Thought Leadership

Payments Don’t Have to be Hard: Arguing for a Platform Solution

TL;DRHyperwallet’s SVP of Digital Markets lists four common issues with running a payments company and explains how the next wave of financial platforms will play an integral role in the new economy.

It’s no secret that payment companies are back en vogue. And it’s easy to see why: when they’re successful, payment companies can unlock tremendous economic value for consumers and businesses, at the same time returning massive gains to founders and investors. The reason being is simple: payments systems are downright difficult to architect, operate, and scale.

The payments business is hard; trust me, I’ve been in it for more than two decades. But just what makes payments so difficult? Well, if you ask me, there are a few obvious reasons:

1) Getting Started Isn’t Easy

Payments businesses require a lot of work to get going. First, there are bank relationships to establish, all of which require heavy due diligence, not to mention the implementation of accounting and reconciliation practices, the creation of treasury operations, the composition of specific terms and conditions, and the adherence to detailed compliance rules. All of these translate into getting bankers and lawyers involved, which (no offense to my friends in those professions) rarely translates into a swift, simple, and affordable process. Planning to operate on a global scale? Take the above laundry list, then rinse and repeat over and over again.

2) Scaling is a Complex Beast

There are no ‘gimmes’ when it comes to scaling a payments platform. Scale comes in a lot of forms: transaction volume, transaction velocity, geographic coverage, demographic coverage, and the risk profile across consumers, merchants, and industries. To be a true player, you must be able to demonstrate that you can not only support scale on a massive level, but also that you can achieve scale quickly. It’s expensive to keep the lights on in a payments business. Either you have a plan to get big quickly, or it’s time to call it quits.

3) It’s a Risky Business

Moving money is a big responsibility and there’s nothing more alluring to a fraudster than fresh, new prey to hack. Payments businesses are built on a foundation of trust, security, and safety. If your platform fails to establish this environment you might as well have a virtual bullseye plastered on your back because it typically spells doom from the outset.

4) Because You Don’t Know What You Don’t Know

Tech startups are notorious for making big gambles. It’s a part of the culture; jump out of a plane and build the parachute on the way down. But when it comes to payments, assuming you can just ‘figure it out’ isn’t really the best way to gain traction. Unless you have the right combination of expertise, practical experience, and fortitude, you’re just betting against the house. And, to be clear, that experience isn’t acquired by reading the Visa or MasterCard handbook. True knowledge comes only after you’ve experienced a business-altering event (or at a minimum, have the benefit of knowing someone who has had that experience). This could even be a positive event, such as unexpected rapid growth, or a negative one. Either way, you’re going to run into problems if your plan is to find solutions on the fly.

A Payments Platform Solution Already Exists

As more platform businesses emerge (and subsequently need to pay increased numbers of individuals), the need for innovative payment companies courageous enough to tackle all of the above issues will increase exponentially. Without them, these new businesses will have little choice but to overcome these roadblocks themselves by building their own ad hoc payments infrastructure. This will include supporting the unique funds distribution needs of their business, safeguarding their user experience, and enabling ongoing growth, which—as you know—is really, really, hard to do.

So yes, the payments industry is tough, especially for companies in this new economy. They are in a constant struggle to integrate legacy financial infrastructure (correspondent banks, clearing networks, ambiguous regulations, etc.), with highly iterative technologies and constantly evolving business models. After 15 years in the payments game, Hyperwallet has successfully navigated the complexities of outbound payments like no other. This has enabled us to build a platform that abstracts all the hard stuff—administrative hassle, compliance risk, distribution issues, and so on—from the payments process. At the same time, Hyperwallet has built a platform that can successfully marry established financial infrastructure with the modern technologies that new economy businesses depend on.

The result? Payments are no longer hard. With the Hyperwallet payout platform, the businesses of the new economy simply need to know who they want to pay without having to understand any of the complexities of how to get them paid.

Let us show you how easy payments can be.

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