Writing for Payment Expert, Scott Dawson, the Director of Operation at Pixxles, underlined the importance of collaboration and choosing the right partners when it comes to maximising innovation and growth within the payments space.
In most industries, a supplier recommending you another company to do business with might be either irrelevant or even a cause for concern. After all, a professional business is supposed to assess multiple potential partners to find the company that objectively works best for them, not work on the basis of ‘I know a guy who knows a guy’. You can certainly take the recommendation, but you will still have to perform the usual due diligence just as you would with any supplier.
When it comes to choosing payment partners, the process becomes more complicated, but potentially much more valuable. Most of us do not need to worry about what happens when we use a credit or debit card – we know that our bank, our card scheme (such as Visa and Mastercard) and presumably the merchant’s bank must be involved, but the exact details of what happens and why aren’t a concern.
When you are running a business, and particularly when you are running an online business, the specifics of the payment process become all-important, and the partnerships between the companies that form the individual parts of this process can unlock new features, new efficiencies and ultimately save money on everyday transactions.
The evolution of the payments space
Payments, or finance in general, have never been simple, but now that they are primarily digital and factors like anti-fraud protection and foreign exchange need to be factored in, they are a complex network of acquirers, payment processors and clearing houses. Some of these companies may be part of larger companies, others may be formal partners. Either way, when a merchant signs up to an end-to-end payment processor who offers a complete solution to payments under one roof, they will actually be linked to potentially dozens of companies.
There are also security systems and compliance factors. Few but the very largest payments companies have their own in-house anti-fraud systems, especially now that these systems often use extremely sophisticated machine learning and ‘big data’ analysis. This will often mean that extremely important systems like anti-fraud technology and Strong Customer Authentication (SCA) come from partnerships with payments companies rather than the companies themselves.
Does this imply a ‘supply chain risk’, in which although your company’s payment processor may be working at 100%, a problem at one of their partners can end up affecting you? Not at all. The payments industry has ‘grown up’ in a digital age through partnerships – the entire process has so many moving parts and needs so much customisation to meet merchants’ needs that there can’t really be a ‘one stop shop’, even amongst the major card schemes like Visa and Mastercard.
This can be a great opportunity for merchants. It means that once they understand the various moving parts in their payments process, they can optimise (or perfect) them according to their needs, particularly if they have certain needs like cross border payments, ‘high risk’ transactions and specific anti-fraud protections. From there you can start building your own network of partners that can deliver a seamless payment process to your customers.