5 Ways to Use Payment Analytics & Insights to Grow Your Business

What are Payment Analytics?

Payment analytics are actionable trends organizations can identify and use to tune and accelerate their business growth. In today’s numbers-obsessed world, turning the patterns advanced analytics platforms can extract from data into action can be the difference between success and failure. Indeed, most companies are now digging through the payment data, seeking insights they can use to operate more effectively and efficiently - meaning organizations who fail to do so are at a competitive disadvantage.

In this article, we’ll identify five distinct ways that you can use payment analytics and insights to compete effectively and accelerate your business growth.

1. Reduce Costs by Optimizing Payment Automation

It is not news to any merchant that processing rates and fees vary wildly from processor to processor. While some merchants opt to commit to a single payment services provider (PSP) in order to reduce the complexity of their operation, the reality is that it is critical to work with more than one, not just for flexibility, but also to reduce costs. 

Using payment analytics, a merchant can evaluate the effectiveness of each at closing transactions, then make value judgments on how many deals to send each - resulting in an optimized flow of sales that balances the likelihood of successful processing with the cost.

2. Optimize Deal Closing Through Data Insights

It is well-known that having a chargeback rate over 1% creates all sorts of problems for a merchant - from increased fees, to fines, to losing the ability to transact credit card deals at all. What is less well-understood, however, is that having a chargeback rate too close to 0 means that too many potential customers are being rejected before their purchase even makes it to the closing stage. In simple terms, if chargeback rates are too low then the merchant is risking their success by over-rotating on risk management.

Data insights can help in the decisioning process of whether and where to direct transactions across a merchant’s business. If nothing else, analytics can keep a running tally of past (and an algorithmically-generated forecast of future) chargebacks, and dial the level of risk-taking up and down to deliver the highest possible volume of closed deals.

3. Use Analytics to Select New Payment Processors and Methods

Online customers are more likely to complete their purchases when they can use their preferred payment method - and those payment methods change frequently! Whether it be newly-minted credit card varieties, online wallets, or buy-now-pay-later options, customers have clearly demonstrated by their actions a willingness to move on if they don’t see what they’re looking for.

Analytics not only identify which payment methods are the most (and least!) popular, they also help to show diminishing usage as options fall out of favor, acting as an early warning system that something new is needed. Merchants can then slot in new options, and use payment analytics to clarify which ones are really needed, and which may be no more than marketing hype.

4. Optimize Support Levels and Schedules

Just because business can happen at any time of the day or night, between principals in far-flung geographical locations, doesn’t mean that it will. Applying analytics to your payments flow can quickly identify the hour-by-hour and locale-by-locale ‘seasonality’ of your business, and let you know where and when you need support ready, willing, and able to pitch in and help your customers bring their deals to fruition.

Equally importantly, those payments insights can tell you how to tweak your payment optimization algorithm across the course of a business week. A more expensive processor may offer the higher transaction close rate during the week, for instance, while the weekend may offer the opportunity to offload some volume to a lower-cost partner. Directing your efforts, both human and digital, toward the most profitable outcomes becomes much easier when you can identify the trends in your payment data.

5. Offer Superior Options that Maximize Share of Wallet

One customer may be very different to another, but across the span of your whole sales volume you will find actionable insights that can not only increase the likelihood of closing the deal and decreasing the cost to do so, but also increase the size of the deal. Payment analytics will show you, for instance, the attach rate of cross-sells and upsells that are placed in the payment flow - and with advanced analytics you can even segment these insights by day, time, and location.

Dynamic offers may be the strongest option for increasing order size without risking the close rate of your deals: payment analytics will drive the highest potential offers, delighting your customers with appropriate deals, and accelerating your revenue growth.

Flexibility: the Necessary Add-on for Effective Payment Analytics

All five of these ways to use payment analytics and insights to grow your business rely on flexibility: the option to direct transactions to the right partner for each deal. Without a stable of payment partners effectively competing for your business, there is no way to arbitrage transaction rates, to increase close ratios by keeping deals to the customer’s region, nor to adjust your list of available payment methods to meet the needs of an international audience.

To achieve this flexibility, you’ll need to start by taking control of your customers’ personally identifiable information (PII) in a secure and PCI-compliant way, such as by using a tokenization provider like Basis Theory. With your customers’ information securely stored in a third-party token vault, you can safely and confidently build out your payment automation strategy, without concerns about being limited by the needs and demands of a single processing partner.

Payments analytics and insights deliver an unseen force multiplier, allowing you to increase your revenues and reduce your costs - growing your business faster than you ever thought possible.