Accrued: After Hours - Episode 15
Welcome back to Fintech Confidential’s Accrued podcast series. Catch the key insights and main takeaways in this weekly newsletter provided by LoanPro. Today's synopsis covers Season 1, Episode 15: Democratizing Payments – Making Low-Cost Payment Solutions Accessible..
This episode features David Anderson, the Chief Product Officer and co-founder of Tandym. As he joins hosts Tedd and Colton, they discuss the unbundling of payments in the financial industry. If you want access to lower assessment fees and envy the branded payments of top companies, grab your headphones and tune in. David and his team are partnering directly with brands to offer credit and pay-by-bank products—powering more exciting experiences.
You can stream the Accrued fintech podcast, (brought to you by LoanPro), in all the usual places.
Here’s what went down
These are the main themes covered by the industry experts:
- Merchant-branded payments are now more accessible to the mass market, strengthening customer relationships.
- Branded solutions minimize traditional credit card processing fees for merchants and consumers.
- Modern tech stacks are crucial for innovation and maintaining a competitive edge in the fintech ecosystem.
Merchant-branded payments
Most of the top 100 retailers currently benefit from a branded payment method. For example, Target's RedCard contributed to 30% of their incremental revenue last year. The card is a win-win for the merchant and the customer: Target benefits from a lower per transaction fee, while the customer enjoys 5% off their purchase. Additionally, there are no annual or monthly fees, which incentivizes all shoppers to apply. Companies that offer these programs increase their customer loyalty, leading to increased transaction volume. Until Tandym, this technology was out of reach for the mass market. The future of payments is becoming democratized, allowing smaller brands to benefit from the same tools enjoyed by major players like Target, Amazon, and Walmart.
Digital wallets are playing a key part in this shift, enabling customers to carry an array of payment options. Emerging technology around flexible credentials, will allow a single account to serve as a gateway for payments across multiple cards or programs. Businesses that adopt these resources early will benefit from increased loyalty and extra funds in the long run.
Minimized credit card processing fees
The average debit and credit card processing fee seems to only ever go up for merchants. Since merchants hold little authority to negotiate fees with traditional players like Mastercard, those who implement a branded-payment platform end up paying less to credit card processors. Tandym's clients slash their processing costs by 80%, which in turn can be put towards retention and customer satisfaction.
Complex credit card networks will continually drive higher interchange fees in the future. For fintech startups, extending credit can be particularly challenging. Companies like Tandym must be cautious with regulatory compliance and ensure sound credit policies to balance innovation at scale.
Competitive modern tech stack
Emerging solutions combine credit card payment and lending services into one platform. This approach simplifies the payment process, making it cheaper for businesses and customers. These advanced platforms allow for a quick and efficient launch of payment programs, providing an advantage over traditional financial services that take longer and cost more. With a team of veterans from Capital One, Tandym has created the platform they always wished they had. Their modern technology can launch merchant payment programs in just 20 minutes, even on airplane Wi-Fi. This is far more efficient than traditional methods and banks, which take months and call for significant financial investment.
Finding great partners that help build your modern tech stack is essential to ensure long-term success in the financial industry.
Key takeaways
Streamline your checkout process
Avoid checkout button fatigue by streamlining payment options. Offering the right payment method with no additional fixed fee can enhance customer satisfaction and boost sales.
Retain loyalty with branded payments
Encourage customers to use your branded payment solution by providing unique rewards. Introducing a card with your logo and no monthly fee could be your next major step.
Understand your payment processor fees
Clarify the costs of your current interchange fee. Being aware of your credit card processing fees can help you choose the most cost-effective options for your business.
Maximize value through the use of customer data
Make use of customer data from the credit card network to offer better payment experiences. This can build customer trust, as long as you ensure compliance with sensitive information.
Commit to responsible compliance
Consistently verify that you adhere to the latest regulations. Neglecting regulatory responsibilities can quickly result in losing your privileges as a business.
