Are you interested in entering the payment industry, but you’re not sure what the most effective strategy to do so would be? We have high hopes that you will find this article to be an excellent beginning point for you in the process of figuring things out about the payment processing sector and the many business models that are accessible.
Why should one begin a firm that processes payments?
The processing of payments is one of the very few sectors that was able to enjoy a surge in revenue as a direct result of the COVID-19 outbreak. While already on the increase as a result of the slow transition to a cashless economy in many nations, the popularity of online payments has been boosted by tighter restrictions implemented in several countries throughout the world. Customers were compelled to make their purchases online rather than going out to traditional businesses since they felt it was more prudent to remain in their homes. As a direct consequence of this, the business of processing payments became significantly more successful over time.
In the years 2020-2021, when several sectors were having trouble staying afloat, the payment processing business was making news with many important transactions. To take just one example, Worldline’s acquisition of Ingenico for $8.6 billion, which resulted in the creation of the largest acquirer and payment processor in Europe, is one example. Or the $5.3 billion acquisition of SIA by Nexi, with the former having the lofty objective of becoming the largest payment service in Europe. And naturally, we can’t forget to bring up Stripe, which just completed its most recent financing round in March and is now estimated to be worth a mind-boggling $95 billion. The firm saw roughly three times the growth in just one year, reaching a valuation of $36 billion by spring of 2020.
Even though it is getting increasingly competitive, the worldwide industry for digital payments is still relatively new and developing, which is drawing new competitors to enter the market. It is anticipated to expand at a compound annual growth rate of 19.4% between the years 2021 and 2028. Continue on to the following section if you are interested in being a part of this rapidly expanding sector.
What are the different possibilities?
There are three entry points available for anyone interested in starting their own firm in the payment processing industry.
The first option is to create your own method of payment, be it software or a physical commodity. It is a road that requires a significant amount of bravery in addition to a significant amount of time, money, and resources.
Another option is choosing a white label model, meaning you buy a ready-made payment software from a vendor and offer it to merchants under your brand and on your conditions.
And there’s one more way to go for those who’d like to make money without development – the affiliate model. You’ll sign a contract with a PSP to bring them new clients for a reward you agreed upon. It’s an excellent choice for networking pros, but today we’ll focus on the first two that allow getting the sense of the payment business better.
