At The Electronic Transactions Association’s October 2014 Strategic Leadership Forum, I moderated a panel on the changing acquiring landscape, and how technology and technology solutions and services are permeating payments through­ out the various channels and verticals. What really struck me was that none of the companies on the panel would admit they were a payment company. All four companies said they were tech companies, despite some of them originating from payments. Global investments in financial services technology (fintech) ventures have more than tripled during the last five years – from under $930 million in 2008 to more than $2.97 billion in 2013. This shows that value is being placed on technology in the financial services industry by the market and by the investor community. We are in a time of opportunity with disruptions in commerce never imagined when the mag stripe was introduced more than 50 years ago.

The rise of the marketplace model

There is a rapid emergence of the marketplace model, proliferating through many industries. Companies like Uber, AirBnB, and Care.com are marketplaces disrupting their vertical markets, while companies like Wepay are focused on providing payments through slick APIs leveraging a full-service Payment Facilitator model for those marketplaces.

What is most interesting is that technology companies are starting to enter the payments industry, and companies that were historically payment companies are evolving to become technology companies as well as some becoming full-service marketplaces, and the payoff can be huge, with multi-billion dollar valuations for some of these players.

For years, legacy business models, inertia, and the complexity of payments restricted growth in the payments industry, allowing, at most, a slow evolution. With today’s foundation of the internet, mobility, cloud computing, and new business models, we see a much more rapid convergence of technology, payments and services that puts FinTech on a path of revolutionary change, or at least hyper-evolution. I think we can all agree, it will be fun to watch.

The Green Sheet, December 22, 2014
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