Rethinking the Cost of Payments

Davi Strazza is president for North America at global payments firm Adyen. He joined the company in 2015 and has held several senior roles, including president for Latin America and senior vice president and head of enterprise sales for the U.S. 

Retailers are continuing to face more and more margin pressure — not just driven by inflation or supply chain issues, but by new operational complexities. As customer expectations climb and commerce becomes increasingly omnichannel, the cost of doing business is growing in places many companies overlook, and payments is one of them.

Adyen’s latest Retail Report reveals that 27% of American businesses are focused on increasing net revenue by lowering the cost of payments. But many companies are still taking a piecemeal approach to cutting costs and are missing the broader opportunity: real savings come from addressing payments holistically.

Whether it’s adopting lower-cost payment methods, consolidating vendors, or minimizing fraud, retailers that take a full-ecosystem approach are guaranteed to see significant improvement. The “total cost of payments” is more than just interchange or processing fees; it’s the result of inefficiencies, fraud losses, poor routing decisions and manual reconciliation work. In fact, 27% of businesses say that fraud and chargebacks alone represent a significant cost, underscoring just how important it is to tackle payment challenges holistically.

When optimized strategically, payments don’t just help cut costs. They actively drive growth.

Operational inefficiencies are hiding in plain sight

Even for sophisticated retailers, hidden inefficiencies in payment processing add up fast. Legacy routing might not account for changes in network fees or approval rates. Multiple vendors can lead to fragmented reporting and higher reconciliation costs — before even factoring in chargebacks, false declines, or the operational drag of managing multiple fraud systems. In fact, only 23% of U.S. businesses are currently optimizing transaction routing, according to Adyen’s Retail Report highlighting just how widespread these inefficiencies still are.

But these inefficiencies are fixable. Through intelligent payment routing, businesses can automatically send transactions through the most cost-effective networks — while also boosting authorization rates. Adyen research shows this can lead to material cost savings, particularly in debit-heavy markets like the U.S., where leveraging lower-cost networks for domestic transactions can make a significant difference. For example, within 90 days, Adobe increased authorization rates by 2.25%, cutting costs and improving performance — ultimately driving more sales and higher profits.

Payments as a strategic growth driver

Cost optimization doesn’t have to mean compromise. If done right, it unlocks growth. By consolidating payments under a single platform, businesses gain real-time insights into performance, reduce reconciliation time and free up resources to focus on the customer experience. This is a shift more companies are prioritizing, with 29% of U.S. businesses saying they plan to consolidate payment systems in the next year, according to Adyen’s Retail Report.

And it’s not just about operational wins. Payments data can fuel smarter fraud prevention, too. With fraud continuing to be a major concern and a significant cost center, streamlined systems help reduce false positives and cut fraud-related losses.

In a market where every basis point counts, businesses that treat payments as a strategic function — not a sunk cost — are better positioned to compete.

Reframing Payments as a Profit Driver

As retailers plan for the future, they don’t need to choose between growth and efficiency. By shifting the view of payments from a cost center to a growth enabler, businesses can uncover meaningful savings and strengthen their bottom line in the process.