Simple to Complicated: The Payments Pyramid
Where you are at in your payment maturity can sometimes be hard to understand or decipher if you are relatively new to payments.
After thinking about it for a little bit, I thought I’d post some thoughts to help you think about your level of sophistication.
Level 1: Keep it Simple
The average ecommerce, online payments system will support a single currency checkout experience. This is in part because if you are serving a single market (like the United States), you will be fine supporting USD 99% of the time. The outlier would be if you were supporting crypto currency (although I don’t currently see a practical need for this).
Shopify, SquareSpace, and other ready-made platforms are built with simplicity in mind.
Level 2: Expand your Business
When your company is first starting out – for the most part you focus on building products/services for a single market.
But as you grow – as I’ve seen with multiple companies in the past, then you are bound to start thinking about expanding who you can sell to outside of your initial market. A good example would be to start selling in Canada after the US, since you won’t have to translate your website into a foreign language off the bat (unless you want to abide by all Canadian rules). And because if you are shipping anything, sending it to Canada is much easier than shipping to Europe.
Equally if your service is digital only, you could take your content and likely make it work in other English speaking countries without much trouble, but you’d still need to support the local currency – like GBP in the United Kingdom.
Now you need to support USD and CAD or GBP with your thriving business. You may still be able to support your business with the same processor you started out with to begin with depending on their capabilities and speciality in foreign transactions.
Level 3: Payments are getting complicated
Depending on your appetite for risk – you might choose to double-down on your payments strategy and add an additional processor to mitigate payments risk.
Maybe you are figuring out if you want to add a new vendor or you decided that its smart to have a fall-over mechanism in place so that if one payment provider goes down, you have a back-up option ready to cut-over to just in case.
This starts to get really complicated if you have a subscription business, because unless you have stored network tokens that can be universally charged – good luck cutting over from one vendor to your backup without disrupting your business or customer experience.
Level 4: Reaching for the Sky
A mature company will support multiple currencies and multiple processors.
There is no single payment processor that universally is great at everything. Although there is consolidation in the market and the ability to process a payment is a commodity – there are processors that specialize regionally to help optimize your customer’s payments experience.
By the time you are at this level, you have customers in APAC, maybe Africa, Latam or Europe on top of North America. You are likely processing in multiple currencies.
The levels described above are a roadmap for growth.
Your business’s ability to grow is tightly correlated with its ability to support the preferred payment methods of your customers and ability to provide a friction-free experience. The infrastructure you build must be maintained, tested and continuously monitored if you want to stay in business.
In this post, many of the nuances of payments have not been covered (collection of taxes, fraud, chargebacks, remittance, settlements, GDPR, PII, PCI, Accessibility, POS vs online, payment methods). But each one of these nuances requires additional up-leveling of your team’s skillset.
Think about where you are today, where your ambitions for the future sit and who your ideal customers are and you can start to ask the kind of questions that will take you from Level 1 to Payments Nirvana.