ensure merchants are able to better interact with their key consumers. Merchants in the United States don’t always have great technology at their disposal, and they lag in their use of modern payments technologies compared to players in other major markets like China.

As U.S. consumers become more demanding in their need for digital-payments access and purchasing power, there is an opportunity for payments-technology providers to work closely with their merchant customers to identify and implement much-needed technological improvements.

Payments providers can upgrade a merchant’s tech suite to help it with its business needs, whether this is enabling digital or social selling or allowing access to better credit or banking technologies. Investing in technology is bound to enhance a merchant’s return on investment, but this requires an investment from the payments provider to work closely with merchants.

Listen And Understand

Customer-centricity is a term that many businesses understand well, but the payments and fintech space hasn’t always paid close attention to it. Traditionally, payments and fintech players have relied largely on the ability of their technology stack to appeal to their customers.

Creating a business model that helps to reach, connect, and engage with merchants is a great way to ensure your business’s success. This, again, requires payments vendors to actively listen to customers and understand their business needs.

Payments players need to invest more in their customer service, logistics capabilities, and operational footprint to reflect the needs of their customers. Payments companies that incentivize their sales, customer-service, and technology staff to be more customer-centric will undoubtedly drive revenue growth and market leadership.

Stone’s pole position in the Brazilian market can be attributed to using customer feedback to build out its unique operational footprint and distribution model, which allows the company to be close to its customers. There is no reason this approach cannot be replicated in markets like the United States.

For too long, businesses in the payments and fintech space have operated in a heavily transactional manner with their customers. The U.S. payments market is ripe with opportunity and enjoys a healthy merchant population, which is in need of business modernization, enhanced technology, and customer-centric processes.

Achieving sustainable growth in the U.S. payments space is not an easy task, as there are many players in the marketplace and the list of competitors is only growing. Payments-technology players that take the time and energy to invest in their customer relationships, in addition to implementing a strategic customer-feedback process, will have a significant advantage compared to newer players that can’t harness these valuable relationships.

Routinely relying on customer feedback and insight will help payments vendors gain that first-mover advantage repeatedly to bring intelligent solutions to their merchant customers and create a business model that is futureproofed and set up for success.

—Augusto Lins is president at Stone Pagamentos SA, Sao Paulo, Brazil.