Payment professionals are well aware of the benefits of payment technologies now entering the marketplace, but concerns about cost and compatibility may delay their implementation, according to Managing Payment Technology Innovation, a study conducted by Capital One and the NAPCP, the professional association of the commercial card and payment industry.
Based on a survey of 136 payment professionals from 21 sectors, the study revealed that payment professionals appreciate the heightened security, streamlined operations, enhanced analytics, lower costs, and, in some cases, additional revenue to be gained from these technologies. However, survey respondents identified three major barriers to implementation: insufficient information to make an informed cost-benefit analysis; insufficient leadership commitment; and lack of knowledge about sophisticated and cutting-edge payment technologies such as blockchain and tokenization.
“Given the rapid pace of innovation we’ve witnessed in our industry, there is a lot for payment professionals to digest,” said Diane McGuire, CPCP, NAPCP Managing Director. “Our research points to the constructive role that industry associations like NAPCP can play in educating enterprise leaders about the value of new payment technologies, while at the same time keeping payment and procurement professionals informed about new payment technologies as they emerge.” More than 78 percent of respondents reported that their organizations send professionals to industry events and conferences, and more than 55 percent said their organizations send professionals to continuing education conferences.
The study also found that payments providers could also play a role in education. “There’s a real thirst for knowledge and a real opportunity for payments vendors to recast themselves as partners, providing ongoing support to organizations trying to make sense of new payment technologies,” said Rajsaday Dutt, Head of Commercial Card Product Strategy at Capital One. The study also suggested that payments providers should emphasize the user experience in the design of their products. Some other approaches that providers could build into their products to facilitate implementation and ease of use include application program interfaces (APIs) for easy plug-and-play, human-centered design, and natural language search.
The study found that acceptance of specific payment technologies varies considerably. Survey results suggest that one reason ePayables and EMV chip technology are so well accepted is that commercial payment professionals understand their benefits and applications. For instance, all respondents could identify at least one advantage of ePayables, and currently almost forty percent of them have adopted it with another 20 percent considering it. By contrast, unfamiliarity with blockchain and tokenization is an impediment to their adoption. Just 13.1 percent are aware of tokenization, and only two respondents say their organizations had implemented tokens.
Providing education and easier-to-use products is especially critical because organizations themselves often do not have the resources to explore payment alternatives. A mere eight percent of respondents said their organizations support technology pilot programs, only 10.2 percent reported that they allocate funds for investigating new payment technologies, and just 22.8 percent said they have a cross-functional committee that monitors the new technologies. “The study revealed that there is a vacuum that associations and payment providers like us can fill,” said Dutt from Capital One.
The size of an organization affects its rationale for adopting new payment technologies:
- Professionals from organizations with revenues over $2 billion value the financial benefits of new payments technologies, such as reducing total process costs and providing working capital.
- Organizations with revenues from $500 million to $1.9 billion are drawn to their process advantages, such as providing administrative efficiency, automating the AP/AR processes, and providing enhanced backend/post-transaction analytics.
The ePayables adopters in the survey identified four principal arguments for implementation:
- Simplify payment demand (73.3 percent)
- Earn revenue share and/or rewards (68.4 percent)
- Reduce process costs (55.3 percent)
- Increase security and controls (44.4 percent)