The payments processing giant, Square, has recently launched a new in-app SDK which will allow merchants to develop payments section right in their app. This is a huge step from the company which was previously a champion in offline payments.
What has prompted the new feature by Square? Let’s dig into it!
For several years now, the online payments processing industry has been dominated by key players like Stripe, Adyen, Square, and PayPal. What has caused this? The fintech industry is perhaps the most competitive and under it specifically online transactions. Since business have gone global, a connection between merchants and consumers is high in demand. This is where PayPal and its band of giants come into play. With expansions, and partnerships the companies have achieved a great traction. The exclusivity enjoyed by these giants have resulted in a more than 90% share in the market. However, till last year shockingly this number has rapidly dropped down to 80%.
Some key players:
Seeing the lucrativeness of the market, more and more competitors are rising up to take their share. While the old payments leaders had a global service stuck to recurring demand of providing a platform to collect and release payments, the new contenders have adopted a different approach. Bolt, Due, Toast and several others are important names in this regard. The startups have aligned themselves to a specific goal, industry or use case. This allows them to start building small but put them on the right track to achieve better results as their predecessors. This way the new incumbents have a better chance to address industry specific queries and demands. Of course by doing this Stripe and others will lose these industries’ huge chunk of transactions.
For instance; for remote employers or those running multiple locations across states and cities; Toast has created a smart payment solution which allows restraunteers to order and pay right at their table. The operations of restaurants, diners, and bars have enough elasticity to smoothly run their businesses. Another major stakeholder, Due, has focused on the entrepreneur and freelancing community by making the cross-border additional cost flexible and low. Additionally, it has significant features such as reminders and autopay.
Time for Innovation!
Seeing that the new payment processors are increasing their reach and bringing cutting edge innovation with them, it’s an alarming situation for the industry giants to maybe reshape their operations or strategies. It is also to note that new payment services are growing on a faster rate than the big names of market. The state of affairs is prompted to a bigger level by the rapidly strengthening American payments economy.
Bolt is an important name in this respect, as its profits have jumped the roofs. The company has been around for only a year but realised an annual rollout of $1 billion which according to the CEO was double their expectations. One of Bolt’s clients, Ivicta, a watch brand, declare that after integrating Bolt it saw a huge jump in their figures. 12% more payments were approved since last year while successfully completed transactions tripled to 32%. Now this is something which merchants would be interested in.
How is the Industry reacting?
Seeing newer payment services’ gaining better and strong profits consequently they are also new target for acquisitions. JetPay based in US was acquired by NCR Corp last year in October, while, Chinese WePay was purchased by JPMorgan Chase & Co. These moves were termed as “strategic” and “long-term” profitable by spokesperson at these companies.
The payment industry is rapidly moving towards mobile operations and seeing that the new players in the market are focusing on developing on in-app purchase options for e-commerce platforms. This means that the old champions have now the ground set for them and it’s going to be interesting to see how they manage to beat the new competition. Or that the new competitors will see 2019 as a booming year to get ahead of the game.
Since there is more and more headway in terms of acquisitions, Due’s CEO also imply that in future they might sell to someone.
2019 will be the year to see a showdown between the new and old players. More is developing on this story. Read more about innovation in payments sector.