How are payment companies saving by automating finance operations?
July 15, 2023

In the realm of payment companies, finance automation has emerged as a catalyst for success, revolutionizing operations and driving remarkable efficiency gains. By automating critical finance processes like invoice processing, reconciliation, and fraud detection, payment companies are experiencing significant cost savings, heightened accuracy, and enhanced customer experiences.

Automating Invoice Processing

Automating finance operations, especially accounts payable (AP), is a key focus for payment companies to optimize invoice processing. According to research conducted by IOFM,AP is considered the most time-consuming, labour-intensive, and paper-intensive process in finance and administration (F&A). Advanced software solutions streamline invoice receipt, data extraction, validation, and approval, eliminating manual data entry and reducing errors. In fact, automation enables companies to handle over twice the number of invoices per full-time equivalent (FTE) compared to their non-automated counterparts.

Duplicate payments can have severe consequences for a company, such as cash leaks, fraud risks, and funding challenges. Infor reports that duplicate payments account for approximately 0.1% to 0.05% of invoices, resulting in losses of up to 2% of revenue. To mitigate this issue, payment companies are adopting automation in their invoice processing workflows. Automated accounts payable processes enable thorough audits and accurate invoice approvals, minimizing the likelihood of duplicate or erroneous payments. Moreover, AP automation solutions provide secure payment methods, detecting unknown vendors and potential fraud to uphold payment integrity.

Optimizing Reconciliation Processes

Reconciliation is vital for payment companies' financial operations. Mobile banking usage has surged, with 53% of consumers using it and 26% adopting digital wallets, according to Fiserv's 2020 survey. Direct debit payments (ACH) are also prevalent, with 69% using them. As transaction volumes rise, back-office operations face pressure. Automated reconciliation solutions can reduce time by 85%, handling over 70 million transactions daily with a mid-90s match rate. Leveraging automation streamlines processes, saving time and resources while ensuring accuracy for payment companies. accuracy.

Enhancing Security and Fraud Detection

Payment processing companies prioritize security as their top concern due to handling sensitive financial information. A Juniper Research study revealed that businesses suffered a massive $17.5 billion loss in 2020 due to fraud and chargebacks. To combat this, finance automation tools have implemented advanced security measures like encryption and tokenization. Among these measures, fraud detection plays a vital role in protecting merchants from financial losses caused by fraudulent transactions. Automated fraud detection algorithms analyse transaction patterns in real-time, enabling the identification of suspicious activities. This not only prevents revenue loss but also reduces the time and costs associated with processing chargebacks and managing related expenses.

Enhancing Customer Experience and Retention through AI-Powered Solutions

AI-powered solutions are now indispensable on payment processing platforms. They analyze customer data to provide insights into behaviour and preferences, enabling personalised experiences that enhance satisfaction and loyalty. Platforms like Amazon Pay and Klarna suggest products and offer personalised payment options, fostering convenience and stronger customer relationships. Stripe and PayPal employ AI algorithms to recommend services based on transaction history, driving customer retention and revenue growth. AI enables tailored experiences that deliver satisfaction, loyalty, and long-term success.

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