It’s almost unheard of in 2023 for a business to not accept credit cards. According to Insiderintelligence.com, in 2022 US companies transacted $3.089 trillion in credit card sales. When you factor in the 2.5% average credit card processing fee, US companies are spending $75B on credit card processing – and no one is complaining. Yet, many of those same companies won’t upgrade their servers, won’t invest in a good supply chain visibility platform and even worse – won’t regard their EDI solution as an advantage to be leveraged. Why the disconnect on something so obvious? To answer that, let’s look at the timelines and drives behind these technologies.
Credit Card Evolution
The very first credit card was introduced by Bank of America in 1958. Of course, the concept of extending credit was not new and had been around for thousands of years, but this was the first true revolving bank credit card and is what would evolve into what we know as today’s credit card. Credit cards have undergone major reform in the last decade, from the addition of the microchip as a security feature to the many laws enacted to protect consumers from predatory lending institutions. The reason? It’s simple – consumer demand. Credit card terminals are now so common that you can find them at the farmer’s market, with Girl Scout moms peddling cookies and even mobile animal groomers. Credit cards and the consequent ($75B) processing fees are unavoidable. Can you imagine the backlash that would ensue if Amazon suddenly stopped taking credit cards? What about Target? These companies know that accepting credit cards earns them more revenue. And you could argue that both Amazon and Target also understand that EDI and B2B technology earns them more revenue. The same cannot be said for every company that supplies products to Amazon or Target consumers.
Avoid Technical Debt With EDI Integration
I hate to throw my favorite airline under the airbus, but it must be done. On December 22nd, one of the busiest travel days of the year, Southwest Airlines experienced a system-wide failure due to outdated scheduling software. This left hundreds of thousands of passengers stranded and unable to get to their destinations. All told, more than 15,000 flights were cancelled and Southwest lost over $800M in gross revenue. The New York Times reports, “This problem — relying on older or deficient software that needs updating — is known as incurring technical debt, meaning there is a gap between what the software needs to be and what it is.” In the EDI/B2B technology world, we see this more often than we’d like. Here are just a few horror stories I can think of off the top of my head:
- Company ABC is using VERY old, unsupported EDI integration software and one day the outbound batches fail. None of their partners are receiving any invoices or ship notices – they are dead in the water.
- Company DEF is using Windows Server 2008 and tried to upgrade their EDI integration software. A key security feature is not working now (because Windows 2008 is not supported) and they are unable to send or receive any MDN receipts.
- Company GHI is using NetSuite and a manual EDI solution. They seek to automate and outsource their EDI processing but due to the sizeable investment, they decline and subsequently lose a huge customer because they cannot support them.
- Company JKL has their EDI managed by a 3rd party and is incurring extraordinary chargebacks; they perceive the cost of switching EDI providers as too great as compared with the service they receive from their current EDI provider, where the tenure of support personnel is just shy of the years they spent in college.
These are just a few cautionary tales we have noted in recent weeks. The recurring theme here is that these companies don’t recognize that keeping their technology current, efficient and running optimally is necessary. They see it as only an expense and not as an investment.
Changing Lanes
How do we get our clients and prospective buyers to understand that their B2B technology is as important as the strategy of accepting credit cards? It really goes back to demand, just like the consumer demand of credit cards. If more of their retail customers demand better fill rates, on-time ASNs, and clean data – perhaps that would incentivize them to keep their technology in better shape. How about offering purchase contracts to only those suppliers who can prove and maintain good vendor scores? Another idea might be offering better payment terms to your “good” suppliers. As a B2B technology partner, we can lead a horse to water, but we cannot make them drink. I’ll bet that Southwest paid more in credit card fees in 2022 than it would have cost them to update their software. Ultimately, companies sometimes need to learn the tough lessons.
EDI Solutions & B2B Technology
Upgrade your B2B technology and leverage your EDI solution to gain a competitive advantage. As the credit card industry has evolved to meet consumer demand, so too must your technology. Don’t incur technical debt and risk losing revenue. Partner with an EDI provider that can keep your technology current, efficient, and running optimally. Prioritize supply chain visibility and automation, and offer better payment terms to your “good” suppliers. Contact GraceBlood today to learn more about our EDI integration services.
