Accelerate and Streamline Payments to Drivers: 4 Significant Considerations
The freight and logistics (F&L) industry is accelerating technology adoption to attain new levels of efficiency and flexibility and respond to growing competition from major e-commerce companies. Technology is a strategic catalyst for carriers to partner with shippers by “doubling down on such qualities as reliability, visibility, and comprehensiveness.”1
One technology gaining traction with many F&L firms is digital payments, specifically for payroll and related expenses, but extensible to a range of payments. Solutions such as PreferPay® from CommercePayments® is a business-to-consumer payments platform that assumes complete life cycle management of a company’s payments to its owner-operator/contracted drivers and other staff. This real-time compensation provides recipients with convenience, speed, and choice of transaction modes: direct to debit card, direct deposit, or paper check. Process automation boosts staff productivity and dramatically reduces reliance on costly paper-based transactions.
Four critical success factors should guide F&L companies as they evaluate such solutions.
Platform-Based
Supply chain participants are looking to minimize use of multiple independent software applications in favor of unified platforms. The goal is to bring “discrete add-on systems … all together in one platform, aiming to provide a seamless user experience.”2 Doing so helps control costs and enables development of platform-based business models.
The right business-to-driver digital payments solution adopts this platform approach in order to support comprehensive process management, permit flexible workflows, connect multiple stakeholders and promote ease of configurability and scalability. Many financial technology offerings continue to be packaged as individual applications rather than robust platforms.
Integration
The platform needs to be integrated with the company’s financial, payroll and other relevant central systems. Integration is fundamental as it enables automatic bi-directional data flow between core system repository and the application. Users are relieved from many data entry and lookup steps. Payment reconciliation information is electronically transmitted, and reporting and analytics are enhanced with more complete data capture.
Look for solutions that achieve integration via Application Programming Interface (API), a set of protocols that facilitate robust communication between many systems and strengthen platform flexibility. CommercePayments® is committed to an API-first approach, which has become the preferred mode in IT development, while also supporting file transfer options.
Security
Cyberattacks plague shipping and logistics as with other industries. These incidents can be costly and highly disruptive. The average cost of a data breach in the transportation sector has been estimated at $4.2 million in 2023.3 Attacks seeking payroll-related information about drivers and staff have many negative ramifications.
Strong security is vital in a digital payments platform. CommercePayments® has deployed its PreferPay® solution consistent with several best practices:
- Private cloud implementation hosts the portal and stores customer data behind the bank’s firewall
- Multifactor authentication by phone and text message to add a system security layer in driver/employee interactions
- Confidentiality requirements adhered to by all bank staff supporting the platform
Another source of vulnerability is the many vendors and partners involved in an F&L firm’s supply chain. The security capability of each of these participants must be evaluated. As a leading financial institution subject to numerous federal, state and local laws and regulations related to security, CommercePayments® understands the risks and the need to be a trusted collaborator with its clients. Indicators that a provider of digital payment solutions is committed to cybersecurity include having a Chief Information Security Officer, performing constant system testing, system monitoring on a 24/7/365 basis, and security training for internal and client teams.
Reliability
Reliability encompasses several features. Well-designed software reduces points of failure. Automation creates exception-based processing that lets staff focus on resolving more complex issues and minimizes productivity “leakage.” A consistent user experience across mobile devices and computers minimizes user error.
Another key factor in the reliability equation is quality support. Does the vendor respond quickly and effectively to issues and inquiries? Are ongoing system surveillance and regular operational reviews conducted with each customer to offer guidance?
Ultimately, today’s F&L companies want more than a vendor. They seek a strategic organization with a track record of reliability, the necessary resources, and the commitment to help clients stay current and meet changing needs over the long term.
There is an immediate opportunity to bring digital payments to the compensation transactions for drivers and employees and generate many benefits for recipients and company alike. Selecting the right business-to-driver payments solution to deliver these benefits is essential and applying the four critical success factors articulated in this article will aid leaders in their decision-making.
If you’d like to learn more about our PreferPay® solution or request a demo, please visit our website.
Also See:
CommercePayments® solutions are provided by Commerce Bank.
Disclosures:
- J.Schulz, “2023 State of Logistics Report: Great Logistics Reset,” Logistics Management, July 10, 2023.
- KPMG, “The Supply Chain Trends Shaking Up 2023.”
- IBM, Cost of a Data Breach Report, July 2023.
