Frequently Asked Questions About Payment Processing

The digital payments market is projected to reach $16.62 trillion by 2028. All businesses should be familiar with the basics of payment processing to remain agile in a competitive industry and ever-expanding landscape. We’ve answered some frequently asked questions (FAQ) about payments and their processing to help you get started.

Payment Methods

Understanding the terms and systems that go into payment processing gives you the edge to offer your customers frictionless, secure and simple ways to pay. Here are answers to some common questions about payment methods.

1. What Goes Into a Transaction Flow?

The transaction flow consists of various participants and components, including:

  • Customer: The customer is the individual or organization paying for services or products.
  • Merchant: The merchant is the service provider or business receiving payment from the customer.
  • Payment method: The payment method is how the customer pays—via check, credit or debit card, cryptocurrency, or electronic wallet.
  • POS system: The point-of-sale (POS) system is a digital platform or physical device used for the transaction. The POS system can be on an e-commerce website, app or terminal point at a store.
  • Payment gateway: The payment gateway safely captures and sends information from the POS system to the acquiring bank or payment processor. This gateway encrypts and secures the data during the transaction.
  • Payment processors: The payment processor is a third-party company managing the technicalities of the transaction. These technicalities include validating information, receiving authorization, and facilitating communication between the acquirer and issuer.
  • Acquirer: The acquiring bank, or the acquirer, is the financial institution where the merchant’s account is. The acquirer receives payments on behalf of the merchant, processes transactions for the merchant and settles the funds in the account.
  • Issuer: The issuer or issuing bank is the financial institution that authorizes or declines the transaction on behalf of the customer. Issuers consider customer account status, the validity of the transaction and available funds.
  • Card network: The card network includes organizations like Mastercard, Visa and American Express. These organizations provide the infrastructure, rules and standards for processing transactions.
  • ACH network: The Automated Clearing House (ACH) network is used to move money between bank accounts in the United States electronically. Nacha, previously called the National Automated Clearinghouse Association, runs the ACH network and ensures the payment system is safe and efficient. Transaction types include business-to-business, consumer and government transactions.
  • Payment security: Payment security consists of a range of technologies and standards to ensure transactions are secure from breaches and unauthorized access. Security involves encryption, tokenization and compliance with the regulations set by the Payment Card Industry Data Security Standard (PCI DSS) Council or the ACH network for bank-based payments.
  • Settlement: Settlement and reconciliation are the processes of transferring funds from the issuer to the acquirer and updating the transaction records to reflect the funds transferred.

2. What Is Payment Authorization?

Payment authorization is when the issuer verifies that the customer has the available funds and confirms that money can be released from the customer’s account. The issuing bank conducts thorough checks before authorizing transactions.

3. What Are Payment Settlement and Operations?

Payment settlement starts with customer payment initiation and ends once the funds are deducted from the customer’s account and paid to the merchant.

During settlement, the issuing bank verifies the transaction details and authorizes money to be debited from the customer’s account and credited to the merchant’s account. This settlement communication operates through the payment network.

4. What Are the Needs and Considerations of E-Check and Credit Card Payments?

E-checks and credit card payments have a few key differences:

  • E-check payments: The Automated Clearing House (ACH) merchant network processes e-check payments between participating financial institutions. E-checks are categorized as electronic funds transfers (EFTs). They work like ACH transfers with routing and account numbers, facilitating funds transfer between accounts. Electronic checks can save your business on payment processing costs—they’re typically more affordable than card transactions.
  • Credit card payments: Card authorization occurs when the merchant accepts a card payment and the payment processor reaches the card issuer. The issuing bank ensures the credit card is valid, verifies the transaction amount and available funds, and does security checks. The issuer will deliver a two-digit code approving or declining the transaction. Credit card transactions are convenient for customers, especially those who prefer to have a range of payment options.

5. What Are the Top Digital Wallets and How Do They Work?

The top digital wallets in North America include:

  • Apple Pay
  • Google Pay
  • PayPal
  • Venmo

Digital payment wallets use software that links your payment details from your bank account to the vendor you’re paying. Some apps offer open wallets that allow contactless online and in-store payments.

Electronic wallets make payments easy for customers—there’s no need to keep card details on hand to pay, and the information is stored in one central, protected location.

6. What Does Accepting On-Site Payments With Devices and POS Entail?

If you want to accept on-site payment with POS systems and devices, you need the associated hardware and software. You’ll also need a payment solutions provider.

The necessary hardware includes a card acceptance machine, like a POS terminal. The hardware connects to software that processes transactions via the provider’s solution. POS terminals can accept several types of payments, including contactless payments, credit and debit cards. Customers can tap, swipe and insert cards depending on their preferences.

Processing Models

Processing models allow transactions to happen between the issuer and the acquirer. Here are the related questions answered.

1. What Is a Payment Gateway?

A payment gateway links all entities involved in a transaction and helps systems communicate with each other. Payment gateways establish secure connections to transmit data and process the transfer of funds from the customer’s account to the merchant’s to complete payment.

2. What Is an Enhanced Payment Gateway?

An enhanced payment gateway is a robust version of a standard payment gateway. This solution goes beyond processing payments, leveraging advanced fraud detection capabilities. Enhanced payment gateways may also feature subscription billing and customizable checkout options.

3. What Is an Acquired Payment Gateway?

An acquired payment gateway is a payment processing solution offered by a payment service provider. This solution lets you securely receive customer payments using online wallets, debit cards and credit cards. The gateway handles authorization, transaction processes and the transfer of secure funds into your account.

4. What Is a Payment Facilitator?

A payment facilitator (PayFac) simplifies the setup of payment processing for your business, allowing you to accept in-person and online payments. The PayFac has a master merchant account. Your business becomes a sub-merchant under the PayFac, eliminating the lengthy underwriting process. The PayFac enters a contract with the acquiring bank and manages the approval process on your behalf.

5. What Does It Mean to Be a Third-Party Sender?

A third-party sender (TPS) facilitates ACH transactions by having funds flow through its account. Third-party senders act as intermediaries, making payments on behalf of customers. This approach provides little protection in terms of risk management and adherence to safety standards. A TPS typically comes with higher transaction fees because of the higher involvement in the flow of funds.

6. What Is the Difference Between a Third-Party Sender and a Third-Party Service Provider?

A third-party sender directly receives and transmits funds through its bank account on behalf of a company. A third-party service provider does not hold funds and transfers funds to ACH network users.

When third-party senders pay on behalf of a client, the risk involved tends to raise the price. A TPS solution can also cause customer onboarding friction.

Leveraging a third-party service provider (TPSP) offers greater security, as these entities strictly adhere to regulations and don’t automatically move money. You’ll also benefit from faster processing times, better customer onboarding, flexible transaction limits and lower transaction fees.

Pricing

Payment processing pricing is also an essential consideration for your business.

1. What Is an Interchange Fee?

Interchange fees make up the majority of payment processing fees. You pay interchange fees to financial institutions that manage the customer’s card payments. These are standard charges that come with the convenience of using a specific payment method.

2. What Is Pass-Through Pricing?

Pass-through pricing includes interchange, assessment and payment processor fees. These fees are typically itemized or combined monthly on a statement for a merchant to pay. Pricing structures differ, so it’s important that your business partners with a competitively priced payment solutions provider.

3. What Is a Flat- or Fixed-Rate Model?

A flat- or fixed-rate model charges your business the same processing fee percentage regardless of the card used. The flat-rate percentage is typically based on the cards with the highest interchange rates.

4. What Is a Convenience Fee?

A convenience fee is an additional credit card or online payment charge. It’s sometimes charged by a payment processor when a customer does not pay by cash, check or ACH. It can be applied as a split charge or split fund.

5. What Is a Split Charge?

With a split charge, the payer sees two entries on their statement—one for principal and another for convenience.

6. What Is a Split Fund?

Merchants can set up predefined splits to go to different bank accounts. Split funds come in handy when your business charges convenience fees that need to go to a separate account from the transaction amount. Debit and credit funding bank accounts are usually set up this way for merchants.

CSG Forte offers split funds and handles the setup to ensure hassle-free allocation.

Integrations

Integrated payments connect your POS system to a payment processor, offering streamlined transactions.

How Does Integration Impact the Payment Experience?

Integrated solutions enable you to offer a better payment experience. Customers can pay using various methods without the need for different payment terminals or manual processes, making transactions frictionless.

With CSG Forte, integrated payments are an all-in-one solution that benefits your business and customers.

 Payment Security

No payment processing FAQ would be complete without info about payment security.

1. What Is Tokenization?

Payment tokenization is a security measure that uses unique tokens instead of transmitting sensitive payment data during transactions. These tokens protect information like banking details, primary account numbers (PANs) and credit card numbers.

2. What Is the Payment Card Industry Data Security Standard?

PCI DSS is a set of standards requiring all businesses that handle credit card or payment information to maintain a secure environment. These compliance standards apply to all organizations, no matter the size of your business or the amount of transactions it handles.

3. What Are the Top Considerations for Nacha Compliance?

Nacha offers rules and requirements for any organization leveraging ACH payments. Here’s a brief overview of what Nacha expects your business to do:

  • Secure payment transmission and storage of sensitive information.
  • Store hard copies of documents with customer information safely.
  • Validate customer routing numbers.
  • Guard against possible fraud.
  • Verify customer identities.
  • Outline and enforce an official security policy.

4. What Is End-to-End Encryption?

End-to-end encryption (E2EE) is a way to safeguard your customers’ data during transactions. This encryption prevents data breaches and unauthorized access to sensitive information like credit card or bank account details. Sensitive information is encrypted and securely transmitted from one point to the next, allowing your customers to pay you safely.

The payment gateway performs the encryption when the customer initiates the payment, and it decrypts the information when it reaches the acquirer.

5. What Is Point-to-Point Encryption?

Point-to-point encryption (P2PE) is an encryption method established by the PCI DSS Council. It offers excellent protection, using an algorithm to encrypt card information when the customer initiates payment. The unreadable code is transmitted to the payment processor with a decryption key. The decryption happens virtually, so your business never comes in contact with customer payment information.

While P2PE and E2EE are similar, the PCI DSS Council only accepts point-to-point encryption.

Ready to Streamline Your Payment Solutions?

CSG Forte will help you scale your business rapidly and make payments frictionless for you and your customers. Each year, we help process over $84 billion of payment transactions.

Contact us online to simplify and secure your payments.

Optimize the Payment Journey for Your Customers

Customer payment experiences have evolved in recent years. Digital payments are leading the pack, providing multiple ways for users to transact with businesses. By optimizing the payment journey for your customers, you can enhance their experiences and reduce late payments.

What Is the Payment Journey?

The payment journey is the path customers take when buying a product or service from your organization. The journey extends from the consumer engaging with your company about what they want to the steps they take to pay for the solutions you deliver. You want billing, invoicing, and transactions to be hassle-free from start to finish, removing barriers and making payments seamless and personalized for your customers and merchants.

The goal of a streamlined payment journey is to replace any friction in the process with solutions that provide convenience and choice.

How to Improve the Payment Journey

Enhancing the payment journey leads to better user experiences and increased customer satisfaction. A happy customer is likely to return and advocate for your brand. Here are four ways you can improve the payment journey.

1. Accept Multiple Forms of Payment

You can optimize the payment journey and meet customers where they are by allowing multiple payment methods, including credit cards, digital wallets, or bank transfers. The more options you provide, the fewer reasons customers will have to postpone payment.

2. Provide Recurring Billing Options

Subscription or recurring billing provides:

  • Consistent revenue: Recurring billing gives your business a predictable revenue stream. Regular payments increase business stability and cash flow. Using systems like CSG Forte Account Updater automatically updates account info so you rarely miss payments and can focus on steady revenue recognition.
  • Convenience for customers: Subscription services streamline payment for customers. Your customers won’t have to complete payments manually, saving them time and effort. Convenience enhances the customer experience and increases brand loyalty.
  • Efficient operations: Recurring billing reduces your team’s administrative workload. Instead of manual interventions, you get automated solutions that optimize your processes and enable you to focus on more impactful tasks.

Securely gathering and storing sensitive information is key to benefit from recurring billing. Using an encrypted platform will help you manage data effectively and make cancellation easy for customers.

3. Offer Multiple Channels to Pay

To improve your payment journey, you must allow customers to select their preferred channels to pay. The seamless transition between channels makes for frictionless payments. It also lets customers choose how they interact with your business. A multichannel payment platform will allow your customers and merchants to use email, phone, in-person, text, or live agent channels to pay bills and complete transactions.

4. Let Customers Buy Now and Pay Later

Merchants are increasingly adopting buy-now-pay-later (BNPL) models. Offering the option to pay in installments may:

  • Improve conversion rates: BNPL lets your customers bypass full upfront costs. Smaller installment payments lower the financial barrier to transactions, leaving customers more likely to make impulse purchases that raise your conversion rates.
  • Attract new customers: The ability to pay in installments can make purchasing an easier choice for new customers who might be put off by prices initially. BNPL also offers an alternative method to credit cards, which may be a plus for some consumers.
  • Increase customer loyalty and repeat purchases: Customers with a positive experience of your BNPL services are more likely to make repeat purchases and advocate for your business, driving word-of-mouth referrals.
  • Reduce cart abandonment: Customers abandoning their carts is a serious problem e-commerce businesses face. BNPL alleviates cart abandonment due to financial barriers, giving shoppers more time to complete their purchases.

The Benefits of Frictionless Payments

An integrated payment system is an investment in your business. Modern customers expect seamless payment experiences, and they might turn to a competitor if they find paying bills or completing transactions out of sync with their preferences.

A seamless payment journey and system has several benefits, including:

  • Saving your business money and time in the long run
  • Increasing customer loyalty and confidence
  • Reducing risks associated with payments
  • Maximizing the probability of repeat purchases and on-time payments
  • Offering flexibility in terms of payment channels
  • Enhancing your payment security features
  • Giving your business a competitive edge in the market

How CSG Forte Will Help You

CSG Forte has decades of experience helping businesses like yours optimize the payment journey. We know how to do payments right, and we’ll come alongside your business to streamline the process for your customers.

Take advantage of multichannel payments, customized journeys and secure solutions to help your business succeed.

Multichannel Payments

CSG Forte Engage enables your customers to choose their preferred channels during the payment journey. Customers can pay by text, phone, email or through a live agent and change their method seamlessly as needed.

Customized Payment Journeys

Forte Engage assists your business in deploying branded customer payment journeys for recurring, future-dated and one-time payments.

You can easily send customers invoices with confirmations, late notifications and payment-due prompts via their preferred channels. These highly personalized interactions can help reduce outstanding amounts that are past due.

Secure Payments

Through the call center payment processing feature of the Forte Engage solution, live agents can rapidly generate personalized invoices and send them to customers online.

The agents leverage innovative NanoSite technology to complete transactions without your customers needing to provide their credit card or bank account info. These secure NanoSites mean you won’t have to worry about data leaking. You’ll also benefit from a solution that offers prompt payments—a win-win.

Enhance Your Payment Customer Experience With CSG Forte

At CSG Forte, we partner with businesses to help them scale while offering superior customer experiences. We use an intuitive, unified payment platform that adapts to your evolving needs. Our payment solutions will reduce operational costs, simplify processes and help your business build a solid reputation for secure transactions.

With our decades of experience, award-winning technology and vast network of partners, you can count on us to streamline your payment journeys and enhance your interactions with customers.

Contact our team for frictionless payments, optimized journeys and first-rate customer experiences.

What Are Electronic Payments and How Can They Help Your Business?

Imagine. You want to purchase a doughnut at the local bakery, but instead of handing over your credit card, you reach into your pocket and pull out a few grains you picked on your farm earlier that day. After all, the baker can use the grains to make more dough. Seems crazy, right? However, the barter system was a cornerstone of transactions in our early history. Lucky for us, advances in payment acceptance mean you no longer are tied to your farm (in fact, you don’t even need to have a farm nowadays). But the biggest advance in payment acceptance isn’t particularly tangible. Why? Electronic payments. The invention of electronic payments makes receiving and making payments online, via mobile and at the point of sale a whole lot simpler.

 

What Are Electronic Payment Systems?

Electronic payments are any payment completed through an electronic medium. These methods include credit and debit cards, ACH payments and virtual cards. These electronic methods replace physical checks or cash, and they can occur at the point of sale or online. For example, consumers can use their virtual rewards card to pay for their coffee at the drive-through.

 

The Benefits of E-Payments

With e-payments, users can enjoy:

  • Payment ease: Many forms of e-payment allow users to pay with as little as a tap. With an easier payment process, you improve the user experience for payers and payees.
  • Reduced processing costs: Processing checks involves printing, signing and mailing, requiring manual labor and material expenses. Electronic payments eliminate these processes, saving you money on payment processing.
  • Greater visibility: With electronic payments, you can track transaction status, access financial metrics and follow audit trails for compliance needs. These tracking capabilities are often integrated into e-payment platforms, so following the status of your financials is much easier than when manually processing physical payments.
  • Improved security: Handling cash or checks can easily lead to theft or fraud. With electronic payments, you eliminate passing physical money between hands, and you can enjoy built-in encryption that protects user data during transactions.

 

Types of Electronic Payments Systems and Their Advantages

There are various types of e-payments, and they all offer unique advantages.

ACH Debit Pull

The Automated Clearing House (ACH) processes electronic transactions between bank accounts. In the case of an ACH debit pull, a payee initiates a pull of funds from a payer’s account. One of the most common examples of a debit pull is direct deposit for employees.

These debit pulls are typically low-cost, and sometimes they’re completely free. The most significant advantage of this electronic payment is it eliminates the need to collect and process checks or deposit cash.

ACH Credit Push

An ACH credit push is the opposite of a debit pull. Rather than the payee pulling the funds from the payer’s account, the payer pushes the amount out of their account and to the payee. Credit pushes are common for a range of online payments where the vendor is an established company. ACH payments often come with lower processing fees than credit cards, making them a practical option for some businesses.

Credit Cards

With a credit card, a user borrows money from their card issuer up to a certain predetermined limit. The cardholder is then responsible for paying this borrowed money back and can be charged interest for outstanding balances.

In the case of e-payments, credit cards are fast and accessible. This secure payment method is easy to use at the point of sale. With the growing use of chip payments with credit cards, every transaction has a unique code that makes it challenging to steal sensitive information.

Mobile Pay

Mobile pay relies on a mobile device, such as a smartphone, smartwatch or tablet, to complete a transaction. Many of these devices are compatible with mobile wallets that allow users to upload their card information for use at point-of-sale terminals. These terminals must have near-field communication (NFC) to receive payment information from the mobile device and accept payment.

Mobile payments can also include mobile payment platforms that use ACH payments to complete transactions. This payment type offers convenience since most people carry some kind of mobile device. Additionally, these mobile payment methods typically require authentication before completing a transaction, making them a secure electronic payment option.

 

The History of Electronic Payment Systems

Electronic payments have their roots in the 1870s, when Western Union debuted the electronic fund transfer (EFT) in 1871. Since then, people have been enamored with the idea of sending money to pay for goods and services without necessarily having to be physically present at the point of sale. Technology has been a driving factor in the development of electronic payments. Today, making a purchase is as easy as tapping a button on your smartphone. Work with streamlining payment methods has been hard-won.

From the 1870s until the late 1960s, payments underwent a slow but gradual transformation. In the 1910s, the Federal Reserve of America began using the telegraph to transfer money. In the 1950s, Diner’s Club International established itself as the first independent credit card company, soon followed by American Express. In 1959, American Express introduced the world to the first plastic card for electronic payments.

Entering the 1970s, people became more reliant on computers as part of the buying process. In 1972, the Automated Clearing House was developed to batch process large volumes of transactions. NACHA established operating rules for ACH payments just two years later.

 

The (Wide, Wide) World Wide Web

Then along came the Internet. In the 1960s, ARPANET, a precursor to the modern Web, was built as a military network to improve communication. In the 1990s, online internet banking services were offered to bank customers. Those first online payment systems were anything but user-friendly—users had to have specific encryption knowledge and use data transfer protocols.

Soon, development across the Web, and the eventual invention of Web 2.0, set the stage for online sites to participate in what’s now known as e-commerce. In 1994, Amazon, one of the pioneers of eCommerce, was founded, along with a slew of other websites that we know and love to purchase on.

Payment acceptance and securing payments have been specific challenges for e-merchants and payment processors. In the early days of electronic payment processing, you needed special equipment and software to send a payment for goods. Now, payment acceptance can be integrated into websites, mobile platforms, and at the point of sale for scalability amongst merchants big and small.

 

Keeping Your Private Data Safe

As technology changes at an increasingly rapid pace, however, keeping your data safe has been at the forefront of most merchants’ minds. It’s easy to see why. Data breaches can have long-reaching financial and systematic impacts on businesses and can damage the reputation of long-standing organizations. What’s more, breaches can also spell financial ruin for companies without the financial, legal and logistical bandwidth to weather the storms of a hack.

Regulations by both NACHA and PCI standardize how payment data is received, stored, transmitted and processed for each transaction and help reduce the likelihood of an attack. However, it’s important that payment processors who offer PCI compliance programs stay ahead of those who wish to do harm to hardworking business owners by hacking their systems.

For point-of-sale transactions, EMV-enabled (also known as “chip card”) transactions add another level of encryption to your sales when performing card-present sales. End-to-end encryption, like what CSG Forte offers, provides a level of security to your entire payment processing system from terminal to payment acceptance and beyond. When accepting payments online, SSL webpages and other methods of data encryption help ease the worry of consumers and take some of the burden off merchants to remain PCI-compliant.

 

What’s Next For Electronic Payment Systems?

According to a McKinsey study from 2020, 78% of Americans currently use at least one form of digital payment. Offering consumers more ways to efficiently pay bills and purchase the things they want should be a key objective for all modern business owners.

Hot-button technologies like cryptocurrency and blockchain could be another way payment processing gets another technological push into a new era. After all, some cryptocurrency contenders aim to revolutionize the processing time for electronic payments, and if successful, can completely change the game for the payments industry. But in the interim, new trends like PIN on Glass acceptance to allow customers to use their PIN for mobile point-of-sale transactions, as well as contactless payments, same-day ACH and advancements in payment APIs all are geared towards making payment processing simpler, faster and more efficient.

For the last century and a half, the world of electronic payments has seen several notable technological shifts. As we speed through the industrial advances that the payment industry currently faces, we will only see a payment processing scheme that is safer, faster and operates how consumers and merchants need.

 

The Benefits of E-Payments for Your Business

Your business can benefit from e-payments with the help of:

  • Improved supplier relationships: When your vendors can enjoy the ease of e-payments, they know that you value their time, security and ease of payment processing. These e-payments also include remittance data for ease of reconciliation. Many modern suppliers may come to expect e-payment options and may even turn down relationships without this convenience factor.
  • Increased customer satisfaction: Your customers will enjoy the convenience and security of e-payments as much as your vendors. When paying for products or services is easy, consumers are more likely to follow through with a purchase.
  • Reduced costs: Processing cash and checks can require hours of physical labor and expenses dedicated to stamps and mailing. Enjoy the reduced administrative overhead of e-payments.
  • Enhanced security: With encryption and unique transaction codes, e-payments are far more secure than physical cash or checks. Plus, electronic payments eliminate the risk of losing cash or checks before they get deposited.
  • Greater flexibility: If you offer various types of e-payments, consumers can pay in a way that works for them. For example, a buyer who forgot their wallet can use their mobile wallet to cover costs. This flexibility encourages more sales.

 

How Can CSG Forte Help Optimize Your Electronic Payment Systems

CSG Forte offers a comprehensive electronic payment solution that supports online, in-person and phone payments. Our payments platform supports secure, flexible payments with reliable reporting and a user-friendly interface. With recurring payment capabilities, intuitive bill presentation, point-of-sale support and trusted security practices, CSG Forte supports the success of modern businesses.

See what electronic payments can do for you, and get started with our platform today.

5 Payment Trends to Watch in 2022

Human beings have an innate need to make predictions. For whatever reason, we like to make forecasts on just about everything, from Oscar winners to World Series champions, from election results to the likelihood of weather events, and everything in between.

The most effective prognosticators tend to take a 360-degree view. That is, they try to eliminate blind spots and take multiple factors into account. The recent past can give us a good idea of where things are heading moving forward.

In the payments world, the COVID-19 pandemic sent shockwaves throughout the industry that continue to reverberate. Today, we are seeing innovative breakthroughs in new digital payments technology, with rapid adoption across a wide range of industries. On the flip side, there are more opportunities for hackers and bad actors to try and take advantage.

Where is the payments industry headed? While I don’t claim to be Nostradamus, there are a few major trends I believe will dominate the payments headlines in 2022.

 

1) Digital Payment Methods Transform (and Explode)

The past few years have shown consumers that there are more ways to pay than just checks, cards and cash. As a result of the pandemic, contactless payments adoption has surged. Today, more than half of all Americans use at least one form of contactless payments (mobile apps, contactless cards, etc.). And consumers are letting merchants know that they expect more digital payment options—57 percent say they are more likely to do business with a merchant that offers a contactless payment option.

New payment methods will continue to attract first-time users in 2022, such as virtual credit cards, which provide consumers with alternative credit card numbers to disguise their sensitive information when making online transactions. There are a number of reasons virtual credit cards are an alluring prospect: they are environmentally friendly, incredibly secure and easy to monitor. They also empower the customer by allowing them to set spending limits and expiration dates. Just like with contactless, once buyers use a virtual credit card, they’ll demand the option moving forward.

 

2) Tighter Payment Security

An unfortunate byproduct of the rise of digital payments is the increase in digital payment fraud. eCommerce fraud grew to more than $20 billion in 2021. As security threats loom over merchants and consumers alike, more advanced fraud prevention will become a necessity.

In the next year, multifactor authentication (MFA) will become more commonplace. MFA has three types of authentication factors—biometric identification, device in-use and traditional password. Just as consumers are used to opening their smartphones with a quick press of the thumb, consumers will get used to using MFA for purchases.

In 2022, consumers will have the ability to set up multiple layers of security while making purchases in real-time. When a consumer is using a credit card at their local market, they can instantly receive a message to confirm their purchase. In the time it takes to glance at a screen, the transaction is confirmed to be safe. These additional levels of security can drastically reduce the risk of fraud, a tremendous benefit to both consumers and merchants.

 

3) Better Bill Pay

Bill payment is the one guaranteed touchpoint your customer will have with your business every month or quarter, and since these interactions are guaranteed, there’s a great opportunity to make them stand out.

In 2022, we predict that businesses and merchants will level up their bill payment processes, from offering customers payment methods like PayPal to establishing recurring payments so customers can set it and forget it. In fact, almost 40 percent of consumers prefer to pay their bills through automatic checking account deductions or credit/debit charges. By offering more convenience and choice, companies can make ordinary bill payment experiences extraordinary.

 

4) Companies Will Offer More Financial Flexibility

The last few years have highlighted the importance of flexibility—in how we work, interact and communicate. Now, consumers have come to expect flexibility in their payment terms. With the rise of apps like Klarna and Affirm, companies are embracing the “buy now, pay later” option, letting consumers pay off purchases in installments rather than one single payment. On the flip side, consumers can also customize when they get paid, with some prepaid debit cards and even financial institutions developing early payday options. In some cases, early direct deposit allows consumers to receive their paychecks into their accounts up to two days early.

Large financial institutions are beginning to adopt these new technologies to create a pipeline of young consumers who place a premium on flexibility, convenience and financial freedom. I anticipate the increased implementation of financial flexibility in the next year as a tech-savvy generation continues to push institutions to reinvent their business to keep pace with digital transformation.

 

5) Recurring Payments Will Keep Going (And Going, And Going…)

Nobody likes to waste money—especially on something as avoidable as late fees. For that reason, many consumers have embraced recurring payments for regular charges, including cable, utility and rent bills. The notion of having to pull out a checkbook and pay bills monthly is outdated—and this trend will spread to the B2B space.

Unfortunately, payment failures can stand in the way of a successful recurring payments strategy. Payment failures can lead to customer churn, bad debt and a diminishing bottom line. Businesses are increasingly embracing automation when it comes to their payments, including recurring payments. B2B companies that embrace payment modernization can avoid failure and effectively set and forget their recurring payments.

 

Want to learn more about how payment security can make 2022 your best (and safest) year yet? Download our 3 Steps to Ensure Payments Security here.

Power to the People: Digitized Payments Make Payments Safer and Easier

The first electronic payment may have debuted in 1871, but digital payments have really shown their worth in the last 18 months. They have presented an ultra-secure, convenient and hygienically safe way to make payments without physical contact. Recent surveys show that digital payments are here to stay— 45 percent of US adults say they are likely to use digital or contactless in-store payments regularly in a store after the pandemic.

 

What Are Digital Payments

Consumers are increasingly growing accustomed to digitized experiences. With a few taps of a smartphone, a pizza can arrive on their doorstep within a half-hour—no phone call, cash or physical contact needed. Digital experiences also offer an extra layer of safety during an ongoing pandemic. As low touch and digital experiences become more ubiquitous, consumers have come to expect them to be available, especially when it comes to payments.

Payments play a pivotal role in the customer experience—and contactless payments give consumers a safe, secure and easy way to pay.  According to Forbes’ State of Contactless Payments 2021 report, when all other factors are equal, consumers will choose a store that offers contactless checkout over one without contactless. In terms of staying competitive, digital payments are no longer a nice-to-have—they are a must.

 

Benefits of Digital Payments

There are several benefits for both merchants and customers when it comes to digital and contactless payments.

  1. Convenience— When asked why they wanted contactless options, 2% of respondents cited convenience as their primary reason for using contactless payments. Contactless payments remove the need for PINs or signatures.
  2. Enhanced Experience—Digital payments offer a more seamless customer experience while cutting operational costs for merchants.
  3. Security— Contactless payments featuring RFID and NFC-enhanced technologies are secure, especially when paired with an enterprise-grade POS terminal with advanced security.

 

Choose CSG Forte for Digital Payment Solutions

From managing employees to balancing the books to creating an exceptional customer experience, merchants have more than enough to worry about—partnering with a payments provider with the right solution helps.  At CSG Forte, we offer a full suite of solutions to make digitizing payments scalable, secure and convenient.

Our V400C Plus device makes contactless payments easy. The device was designed with merchants and their customers in mind—with enhanced features including a color touchscreen interface, wi-fi connectivity and thermal printing, merchants can smoothly conduct transactions and provide an exceptional customer experience.

The V400C Plus can be used as a standalone device, be connected to a point-of-sale application, or seamlessly integrate with CSG Forte products. Merchants can accept every major credit card, as well as mobile wallet payments, like Apple Pay and Google Pay.

Combined with our cloud-based platform Dex, merchants can gain insights into what payments customers prefer and allow them to easily manage the entire transaction lifecycle.

Contactless payments were on the rise before the pandemic—COVID-19 has merely accelerated its momentum. When powered by the right technology, merchants can satisfy customers and boost revenues by offering secure and convenient contactless payments.

 

5 Payment Trends To Watch For In 2021—And Beyond

If we’ve learned anything in the last year, it’s that human beings have a remarkable capacity to adapt to rapidly changing and challenging circumstances. Some of the changes introduced in the last year will likely go by the wayside (sorry, elbow bump). But other changes, like digital payments, will become part of the post-COVID normal.

While the adoption of digital payments was on the rise before the pandemic, COVID-19 has acted as a major accelerator. Accenture estimates that approximately 420 billion transactions worth $7 trillion are expected to shift to digital by 2023.

 

Anticipating Payment Trends in 2021

  1. Old-School Habits Will Turn Into New Payment Preferences

We all have stories about someone we know changing a long-held habit during the pandemic—an uncle using online banking for the first time or a grandparent ordering groceries online. While digital payment options aren’t new, their adoption has surged over the past year—digital wallet adoption jumped from 38 to 55 percent during the pandemic. As consumers get used to the speed and convenience of digital payments, options like digital wallets and contactless payments will become the new normal.

  1. Tokenization Takes Off

Tokenization, or the use of non-decryptable data that acts as a substitute of a sensitive data element, plays a major role in ensuring that payments are secure. It helps reduce risk from data breaches and provides customers with a sense of confidence in the safety of their financial information and property. As more payments are made online, the use of tokenization will become more of a focal point for merchants and processers. The future of tokenization is bright—one forecast believes that the worldwide tokenization industry will reach $4.8 billion by 2025.

  1. No Contact, No Problem

Many individuals, merchants and government agencies used contactless payments for the first time during the pandemic and found them to be efficient and intuitive. In fact, the usage of tap payments in the United States rose by approximately 150 percent in March relative to the prior year. Today, more than half of Americans are using at least one form of contactless payments. Not only are contactless compliant with social distancing guidelines, but they are also secure and flexible. Even as restrictions associated with the pandemic subside, consumers will continue to expect contactless payment options.

  1. More Governments Modernize the Citizen Experience

The pandemic upended workflows for not only the private sector, but for government agencies as well. When the pandemic hit, state and local governments rushed to keep government business progressing and revenue coming in. Governments have accelerated their adoption of new, flexible ways of operating, including accepting online and ACH payments for the first time and supporting bill payment through interactive voice response (IVR). Now that these stop-gap measures have been widely implemented, governments will need to keep moving forward with more digital offerings.

  1. Fraud Prevention Measures Will Be Tested

An unfortunate byproduct of the pandemic has been an increase in fraudulent activity. According to the Association of Certified Fraud Examiners (ACFE), 79 percent of respondents had observed an increase in fraud since the start of the pandemic. As a full economic recovery is expected to take years, we are likely to see an increase in fraudulent payments in the short to medium term. E-commerce businesses are particularly vulnerable to fraud. Payment processors will be tested by bad actors looking for vulnerabilities and will need end-to-end encryption and a secure token data vault to reduce risk.

This past year’s disruption has conditioned us to expect the unexpected. If there is anything positive to be found when looking back at 2020, it’s individuals’ and companies’ ability to adapt amidst adversity. Absent having a crystal ball, it’s impossible to know exactly where the payments industry is headed moving forward. But we can expect that payments will be more flexible, modern and digital.

 

This post originally appeared on csgi.com.