A hand holding a smartphone over a point-of-sale device, symbolizing the choice of a Payment Service Provider

Payment Service Providers: How to Find One For Your Business

Let’s spill the beans: You are in the e-commerce business for profit. Not solely for the profit perhaps. But it’s clear that you want to make money. And that means you must figure out how to get paid for the goods and services you offer online. The “how” is crucial: The choice of the Payment Service Provider you want to trust with processing your transactions with customers will resonate in every nook and cranny of your day-to-day operations. If payment doesn’t work, you won’t sell anything.  

That’s true all the more if you are operating in multiple countries or across borders – preferences in Payment Service Providers (also called PSPs, Payment Solution Providers and sometimes Merchant Service Providers) fluctuate among nations and demographics. 

Here’s the good thing: Whatever your business requires, there will be a Payment Service Provider with the right capabilities. That friendly online encyclopedia counts around 900 different Payment Service Providers worldwide, 300 of which cater to Europe and North America. 

Now, you can see why the good thing is the bad thing at the same time. With so many options, how could you track down the best Payment Service Provider – the one that fits your business model and your market? 

That’s the challenge this article is here to help you with. In the following paragraphs we will provide: 

  • A short definition of Payment Service Providers
  • A compilation of decision points and criteria, which will help you determine what kind of payment your business needs
  • A plan B to fall back on when none of the options offered by a single Payment Service Provider appeals to you. 

Let’s see if we can narrow down your options. 

Read More
A shopping card to which a banknote is attached via paperclip, symbolizing Embedded Finance

Embedded Finance – What It Means (For Banks and Tech Firms)

Traditional banking houses no longer hold the monopoly on offering financial services. Instead, companies whose core business initially laid outside the financial sphere have adopted what’s called Embedded Finance. This means that they offer financial services as add-ons and parts of the regular user journey on their platforms. 

Originally, financial services were embedded in online shopping or service platforms. Yet companies in other application areas adopt this practice, too. Thus, nowadays we arrive at a big list of different finance-embedding enterprises including: 

  • E-Tailers
  • Online marketplaces
  • Comparison portals
  • BigTech companies
  • Logistic and transportation firms
  • Car manufacturers
  • Social media giants
  • And many more…

What all these diverse companies have in common is their aptitude for digitization. They already deliver on the tech front, mostly; the fin just has to follow. And even as most such companies only started to develop their financial service (or finserv) portfolio, they have vital advantages over competitors:

  • A widely known branding that many customers are familiar with from their everyday purchases.
  • A streamlined user journey, into which the financial services can be embedded easily.
  • An affinity towards innovation and digital transformation – many of them have already shaken up their own areas of operation and are well known for it. 

This mixture allows those new finserv players to quickly scale and activate a broad customer base when compared to cold-starting fintech companies. 

But what is Embedded Finance exactly? And should banks or fintech companies care? 

Examination underway… 

Read More

Vertical Banking: Why Banking for the Niche Is a Growth Market

Imagine a bank. What does it look like to you? 

We assume that most of you reading this would picture it as a building. Perhaps with a sleek, dark blueish glass front. Perhaps with towering pillars reminiscent of classic empires. Definitely with ATMs and clerks giving out cash, taken from underground vaults.

But let’s be honest here: Nothing of that represents modern banking services. Since the introduction of online banking and smartphones, banking is no longer confined to a physical place such as a bank building. Banks become platforms: Nor more need for the branch offices of the financial giants. What’s more Open Banking initiatives make SME banking easier, leaving much room for the smaller, more focussed financial institutions. 

Those institutions are the domain of the so-called Vertical Banking. Providers engaging in this form of banking cater to a specific customer niche that larger financial houses and neo-banks don’t address as purposefully. But what do those niche banks look like and what role will vertical banking play in the future? 

We start with the basics. 

Read More
A women scanned thoroughly, symbolizing know-your-customer procedures

What is KYC: An Overview for Fintech Companies

KYC, meaning Know Your Customer or Know Your Client, refers to the processes conducted to verify the identity of a customer and assess the risk of the business relationship with them. 

KYC is a crucial regulatory requirement for fintech companies and other institutions with financial responsibilities (like banks, credit institutions and insurance providers). Laws and regulations oblige those actors to validate the identity documents their clients provide. That’s equally true if the clients in question are legal entities instead of persons. KYC also requires companies to evaluate the clients’ financial status and monitor their monetary accounts for suspicious transactions. 

The goal: Adhere to Anti-Money Laundering (AML) and Countering the Financing of Terrorism regulations, prevent fraud and constrain the access of users, who don’t fulfil certain standards of credibility.

But Know Your Customer policies are not just boundaries. They also act as competitive factors. KYC yields insightful data on one’s own services and customers.

It thus helps establish a reputation as a secure and trustworthy company as well. And trust is likely the most valuable asset for any financial business today.

So it’s time for a deeper look into the meaning and definition of KYC, its chances and its challenges. 

This Know Your Customer Introduction for Fintechs Contains:

  • A definition of KYC
  • A discussion of key KYC-related concepts such as AML or EDD
  • An overview of legacy KYC procedures and their modern counterparts
  • A list of typical challenges fintech companies face with KYC

Now, shall we? 

Read More
A picture of the "chance" square on a Monopoly board, symbolizing the opportunities of re-built payment systems

Why You Should Change Your Legacy Payment System

You have a big problem with your payment system. 

At least that’s why we suppose you read this article. 

Maybe your business just started, but the payment system you integrated already struggles to meet customer expectations. Or you run an established platform, but your legacy system has grown into an inflexible and costly monolith of different providers.

If you work with a particular provider like PayPal or have integrated a variety of individual acquirers or PSPs, you cannot excess full control over your payment. For example, feature updates, security or transaction limits and fees lie outside your agency. 

However, perhaps your transaction system runs just fine, it is functional and flexible. But have you utilized its full potential yet? Have you thought about adding e-money wallet functionalities to enable P2P transactions, loyalty point systems or quick refunds? 

Whatever of the above is the case, this article is for you. It will discuss how you can turn your legacy system into a version that better suits your needs. By finding a proper payment solution provider and adding payment orchestration and e-wallet functionalities, you will be able to take back control. 

Read More
An assemblage of violins, symbolizing payment orchestration

What Is Payment Orchestration (And Why Have It)?

Payment Orchestration describes the process of integrating and handling different payment service providers, acquirers and banks on a single, unified software layer. The Payment Orchestration software executes the complete payment processing, from validation to routing to settlement. 

The Payment Orchestration Layer / POL (or Payment Orchestration Platform / POP, respectively) bundles user and merchant accounts, acquirers, payment providers, fraud detection services, etc. to initiate, validate, route and process transactions involving those parties. In addition, it handles payment processes such as reconciliation, billing and settlement, payouts and reporting. 

Thus, a Payment Orchestration Layer acts as the entry point and core of a payment system. This approach differs tremendously from separately integrated PSPs. E-commerce platforms and online service providers don’t need to integrate every PSP and every acquirer separately. Instead, they can consume the unified API of the payment orchestration layer, benefiting from a reduced integration complexity. Moreover, a POL simplifies the maintenance and further development of the system for platform owners and for merchants. In the same vein, it eases the interaction with 3rd party service providers.

Read More
A hand holding a handy, on which a stock market app is running, representing the SPAC investment type

Opinion: What the ICO Hype Can Tell Us About SPACs

Hypes are a good thing. No, think about it: They generate attention for products, activities and ideas. And where there is attention, there is scrutiny, too. The humming of the mainstream buzz makes us turn heads and observe closely where the noise is coming from. 

Matthias Gall, co-founder of trimplement
Matthias Gall, co-founder at trimplement, analyses the potential and possible drawbacks of Special Purpose Acquisition Companies.

For the hype-sensitive stock market, this has proven a boon in many cases. Wall Street is loud, and the more volume an investment trend generates, the more it will catch regulators’ interest – besides that of eager venturers. And currently, one investment trend generating much noise is that of SPACs. 

SPACs (short for Special Purpose Acquisition Companies) stood on the sidelines of the stock markets for a few decades. But in recent years, they made a comeback in the investment mainstream – mostly thanks to the web. And there, I could not help but think of another social-media-driven hype of the 2010s: ICOs. 

In fact, SPACs already show the same signs of overvaluation and ultimately disintegration that have befallen ICOs a few years back. But will SPACs go down the path of the ICO? 

In this article I will try to answer this question and a few more, like: 

  • What are SPACs? 
  • Why are they popular?
  • What are their risks and disadvantages? 
  • Is the SPAC hype comparable to the ICO hype? 

Okay then, here goes: SPACs, the specifics… 

Read More
A picture of a Thomas Tittelbach, giving his opinion into the European Payments Initiative

finquiry #3: Thomas Tittelbach on the European Payments Initiative (EPI)

One key goal of the European Union is to establish a unified economic and financial system. Yet, in terms of payment schemes, the Union presents fairly non-uniform today. Regulatory reforms like SCT Inst and PSD2 have only laid the foundations of a profound rebuild of the European financial system. Today, the EU’s financial landscape is still characterized by national payment systems and dominated by US card schemes like Visa, Mastercard and PayPal. 

With the launch of the European Payments Initiative (EPI), this shall change. EPI – formerly also known as Pan-European Payments System Initiative – aims to establish a payment scheme and interbank network that’s applied throughout Europe.  

However, while backed by the European Central Bank the initiative is also met with scepticism. For our fintech interview series “Finquiry” we have spoken with payment and business development expert Thomas Tittelbach about the chances, risks and prospects of EPI. 

Our Guest: Thomas Tittelbach, Managing Partner at aye4fin

Our interview partner Thomas Tittelbach has been a force in the international payment industry for over 20 years. As a serial entrepreneur, he has co-founded and directed the payment companies omba and Payreto and acted as Head of Payment for Clickandbuy. Currently, he applies his extensive skills in P&L, operations, product and partner management as well as his in-depth knowledge of fintech, payment orchestration and business strategy at aye4fin as a Managing Partner. 

Thomas is also a member of the Associate Committee of the CNP Payment Forum. 

Read More
A car computer of a modern car, presenting digital content and e-commerce options

Automotive Payment Solutions – Fast Lane to Car Maker Success

The future of automotive will not be about how fast your car can go. Or how snappy it can look. Instead, innovation will centre around what a car can do. As a manufacturer, you already witness the shift towards connected vehicles with high-end telematics and web-enabled computers under the hood. Those cars can communicate with external e-commerce applications and service platforms.

And that comes with technical challenges. One of the most pressing for car manufacturers: Providing a solid automotive payment system to handle all in-car commercial activities. 

One may be tempted to turn to the obvious choice: Turn-key payment software by 3rd parties. But once you scale up, the drawbacks surrounding such off-the-shelf solutions begin to show.

The alternative would be to choose the payment orchestration model and build up your very own connected car payment infrastructure. You can bring in a business and/or a software partner with experience in the automotive payment domain to support you there.

This article will help you answer, whether this approach fits your business. It discusses: 

  • Which use cases require connected car payments?
  • What are the advantages of custom-built automotive payment solutions over standard 3rd-party payment systems?
  • How will you benefit from payment orchestration? 
  • Where to find competent technology partners to support you?

Let’s go for the answers! 

Read More