Time for a Chief Payments Officer

The role of payments has moved way beyond its early perception as a way of receiving funds and ticking regulatory boxes. Today it’s a growth engine that can boost the bottom line.

In fact, the function fulfils such an important role that it deserves its own seat at the C-Suite table. If companies were to create the role of Chief Payments Officer, they would see how the function can reduce costs, boost margins and improve sales, all while increasing customer loyalty. That was the suggestion reached during the first episode of The Payments Manifesto series recently hosted by Primer. In the first episode of a three-part series, host Kailash Madan invited guests from Zip, Edgar, Dunn & Co and Primer to make the case for payments. 

The consensus was that payments need to have a higher profile within the business. While some may still see the function as a cost centre, there is room for optimism. According to Primer CFO, Pierre-Edouard Jumel, though there is still much work to be done, the function is increasingly seen as a growth opportunity, for those who commit to improving strategy. However, there are still legacy views in many businesses that must be overcome first.

“Payments are still too often seen as this complex process that sits at the end of the customer journey and represents, for finance leaders, mainly a cost line item that needs to go down,” he said.

“But money left on the table due to a poor payments strategy, the payment journey is unparalleled, and finance leaders seem to not fully appreciate this, or at least not until recently. Payments are everywhere, and should be at the core of any strategy to enhance online shopping experiences and improve financial KPIs.”

CFOs are starting to listen

A proof point of how much is at stake came from Primer recently sharing a fraud report that showed the global retail sector lost more than $400bn to fraud in 2023, with one in four businesses impacted. Jumel believes it’s avoiding fraud, as well as improving revenue, that means the message of the vital role payments plays is now starting to be listened to.

“The discussion I am having from all verticals in all geographies, from SMBs to blue chip enterprises, is that with a bit of education and the right tools for leadership teams, they understand the well-defined benefits of payments,” he says.

“They understand payment impacts, all the main components of their P&L, for revenue, gross margin, overheads and cash flow. The bottom line is payments have a direct impact on governance, and therefore on value creation for shareholders. And I can guarantee that CFOs are extremely sensitive to this discussion.”

Time to unite under a CPO?

For this growing awareness of the prime role of payments to coalesce into action at the top of a business, the function needs to be represented. Payments need an ‘owner’ and this is not often the case, according to Mark Beresford, Director at Edgar, Dunn & Co. While he believes that many companies are open to a discussion about using payments more strategically to drive revenue and growth, it’s hard to gain traction without a single person at C-suite level who can lead the debate. For him, the answer is clear. Create the role of Chief Payment Officer and then get ready to start seeing the impressive gains possible in customer experience, sales growth and revenue. 

“I’ve always found that payment is not owned by an individual,” he points out. “It might ultimately float up to the CFO or CEO, but because payment touches many parts, it's owned by a group of people. I think that's where quite a few things fall through the cracks. 

“Businesses that have started to realise this, and create the role of a Chief Payment Officer, at board level, understand that payments is a differentiator. It brings to the merchant, to a business, a differentiation factor in the customer journey, the customer experience, the checkout experience, the unhappy customer experiences, such as returns and refunds and and chargebacks. With a Chief Payment Officer within a business, they actually start to get a coherent viewpoint on payments.”

Payments as a revenue driver

Nitin Kashid, Global Head of Payments and Partnerships at buy-now-pay-later operator, Zip, echoed the positive steps that are taking place in the industry. He charted the progress of the function from being a requirement to a driver of growth. Just twenty years ago when he was helping the rollout of chip and pin cards, the move was seen as a regulatory obligation. Then, when these cards were used by the Australian government for its staff, as a more efficient way of reimbursing staff than per diem allowances, it was labelled as a means of enhancing admin processes.

Today, the payment industry can go to market with its message that it’s more than a process, it’s a growth engine. By adding the most appropriate payment methods that consumers require in each geography, and by partnering with the right people offering the best technology, the function can have a near immediate impact on the bottom line.

“We know that payments will drive process optimization, as well as cost optimization,” he said. 

“We genuinely look at payments as a revenue driver for businesses, for the merchants we work with. A better payment stack (that includes ZiP, as a payment method) is going to help customers improve conversion rates and basket size. That's the biggest value proposition when we talk to a merchant, giving your customers the best chance to complete the purchase. Companies must look at payment optimization as a revenue driver.”

Drive up brand image 

The argument that payments need to be seen more strategically, with a dedicated position in the C-suite, is even more compelling when companies look beyond just optimizing revenue from sales and focus on creating new opportunities. High level decisions can include which partners a business works with, what payment methods are shown in each geography, how it improves authorization rates, and how it handles issues that arise from poor experiences.

Ultimately, this means the payment function sits at the heart of not just optimizing revenue but also improving customer experience and brand loyalty. It requires strategic thinking at the top of an organization to ensure customers convert and keep returning.

“There are so many touch points across the entire journey when it comes to payments, through pre-purchase, purchase and post purchase,” Kashid said.

“What's the experience for the customer? What happens when the payment fails? Are you giving them enough information to make sure they understand why a payment fails? Do you have multi-acquiring options? Because the payment may have failed because of one acquirer. In the post purchase experience, how do you deal with the disputes over the chargeback refunds that the customers just abandoned?”

These may sound like questions for a finance team working on payments, but they speak to the core competency of an organization. How well a company succeeds in offering customers a frictionless experience which treats them fairly, impacts directly on their brand image. In turn, this dictates the likelihood of creating loyal users who spend more and come back for subsequent purchases.

The guests on the first episode of our Payments Manifesto series believe there are many options available to payments teams to prove the worth of the function to the CFO, as well as sales, compliance and marketing teams. First though, a company has to understand that payments go beyond a cost centre and are now a strategic game-changer. As such, it needs to be seen as a core function of a business. For that to happen, it needs an owner. 

It’s time for the Chief Payments Officer to have more common sight within the C-suite.