The payments market opportunity

Ecommerce is big business. Emarketer has predicted that global ecommerce sales will reach $5 trillion by 2021, following sustained annual growth rates of more than 20%. In turn, this flourishing market generates billions of dollars of fees for the payments companies that enable it.

Little wonder, then, that an array of non-banking financial solutions providers has flooded the marketplace in recent years. Without the constraints of dated technology or a sprawling existing infrastructure to manage, these disruptors have been able to overtake incumbent banks and payment providers in many ways. From offering a greater range of payment methods in line with merchants’ expectations in different countries, to managing fast-changing regulatory compliance across jurisdictions, they offer the features and services needed to enable truly international ecommerce.

Ultimately, offering a truly international payments platform to their merchants requires payment businesses to manage myriad different factors. They need to work with multiple different acquirers to ensure the highest success rates at the lowest cost across different countries. They need to offer multiple payment methods, currencies and languages in line with where merchants – and shoppers – are based. And they need to manage a highly complex fraud and compliance landscape, with different requirements across business sectors and countries.

Furthermore, to truly drive ecommerce success for their merchants, payments businesses need to be able to offer sophisticated business intelligence and tangible, actionable insights, on everything from the payment methods preferred by customers, to the devices they browse and buy from.

Build vs buy

This leaves those incumbent banks and payment providers with a potentially risky choice. They can attempt to build their own in-house payments platform covering all of these features – which means they retain ultimate ownership and control, and brand consistency for their customers. Or they can turn to these disruptors to deliver specialist online payments services – services which are becoming increasingly important to their customers.

However, in-house builds can be hugely costly and time-consuming, especially for long-established banks and payments businesses with legacy technology and complex infrastructures in place. If such a build takes, say, two years, then a huge opportunity will have been lost.

On the other hand, merchants turning to third-party providers for specialist online payments services can dilute the incumbent payments businesses’ and its brand.  Those providers take a share of the clients’ wallets, a share of their business intelligence and insights, and opportunities for cross and up-selling that the original payments business might otherwise have been able to capitalise upon.

Some banks and payments businesses have bought acquired disruptors in order to bypass this problem – in 2018, ING bought a majority stake in Payvision, for example. This approach can be successful – or it can introduce a raft of new challenges in terms of cultural and technological integration, to say nothing of being a very costly option. You can read more about this Build vs. Buy dilemma in our whitepaper here.

Striking a balance through white-labelling

Payment companies need a modern and modular platform that can be implemented in a matter of days rather than years, and a white-labelled platform is an increasingly popular choice. A single integration between the bank, acquirer or PSP and the white-labelled platform is all that is required. From there, an out-of-the-box online payments platform is available to all of the payments business’ merchants, customisable to their precise contexts and needs.

Nevertheless, if this option is chosen it is vital to work with a trusted specialist. Merchant migrations need to be smooth and seamless, with absolutely no loss of data or operational downtime. Working with a white-labelled platform should not mean any loss of control for the payments business in question.

Growing your payments business

Existing banks and payments businesses have several choices when it comes to growth and success in an increasingly ecommerce-driven world. They can build a payments platform in-house; they can partner with one of the disruptive new players or even buy one outright; or they can white-label an existing solution. In most cases, this latter option will offer the best combination of speed, agility and cost-effectiveness.

Perhaps most importantly of all is the fact that doing nothing is not an option. Only 7% of total retail is currently online. Ecommerce sales are set to grow and grow, and banks and payment providers, which are not set up to enable them, are quickly likely to be left behind.