New Amex Paper Details Benefits of Creating Your Own Payments Offering
The list of software companies that are making the move to becoming a payment facilitator is growing. The number of PFs is expected to more than double from 1,000 to over 2,300 globally in the next five years.
This is according to a new American Express white paper, which is geared to helping SaaS companies bring payments in-house. It details some of the reasons why so many businesses are making this move.
According to the paper, SaaS companies find becoming a payment facilitator financially beneficial, in a couple of primary ways.
The first is the additional revenue a payments business receives. Software companies that handle their own payments collect all of the gross payments revenue, rather than simply receiving a commission from their payment providers.
The second way is the potential for incremental enterprise valuation. Adding payments to a software provider’s services streamlines its offerings and differentiates it in the market, often resulting in increased interest from investors.
But financial benefits aren’t the only rewards of becoming a payment facilitator, the paper noted.
One important advantage for PFs is that companies with their own payments products maintain direct relationships with their customers. Payment facilitators manage their customer experiences directly through control over their own application and onboarding processes and risk decisioning, rather than turning those customers over to a third party for these services.
While more software companies are choosing to become PFs, they are controlling a widening piece of the global payment processing pie. The top four payment facilitators manage 6% of global payments volume, about $929 billion. Forecasts put that number at about $4 trillion by 2025, the paper said.
To learn more about why a growing number of software companies are choosing to offer their own payments services, and which companies are taking the step, download the white paper.