How to Use Payment Analytics to Grow Business?

Be it through cash or any other mode, timely payments are essential to growing any business enterprise. In the modern age, companies are now accepting cashless forms of payment. At the global level, the volume of cashless payment transactions will reach 2.3 trillion by 2027. 30% of these transactions use payment methods like account-to-account transfers, digital wallets, and QR-based transactions.

As the volume of payment transactions increases, so does the payment-related data. When properly leveraged, payment data is a massive source of customer and business insights. Companies can use this data to improve their customer service, reduce costs, and ultimately grow their business.

Effectively, payment analytics can help them make the most out of payment data. How does payment analytics work? Let’s find out.

Understanding Payment Analytics

Payment analytics is the technology used to collect and analyze data from payment transactions in any business. Be it through physical or online transactions, payment analytics analyzes data including:

1. Which item was purchased?
2. What was the purchase amount?
3. What was the time of the transaction?
4. Which payment mode was used to complete the transaction?

When used correctly, this payment-related information is a valuable data source for organizations. Additionally, payment analytics can collect and process payment data from various sources including credit or debit cards, bank transfers, and mobile wallets. With this technology, organizations can gain valuable insights into the following:

– Visibility into their customer’s shopping behavior and pattern.

– Individual customer transactions including successful and failed payments.

To be effective, payment analytics tools work with different types of payment data including data related to transactions, customers, products, and payment processing.

Common metrics used for Payment Analytics

To generate accurate insights, payment analytics tools collect and analyze various payment-related metrics. Here are some of the common metrics:

• Payment type: This metric indicates the common payment type used by their customers. For instance, if customers prefer credit cards, organizations can negotiate lower transaction fees or even offer discounts.
• Value of the transactions: This metric indicates the transaction value (minimum, maximum, average) by dividing the total sales value by the number of transactions. This metric is useful for companies to improve their average order value.
• Transaction volume: This metric indicates the number of transactions daily, monthly, or by season. Accordingly, organizations can adjust their inventory supply and demand based on the volume.
• Transaction velocity: This metric indicates the rate of recurring transactions using the same payment method. With this metric, organizations can detect possible fraudulent transactions.
• Payment fees: Using this metric, organizations can set the appropriate range of payment fees for retail merchants, without reducing their profits.
• Customer churn: This metric indicates the rate at which the organization is losing its customers. For high churn rates, organizations must address the reasons why customers are leaving the business.

Benefits of Payment Analytics

How can organizations leverage payment analytics to grow their business to the next level? Here are some of the benefits of using payment analytics:

1.Competitive performance

Through efficient analytics, organizations can benchmark their market performance against their competitors. For instance, how effective are their marketing campaigns in driving more customer transactions? Or are they experiencing more failed payments than their competitors?

Using these insights, organizations can take steps to reduce their failed payments or customer churn.

2.Customer behavior and industry trends

Payment analytics is also useful in understanding customer behavior. With accurate forecasts, organizations can prepare for an “uptick” (or slowdown) in customer demands. Besides, payment analytics is a good measure for understanding prevailing trends in the industry. For instance, do customers prefer online channels or in-store purchases? What are the focus areas for improving the customer experience?

3.Fraud detection

Payment frauds can cripple any business and create a negative brand experience for customers. Through payment analytics, organizations can measure the current refund and chargeback rates. Advanced analytics reveal the most common fraud patterns and how the company is losing money due to fraud.

4.Commonly used payment methods

Through payment analytics, companies can analyze the common forms of payment methods preferred by their customers. For instance, if customers prefer mobile payments, then it’s the right time for companies to invest in more mobile terminals.

Additionally, they can analyze payment methods used across channels, based on:

• -Regions with the most online purchases or transactions
• -Store locations generating the most sales transactions
• -Payment methods with the most successful (or failed) transactions

How companies can use Payment Analytics

For effective analytics, companies must first learn to collect and use real-time payment data. Here’s how they can execute this:

1. Identify the right and relevant data sources that can feed data into payment analytics tools.
2. Collect and organize the data in cloud-powered data repositories.
3. Structure the payments data to feed into analytics-powered algorithms.
4. Identify and deploy the right analytics tools to analyze the collected data.
5. Identify the relevant data points and refine them for accurate insights.
6. Access the analytical reports to check if the business is growing in the right direction.

With the massive data volumes, it’s challenging for companies to implement effective data analytics, while ensuring data compliance and security. They can simplify this process by partnering with a solution provider experienced in payments-related solutions.

Conclusion

Effective payment analytics can go a long way in delivering business value in the age of digital payments. By monitoring payment metrics, analytics tools can gauge the overall financial health of any customer-facing organization.

At Verinite, we are in constant touch with the latest innovations in digital payments. With our wide variety of payment solutions and industry expertise, we enable our banking customers to innovate using the latest digital technology. Besides, we are transforming the payments domain with our expertise in retail payments and open banking.

If you want to know more or partner with us, get in touch now.