From Cost Center to Strategic Asset: Discover A Fintech Leader's Winning Strategies

Corporate functions operate on orthodoxies. One such orthodoxy within the finance function is the belief that a business has no choice but to accept the cost of getting paid. Nothing could be further from the truth, according to payment expert Rishi Munjal. A cross-functional look at payments within a corporation not only reveals cost reduction opportunities but opportunities to drive revenue and create a strategic asset.

Munjal's conviction in his views comes from years of experience as a practitioner working at the intersection of financial technology, payments, and strategy. "Cards are the most used form of payment by US consumers. In 2022, merchant fees were a significant one-third of the revenue generated by providers from card processing. Unfortunately, most businesses lack sophistication in navigating the complex card ecosystem, leading to unnecessary costs they bear," Munjal notes.

Managing costs of payments

Munjal cites several cost levers, such as card downgrades, poorly negotiated provider contracts, and legacy terminals/systems as the reasons for higher costs. He adds, "On average, downgrades can cost a merchant 0.5% or higher in merchant fee." There is no reason for businesses to assume that they are paying a fair price, as there are plenty of factors that drive up their cost of payment acceptance. The downgrades and many other cost levers can be largely attributed to suboptimal processes and systems a merchant may have. According to Munjal, it is wishful thinking to assume that there is one simple universal fix that can easily be implemented by all businesses. Every business has its own unique way of running and operating. The strategies and methods they employ may vary, and the path to achieving their desired outcomes can differ as well. While cost takeout is the most instinctual to the finance function, Munjal opines that businesses often overlook the more significant implication of payments on the revenue side.

Stopping revenue leakage

According to Munjal, an increasingly digital payments landscape can create a non-linear revenue downside for businesses. He mentions, "Every $1 of fraud can cost US retailers anywhere from $3-$3.5." To make matters worse, if businesses cross the fraud thresholds set by networks and issuers, they risk losing the ability to accept cards, which can be a death blow for many of them.

In addition, customers' experience at checkout has direct revenue implications for businesses. Munjal notes that a failed payment during an online checkout means a lost sale and more than a 60% chance that the customer will never come back. Not to mention the negative impact on the brand's long-term reputation, which takes years to build. He explains, "Cart abandonment is a direct result of friction during checkout. Optimizing the checkout experience can lead to double-digit improvement in conversions." Munjal takes it a step beyond cost and revenue leakage reduction and helps customers turn payments into strategic assets.

Turning payments into a strategic asset

While many of Munjal's customers have a well-defined strategic vision and approach, only a few take the initiative to develop a corresponding payment vision and strategy that aligns seamlessly with their overall objectives. For example, a business seeking to expand its global footprint beyond US shores can be at a huge strategic disadvantage if they have not considered the choice of its payment provider carefully. He notes that if a business does not consider its local acquiring needs or the targeted global footprint, it can be exposed to significant currency conversion costs and spaghetti payment processes that are unreliable.

Payments as an asset serve a fundamental purpose by enhancing a business' strategic advantage. According to Munjal, embedded payments can help non-payment businesses drive new revenue streams from payments.

Expertise grounded in hands-on execution

Drawing from his extensive hands-on experience in enhancing consumers' payment experiences, Munjal helps numerous businesses expand payment options, lower payment acceptance costs, mitigate revenue leakage, and establish innovative business models.

Munjal's diverse experiences include ensuring compliance with anti-money laundering (AML), and know-your-customer (KYC) regulations, as well as adhering to Payment Card Industry (PCI) standards. He has also played a pivotal role in spearheading the launch of new payment products and devising market entry strategies.

Currently, Munjal showcases his strategic prowess as a member of the Federal Reserve's working group, the FedNow Request for Payments Workgroup, an influential group actively shaping the introduction and adoption of faster payments across the United States. Furthermore, his collaboration with The Clearing House to reimagine bank bill pay has spurred significant investments by leading US banks, fueling the modernization of their payment systems.

Overall, these groundbreaking projects push the boundaries of payment systems, facilitating automation and streamlined processes. Munjal's professional expertise and unwavering commitment position him as a priceless asset in transforming payment cost centers into strategic assets.