FinTech Payments

Western Union Boosts Business FX Payments

February 25, 2021 at 10:01AM

Western Union Business Services, the payments arm of Western Union, is looking at expanding its cross-border payment services for business customers, a press release says.

According to the release, Western Union Business Services has integrated SWIFT Global Payments Initiative and also boosted its international currency options.

“We are continuously advancing our capabilities to give our clients the tools to access the growing global marketplace. Adding GPI Swift and expanding our currency portfolio within our Mass Payments API advances not only our competitive advantage but that of our customers”, said Scott Johnson, Head of Product at Western Union Business Solutions. “Customers expect, and now have, payments that are faster, traceable, transparent, consistent, and more reliable. We give them that, along with our global compliance program.”

The integration of the SWIFT network will help the company utilize a new level of their services for operational efficiency for business customers. Clients will be able to access better visibility as well as “certainty” that their money will reach where it needs to go.

In addition, the release says the increased currency support will “expand their reach, improve efficiencies and transact in more currencies by integrating a flexible global payments network into their own product or service.”

With WU Mass Pay, recipients with built-in, real-time cross-border payments will find better, more seamless experiences, the release says, with the ability to send up to 10,000 payments in over 130 currencies. Real-time payment tracking and automated changes to payment status are also available, the release notes.

Western Union CFO Raj Agrawal talked to PYMNTS last year about the company’s better-than-expected quarterly numbers even in the face of the pandemic. He said there was a greater demand for customers to send and receive money, both at home and abroad.

According to Agrawal, the travel restrictions made necessary by the pandemic have made digital remittances more necessary.

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Gift Cards Become Employee COVID Vaccination Incentives

February 25, 2021 at 09:03AM

The vaccines are here, and while rolling them out has presented some logistical hurdles across the country, employers have been ramping up efforts to get their respective workforces vaccinated in the bid to return to (some semblance of) normal. Some have even extended financial rewards to do so. Among them are Aldi, Trader Joe’s and McDonald’s.

Of course, vaccine supply and delivery have been a challenge. Beyond logistics, as Nat Salvione, chief commercial officer of Tango Card, told PYMNTS, there are a number of challenges that confront employers in that effort. From an employer’s standpoint, one key question is whether to make the vaccines mandatory for workers or not. “For the most part, it’s definitely within an employer’s right to make it mandatory,” he said.

Of course, the ultimate goal of any vaccination program is to get enough coverage in place to stop the virus’ spread so that employees (and their customers) can be healthy in the workplace. But there may still be some hesitation on the part of employees to get the shots — perhaps they are in a middle ground where there’s a “gap” in coverage, or maybe they are wrestling a bit with uncertainty, perhaps procrastinating in making the appointment.

An incentive, on its own, probably won’t be enough to spur individuals to overcome deep personal, ethical or religious grounds of objection to getting vaccines. In other cases, however, financial incentives can work, offering “an extra motivation” to get vaccinated, said Salvione — and gift cards are a good vehicle for those incentives. But there’s a balancing act with the incentive itself, he noted, a sweet spot that must be eyed. If the incentive is too high, it could be seen as punitive to those who are objecting to the vaccine. Set the incentive too low, and it may come across as insulting or seem that the employer is being cheap.

Based on Tango Card’s conversations with its own client companies, Salvione maintained that a gift card range of $25 to $50 has proven effective. While some employers might like to reinforce the company’s branding with merchandise or apparel and other companies might opt for cash, he noted that gift cards represent the “best of both worlds.” They have monetary value but also some brand affiliation. Salvione pointed to the fact that over the past several years, gift cards have proven to be the most favored gifting option for the holidays. A temporary “boost” in the paycheck may not be as memorable, he contended.

In contrast, studies have shown that among employees who receive a gift card from their workplace, a majority of them will remember “forever where they got it and what they spent the gift card on.” In this way, said Salvione, the gift card reinforces the company’s intention and the “feedback loop” for the incentivized vaccination.

Additional Advantages 

There are additional advantages to gift cards as an incentive. Digital delivery means they can be dispersed to workers with speed and security, requiring only an email address. A number of verticals are actively mulling the financial incentive’s role in accelerating vaccinations — especially retailers and restaurants, where staff and customers interact continuously.

“In the best-case scenario, people are self-motivated to get vaccinated, but it’s also in the company’s best interest to be able to tell the public, ‘hey, our employees have been vaccinated and they’re returning to work, and you can shop here with confidence,’” Salvione said. “That’s a great message.”

He told PYMNTS that the company is maintaining a vaccination incentive “guide” for its customers. The guide takes into account some of the issues any employer should consider, such as labor laws and working with employee relations groups in the event that workers are unionized. “It’s definitely within the company’s right to mandate vaccination, but it’s maybe not the cleanest way to do it,” noted Salvione. “We feel an incentive-based approach is the best.”

He predicted that on the other side of the pandemic, we’ll see firms incentivizing employees to adopt other healthy behaviors, such as getting their annual flu shots and taking other proactive health measures.  “We already see a number of companies that find it economically beneficial, but are also helping their employees to feel more engaged and happier at work by offering small incentives to exercise, to take walks, to quit smoking and maintain their medication regimens,” Salvione told PYMNTS. “It benefits the company when the employees are healthy, happy and engaged. And I think we’ll only see this increase in the coming years.”

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Western Union links to Swift GPI, adds B2B currency options

February 25, 2021 at 09:00AM The payments division of Western Union has integrated with the Swift Global Payment Initiative for faster transfers, and has added international currency options.

via The Latest

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NCR: Payments Are Connective Tissue For Banks And Retailers

February 25, 2021 at 09:02AM

In the digital shift, merchants have to manage their financial health by meeting consumers where they want to be, whether that’s curbside, in-store or at home (which, of course, means getting items delivered to the doorstep). For consumers, managing their financial health means juggling the minutiae of everyday spend and receipts. The proverbial shoebox approach, laden with crumpled paper slips detailing who bought what and when, simply won’t cut it anymore – nor is it necessary in the digital age.

The common thread, or the connective tissue, is payments. It was the topic of a recent conversation between PYMNTS CEO Karen Webster and NCR’s Doug Brown, senior vice president and general manager of digital banking, and Marc Haberkorn, corporate vice president of product management. They said that banks and retailers can work together to create a fully contextual eCommerce experience. On top of that, payments can serve as the connective tissue that binds enterprises, financial institutions (FIs) and customers together into a new ecosystem. In other words, an app-like experience takes shape.

But Brown and Haberkorn were quick to note that for FIs and retailers, gunning for a super-app may not be the optimal strategy.

“We don’t ascribe to the theory that there is one app to rule them all,” said Brown. “That is just not going to happen. But banking and services need to be connected. We want to bring these ecosystems together — banking and payments and retail.”

The Catch-22 Of The Forced Digital Shift

The urgency is there, wrought by the pandemic. Drilling down into the continued pressures faced by retailers across all verticals, said Haberkorn, as COVID-19 hit early last year, merchants faced a version of “Sophie’s choice” as they moved to embrace commerce platforms and aggregators, but lost some autonomy in the process.

“They had to either not quickly participate in the shift to eCommerce and lose a portion of their revenues, or they participated quickly but conceded or forfeited control of their most prized resources: their brand, consumer engagement and potentially even margin,” he said of these retailers. He noted that eCommerce might be marked by the “come to me” channels (delivery or curbside) or the “you go to it” options (in-store purchases) — but as the lines are blurring and converging, merchants need to rethink fulfillment and re-invent their ecosystems.

Building Consumer Trust Through Strategic Acquisitions

To help forge those new ecosystems, NCR said last month that it would acquire the grocery eCommerce brand Freshop. Through the deal, NCR is adding eCommerce to its retail point of sale (POS) platform, giving grocers the ability to quickly add “buy online, pickup in-store” (BOPIS) capabilities,  where demand for this type of eCommerce is growing by 25 percent annually. Noted Haberkorn, the acquisition “allows the best of both worlds and aligns our interests with our grocer customers, such that they maintain the relationship with their end consumers. Consumer trust actually increases as well. So it’s a win-win.”

Freshop will become a key component of NCR’s Next-Generation Retail Store Architecture, which gives retailers the ability to simplify store operations and introduce future innovations without expensive integrations. It’s part of NCR’s initiative to help retailers manage operations and inventory in a world where the ratio of in-store to digital purchases has flipped during the past year. For example, NCR Counterpoint offers an inventory management solution that includes a POS system designed to handle reporting, loss prevention and variable pricing.

Through offerings like NCR Retail Online and NCR R10, a unified commerce platform, smaller retailers and chain store operations can build their own omnichannel and checkout experiences (including online stores) and monitor sales to ensure that inventory needs are met. That real-time information flow and optimal business management can be especially useful for convenience stores, where service mixes are changing. For example, consumers are not commuting to work or traveling as much anymore, and demand for fuel has suffered as a result. That means convenience stores must pivot and replace the margins lost on fuel, with sales coming not at the pump but from the convenience store itself. Convenience stores thus need to manage their relatively small store footprints and SKUs judiciously.

Enhancing The In-Store Experience

As retailers of all stripes have ATMs and POS devices on-premise, said Haberkorn, there are opportunities to enrich the customer experience in-store. Last November, NCR debuted its ATM-as-a-Service initiative, which runs an FI’s entire ATM channel, including installation, maintenance, security, compliance, cash management and more. The company believes frictionless ATM interactions result in better customer experiences.

Stated Haberkorn: “We can tie some of the individual’s experiences, from a loyalty perspective, to the ATM so that we can give them offers.” Data suggests that 80 percent of the time, customers take cash out at the ATM and then they spend some of that money in the store.

Digital Receipts For More Intuitive Banking

NCR has also innovated on the consumer side of the ledger, providing a connection point between banks, retailers and their customers. To that end, NCR has debuted Digital Receipts, a feature that helps banks see SKU-level information about transactions and identify meaningful spend patterns. For consumers, digital receipts can eliminate the shoebox syndrome, creating a portal that lets consumers look up previous transactions and receive targeted marketing promotions.

Helping consumers manage the abstraction of digital is “personalizing the relationship from the bank and credit union side,” said Brown, where payments brings the separate pillars of retail and banking together — and where banks can use personalized retail data to create deals and offers for consumers.

Because of the trust consumers have in banking, said Brown, “that’s where they’ll go to get the overall guidance, the coaching, the wellness — but then a marketing team is going to guide them to the best deals, including promotions and a fast experience, inclusive of payments.”

The Contextual Trend Extends To Banking

Against a larger backdrop, banking needs to be as contextual as any other aspect of commerce and retail — no matter the channel in which the banking itself is occurring. There is still a role for physical banking, Brown and Haberkorn told Webster, but it will be modernized. And that means the in-person experience must be perfect. To that end, on Feb. 8 of this year, NCR acquired Terafina, which offers the technology for customer account opening and onboarding across digital, branch and call center channels.

As Brown recounted, the perfect contextual experience is one where the bank is aware of a customer’s arrival as soon as they drive into the parking lot, where an appointment has been scheduled in advance, and the appropriate staffers are on hand to address the consumer’s concerns. With advanced technologies, he said, “the bank can acknowledge the customer by name as they come in, because the proximity detection has relayed that awareness to the branch manager and the bank can do what needs to be done. Then we’re going to survey the customer on the way out to ask, ‘how was your visit?’”

As Brown stated, “what was ‘digital-first’ is now becoming ‘digital in the branch.’”

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Western Union: 5G, AI, RTP Will Create New Digital Experiences

February 25, 2021 at 09:01AM

“Turbulent” is the word Scott Johnson selects to describe the events of 2020. And as vice president and head of product at Western Union Business Solutions (WUBS), Johnson would know. His eye on business payments and FX risk management gives him a unique vantage point from which to view developments in creating new pathways for an API economy and the future of payments.

Saying that global business was “reminded with stark force of the need to be as prepared as possible for whatever lies ahead” after the collective COVID-19 experience, Johnson sees uncertainty and volatility — but it’s slowly giving way to clarity around what’s needed now.

“We don’t really know what the global markets are going to look like as we exit the pandemic, so it’s really important for businesses to do … a lot of future proofing and … make sure that [they] have redundancy and flexibility to pivot with the market as things change over the coming year, and even further,” he said.

Everything from politics to roiled financial markets “adds another layer of unpredictability to the situation,” Johnson told PYMNTS, while also pointing to the ground that’s been gained.

“Companies really had to accelerate their digital transformation journeys as everybody went home to work,” he explained. “Supply chains started to fall apart around the world. As we exit the pandemic, companies will need to work on their supply chains … they’ll need to diversify, they’ll need to continue the digitization of their work, and they’ll need to carefully manage their working capital, given that we’re probably looking at a period of uneven demand ahead.”

Flexibility is paramount in meeting those new and undefined demands, Johnson said.

APIs, Open Banking Create ‘Huge Opportunities’

Pointing to Oxford Economics’ Global Services Trade Revolution Report, commissioned by WU, Johnson said, “We projected the value of international trade and services, as opposed to the trade in goods, will increase from around $6 trillion in 2019 to $8 trillion by 2025.”

That’s a lot of market potential. However, continuing changes in how we work, shop and pay require fundamental upgrades and enhancements to existing payments infrastructure.

“We hypothesize that this digital transformation will enable the financial services industry to increase in value by almost a third by 2025,” Johnson said. That equates to what he called “huge opportunities” for digital payment players “focused on providing businesses with the flexibility they need to pivot with the market in the coming years and to focus on providing best-in-class customer experiences.”

That flexibility will increasingly come in the form of APIs (application programming interfaces) and open banking.

Johnson said, “As the world becomes more digital, it also becomes more international, so it becomes … critical for businesses … to enable customers to pay for things regardless of where the customer happens to be, or to get paid … regardless of where the supplier may be.”

With pilots in Europe, India and elsewhere, amid open banking and investment in APIs by banks and financial institutions (FIs), the dawning data economy “drives a lot of really interesting and innovative ideas and potential growth for the financial services and adjacent industries,” Johnson told PYMNTS. “As more and more companies embrace this digital transformation, APIs become a … critical way to glue together different services to ultimately provide a great … experience to customers, wherever they may be around the world.”

To illustrate, he used the example of WU Mass Payments, a processing platform for high-volume domestic and FX transactions. Its API batching, reconciliation, processing and other services let “our partners integrate a payment solution … into their customer experience that allows their customers to pay for things in 142 currencies in pretty much every country on Earth.”

Unified platform functionality from a trusted name in global payments also means “new levels of automation,” Johnson said. “It helps companies streamline their traditional accounting processes … while ensuring compliance and strong FX risk management strategies without having to hire teams and do a ton of work.” He added that several Mass Pay partners are having “great success” using these APIs to ensure that their employees are reimbursed for travel, and that vendor invoices are “paid efficiently without having to leave their application.”

Achieving And Delivering ‘The Nirvana State’ Of Digital Experience

Super-hot tech coming online is poised to take API payments to the next level. As companies begin working with real-time payments (RTP), artificial intelligence (AI) and 5G speeds, a new world of financial experiences quickly starts coming into view.

“It’s a really interesting time in the payments industry,” Johnson said. “We’ve seen a ton of investment in digital payments infrastructure, the emergence of … real-time payment systems that are actually real-time. That’s enabling a lot of innovation and … will continue to enable innovation. The payments are clearing faster, they’re settling faster, they’re happening around the clock 24/7 and in some countries — and that’s driving a lot of business process change.”

Beyond process change, Johnson said APIs are a critical enabler as payments “become more and more embedded in the business processes they serve, rather than acting as a standalone business process. That makes it easier to initiate payments, easier for end customers, and takes us steps closer to that invisible payment experience that we see with some consumer products.” Johnson calls that “the Nirvana state — the end goal many of us are pushing for.”

Noting that many new RTP schemes provide access to better data than older systems, he said the use of data itself is undergoing major change that is creating new efficiencies.

“These new real-time payment schemes are kind of what we’ve always wanted real-time gross settlement to be. I think 2021 will be a big year for bringing products that live on top of these real-time payment schemes to market. Ultimately, this is about good customer service,” Johnson said, adding that “an easy experience is a good experience for customers. By using APIs and new, real-time payments infrastructures, companies can build much easier payment experiences for their customers,” while also raising levels of engagement and something harder to measure: happiness.

Harmonic Convergence Of AI, 5G For The Ultimate CX

While APIs are well understood, Johnson said, “I think we’re still at the beginning of our journey with artificial intelligence and machine learning.” Basic use cases like reconciliation and bot-based investment are only the start. “As we get access to richer sets of data, we can continue to layer AI … on top of our infrastructure to provide customers with better insight and help them make better decisions about how to run their business.”

Conceding that “AI would have been really difficult to manage when we were all still in data centers and had to buy gear,” Johnson said cloud-based systems are giving AI and ML the medium in which to perform new financial feats of legerdemain.

“With cloud and with autoscaling, [it’s] a lot easier for smaller companies to start to explore AI without having to make really big upfront investments,” he said. “As we enable smaller companies to explore these things, we’ll see an explosion of innovation coming out of that.”

Also watch for fireworks around 5G. Johnson is one of legions in the industry who feel that 5G throughput “has the potential to really democratize access to markets. There are certain activities, like interacting with AI models in the cloud, that require pretty fast connectivity. With 5G, all of a sudden, everywhere on Earth, [all markets] could have access to that sort of connectivity.”

Johnson also noted that “obviously, there’s the payments play here. We don’t know where the future hotspots will be for commerce. It’s really important to make sure there’s access to those markets, that people can get money in and out, so that as companies, we can participate in these innovations, too.”

It’s all very technical and complex, of course, but Johnson says humans are calling the shots.

“I think one constant we will see [in the coming years] is that customers will always demand more, as they should,” he predicted. “They should demand better experiences and better service. That means we we have to be customer-centric, [just as] we have to be relentlessly focused on solving problems for our customers, thinking about the fundamentals, understanding the issues our customers are trying to address, and then building solutions that help them solve those problems.”

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Indonesian FinTech Builds Bridges Between Banks And Workers

February 25, 2021 at 09:00AM

There are roughly 270 million people living and working in Indonesia today, roughly 92 million of whom do not have bank accounts. That leaves a little over a third (34 percent) of the nation’s population unserved by the banking system. It’s a reality that makes providing value for the Indonesian consumer a challenge, GajiGesa Co-Founder Vidit Agrawal told PYMNTS in a recent conversation, and also a tremendous opportunity to build a bridge between those excluded customers and the banks.

GajiGesa is a newly founded FinTech designed to offer workers access to their wages as they earn them. Agrawal believes that in time it can connect Indonesian consumers to the formal financial system, particularly blue collar consumers who have been largely overlooked by banks due to their relatively small asset value.

“What we see is we have this very interesting opportunity where over time we learn about the spending behavior of the employees and their needs, and we can help the employee make better decisions,” Agrawal said. “Over time, we can believe we can also get banks to provide better financial products that are going to improve the lives of these individuals, because clearly there is a disconnect today.”

It’s a disconnect that Agrawal and his co-founder (and wife) Martina come well trained to take on. Prior to founding GajiGesa, Vidit Agrawal worked with major multinational tech players like Stripe and Uber, while Martina has served as product director at Standard Chartered Ventures. Prior to that she spent about half a decade working with unbanked customers in Indonesia and Cambodia. Combined, he said, they came in well educated to create a payroll product that could work for any employer-employee pairing. The FinTech isn’t built to solve every problem in the market on its own, he said, but to build the connective tissue that can make the creation of the entire array of products the Indonesian market and its consumers need more available to all.

“There is a lot of opportunity and there is just so much to do, but we are also a 5-month-old startup,” Agrawal said. “So for us focus is really important and we’re taking steps towards building a platform and our first product is largely focused towards the benefit of employees in Indonesia.”

Building A Platform On Earned Wage Access 

GajiGesa, he said, started with the entry point of earned wage access because of its obvious utility to workers. But building that kind of offering on their own, he said, is basically technologically impossible for the average employer. Nonetheless, the company found that it is something employers want to be able to offer their employees, even if they can’t do it themselves. This is where GajiGesa comes in — with a fully automated technological platform that allows employees to sign in and withdraw their wages instantly as they earn them.

And what they’ve seen is that earned wage access is popular by its own lights — and a significant starting point from which they have been able to insert other value because of the level of engagement they’ve see the app attract. Though employees only use the app to withdraw wages two or three times a month, they visit the app about 28 times a month.

“There is something in the platform which excites and captivates the individual that he keeps coming to that app again and again,” Agrawal said, noting the engagement and the number of eyeballs the platform was attracting made it obviously quite a good place to continue adding features and functionality that would also appeal to the consumer. So from earned wage access, he said, they went on to add prepaid card top-offs, data packets for sale, bill pay and digital wallet integration to the platform to make it more robustly applicable for users.

“This is how the product is expanded into a platform. Financial education is another element we are looking at because it’s a need of the market,” he said.

What’s Next 

Though most firms’ early thoughts run to taking on the world, and both of GajiGesa’s founders have wide experience in the global FinTech market, as of now they aren’t thinking about global expansion — despite the fact that the firm recently snapped up $2.5 million in seed funding.

“Often people don’t realize how unique Southeast Asia is, and as we think about expansion, we think about how to leave Indonesia for new markets — where everything is different about them,” Agrawal said. “So for now GajiGesa is an Indonesia-only business where we want to penetrate and think about new products that can launch here, rather than thinking about new markets for now.”

Which isn’t to say they don’t want to grow — they do, they simply see a lot of opportunity for growth in their home market before they can seriously consider an idea like taking on the entire world. There is a host of untapped value to provide for the Indonesian employer and employee, he said, and the firm is just getting started in unlocking it. The goal for the next year, he said, is to aggressively and proactively reach out to as many employers as they can to get them signed on to the platform.

Because with 92 million unbanked consumers, he said, there is a lot of value GajiGesa can offer as it works in partnership with employers to help give workers more access to their money — and the rapidly expanding digital economy worldwide. And not just access, he said, but also insight on how best to leverage that access to their advantage.

“We realize that there’s so much value we can provide to Indonesian employers and employees,” Agrawal said. “And we are just starting, especially with financial education. When you think about it, especially the blue collar worker with a very limited financial understanding — because of that, he or she gets cheated time and again. We want to be the platform that provides access to wage and financial education so workers can start building some capability to more fully manage their total financial life.”

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Report: Buy Now, Pay Later Helps Toy Merchants Go Global

February 25, 2021 at 09:00AM

Financial flexibility has been key for consumers during the pandemic, and many have turned to buy now, pay later (BNPL) plans that allow them to pay for purchases in installments. Americans are also spending more time at home during the crisis, prompting them to seek more ways to stay entertained even as they keep a close eye on their budgets. This suggests that merchants selling toys, electronics, music, books and other hobby-related products could significantly boost their conversion rates and in-store success by introducing flexible installment plans into the mix of payment options they offer.

The February edition of PYMNTS’ Buy Now, Pay Later Tracker® examines how consumers are turning to BNPL payment methods for their entertainment-related purchases online and in stores. It also analyzes which consumer segments are particularly interested in these solutions and how merchants can embrace the benefits that these plans provide.

Around The Buy Now, Pay Later Landscape

The ongoing pandemic has forced consumers to accept new financial realities, but many are reluctant to add to their credit card debts. Some are instead turning to installment payment solutions for more flexibility without facing monthly interest charges and fees. The BNPL market’s growth has been significant during the health crisis. More than 13 million American consumers signed up for accounts with installment payment solution provider Afterpay as of November, for example. The BNPL provider facilitated more than $770 million in U.S. sales during the same month, more than triple the amount processed in November 2019.

Digital shopping channels remain in high demand as the pandemic continues. Still, many consumers are growing more comfortable with in-store safety measures and are beginning to return to brick-and-mortar stores to make purchases. Research also shows that they seek access to their preferred payment methods — including BNPL solutions — when they make such trips. A recent PYMNTS survey of 2,992 consumers found that those who paid using installment options at the physical point of sale (POS) bought more items and spent more than those who used other payment methods. BNPL users made five in-store purchases in the week before the survey, for example, compared to just three purchases for consumers who used other payment options.

Residents of New Delhi, India, have long used BNPL solutions to buy pricy electronic items such as smartphones, but the payment method is also beginning to gain favor for smaller purchases of everyday items such as clothing, musical instruments, kitchen appliances and hair treatment products. Data from one India-based payment solutions provider found that merchants have seen an increase in the use of BNPL solutions in other big cities as well, including Mumbai and Bengaluru. The data revealed that there had been a nationwide shift in consumers’ payment preferences, with small businesses that adopt BNPL solutions seeing more conversions.

For more on these and other stories, check out the Trackers News & Trends section.

Tambo Teddies On Boosting Sales And Expanding Its Reach With BNPL Solutions

BNPL options are increasingly being offered by retailers outside the apparel sector, including those in the home decor, food, fragrances and toy spaces. Australia-based Tambo Teddies began offering installment payments last summer to boost its global visibility and help it convert more customers, for example. In this month’s Feature Story, Alison Shaw, Tambo Teddies’ co-owner, discussed why the company chose to implement BNPL payments and how replacing its standard layaway program with such options has given it a notable sales boost.

To get the full story, download the Tracker.

How Merchants Can Harness BNPL Plans To Drive More Consumer Purchases

Consumers stuck at home during the pandemic are buying more entertainment products for themselves and their children. Still, many are staying focused on the family budget and modifying their purchasing habits as the health crisis strains their finances. Offering flexible installment payment plans could help them stretch their dollars and splurge for products to keep themselves and their families occupied. This month’s Deep Dive examines how the pandemic has shifted consumers’ spending on toys, games and hobby purchases and why offering BNPL solutions could help merchants drive more entertainment-related purchases.

Read the full Deep Dive in the Tracker.

The Buy Now, Pay Later Tracker® is done in collaboration with Afterpay, and PYMNTS is grateful for the company’s support and insight. retains full editorial control over the following findings, methodology and data analysis.

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Invoice Financing Comes To SMBs And Freelancers

February 25, 2021 at 09:00AM

Cash flow problems have always been an issue for small businesses, though according to PYMNTS data, the pandemic period has added urgency to the issue. Some 37 percent of Main Street small and midsized businesses (SMBs) reported experiencing cash flow shortages within the early months of the pandemic, with 26 percent tapping their personal credit cards to even out shortages. Twenty-three percent asked family members or friends for help and 21 percent applied for loans.

A massive part of the problem, Colin Gunnell, co-founder and CEO of Penny, told PYMNTS in a recent conversation is that SMBs have to spend too much time chasing payments or speeding them up. Gunnell’s company is a platform that allows small businesses, freelancers and the self-employed to create, send and finance invoices.

On average, in the UK, where Penny is headquartered, he said, small businesses will spend 32 working days per year chasing down and recovering the payments they are owed.

“Payment cycles globally and traditionally are kind of skewed towards who — who has the most power in the relationship,” Gunnell said, leading to a “crazy bonkers” system where businesses have to plan to spend a full month of their time and treasure handling financial administration. It wasn’t a system that Gunnell had ever planned to take on or for which to create a solution. But the problem forced itself upon him when running a chartered accountancy firm where he kept hearing variations of the same question: How can you help me get my bills paid faster to alleviate the massive cash flow problem that waiting 30-60 days to get my invoices paid is causing?

“We had this question that was thrown out to us for ages, and we always said, ‘we can’t. We’re accountants; we can’t do these sorts of things,’” Gunnell said. “Until one day, I sat down with a chum of mine and I realized that these guys aren’t really asking us questions about funding. What they’re actually after is a time machine. They want to remove the time between raising a payment after they’ve done stuff, whatever that may be, and getting paid for it.”

And that, he said, was a problem they could solve with a couple of years, an excellent ecosystem of connections and a team of talented developers dedicated to taking on the problem. With a solution, Gunnell said, that is actually surprisingly simple. What Penny does, essentially, is buy out SMBs invoices at a discount, at which point the invoice holder gets paid (slightly less) instantly while Penny gets ownership of the invoice and takes on the collections process. How much that invoice will be discounted, he said, is determined by a team of “very clever data guys” tasked with assessing various data streams and determine the risk of “something going squiffy on a transaction.”

And perhaps more critically, he said, is that they can do this fast — on average, about 15 to 17 seconds to review an SMB invoice and make an offer on it.

“It means that they can just log in and very quickly see this is doable,” he said. “I can get paid early. This is going to be the cost. And it’s very clear and it’s very transparent. We don’t, because we never set off to be a traditional funder with a ledger, need an extensive process based on the risk profile of X, Y, and Z.  It all starts becoming very annoying for the sake of it. We just want it where it can be as simple as possible.”

Simple is what small and even microbusiness owners need. Otherwise, they are engaged in operating a business they are trying to grow without the bandwidth to spend a month of every calendar year trying to run down money owed for goods and services they have already provided. What they want and increasingly need, he said, is an experience that is simple and transparent to them. Because more than they want their customers to value the funding part of their service, he said, they want them to value the experience itself as non-onerous. SMBs, he said, increasingly have many choices when it comes to how they solve for their cash flow crunch. Why would they want to surround themselves with painful, friction-filled experiences going forward if they didn’t’ have to?

Moreover, he said, it’s better for the world if these businesses can grow instead of being crushed to the point of closure by a cash flow problem. Because, Gunnel said, the amount of value the freelance and small business workforce brings to economics on the whole is pretty simple: make it easier for them to do the things they actually want to do instead of forcing them to burn daylight in a frustrating cycle of collecting payments.

“The future of Penny, I think, is absolutely going to be connected into how do we champion these individuals,” he said. “How do we allow them to be free to follow these business ideas and to scale and drive forward by themselves? How can we actually do it within an experience that feels more like you’re grabbing an Uber rather than applying for a bank account?”

Part of the future of Penny also lies in collaboration with freelance booking and payment platform Fiverr. Fiverr freelancers get 20 percent off Penny fees and in return, Penny users get a discount on Fiverr membership.

Invoice Financing Comes To SMBs And Freelancers …

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