What COOs should know about digital payment solutions: Identifying and fixing your payment model

The rise of digital payment solutions

Every business, public sector agency, non-profit, etc. sends and receives payments.

They send payments to each other. They send payments to consumers—think refunds, insurance claims, or wages. They receive payments from consumers, too, such as when they pay a mobile bill, electric bill, or when they are buying food or gas. Furthermore, several services allow consumers to send money among themselves within a country or cross-border.

None of this activity is new. But a sea change is taking place in the world of payments. Digital technology has upended traditional money-transfer methods, forcing many businesses to adapt their operating models and technical infrastructures. How is this trend playing out in practice? Let’s break it down.

The four types of payment models

The simplest way to think about payment models is how they flow: business-to-business (B2B), business-to-consumer (B2C), consumer-to-business (C2B), or consumer-to-consumer (more commonly called person-to-person or P2P). The matrix below illustrates this framework.

There are many other aspects and dimensions to payments, and most organizations are parties to more than one type of payment model. In addition, intermediaries such as banks and the Federal Reserve sit in between all these flows with their own products, operations, and technologies. But if you’re an operations chief looking to improve payment processes in your organization, the first thing you probably want to do is narrow the scope to something more manageable, which this framework can help you do.

Finding and tackling pain points

Once you’ve identified who’s paying whom in your organization, the next step is to size up the current situation. Your aim is to understand where pain points exist and the options for a solution. For instance:

• Do you want to adopt new types of payments, channels, or geographies that attract new customers in some way?
• Do you have many inefficient, error-prone manual processes and need to digitize them? 
• Are your legacy systems simply getting old and expensive, meaning they need to retire and give way to something more modern?

Usually, any set of solutions is going to tap into some combination of:

• Operational transformation
• Cloud enablement or migration
• Vendor assessment and selection
• Strategy

Often, a solution will require a new system that's commercially available through a vendor. And many payment solutions involve a digital design (like screens for a mobile wallet).

Here’s an example. Suppose your company is an insurer that needs to send and receive money to and from policyholders, and, in some cases, to and from corporate vendors. So it's touching on B2B, B2C, and C2B payment models. One potential solution for policyholders could be to enable a digital payment solution from a mobile app. (In fact, these days a mobile app is almost a given.)

The shift to a digital-first reality in payment solutions

Payments are an essential business process that didn’t necessarily attract a lot of senior-level attention before the digital revolution. Now they’re causing businesses to reconsider operating models to drive innovation and customer acceptance.

In our next blog, we’ll take a deeper dive into payments as a capability, including some real-life examples of companies that redefined the way their payment systems function. Stay tuned. And, in the meantime, if you have any questions or would like to discuss your own situation, please don’t hesitate to contact us.

Get in touch

	Conrad Sheehan Managing Director | Operations Transformation csheehan@deloitte.com +1 847 732 6388		Rob Kaye Principal | Operating Model Transformation Leader rkaye@deloitte.com +1 248 762 4517
	Mark Ericksen Senior Manager | Operations Transformation mericksen@deloitte.com +1 303 319 1038