In the payments industry, partnerships have played a crucial role in driving innovation and progress. However, amid the flourishing digital commerce landscape, there is a concerning knowledge gap among merchants regarding payment-making processes and partnerships.
Anjulie Patel, VP of partnerships at payment processing platform Nucleus365, often sees confusion from merchants who may not possess an in-depth knowledge of payment-making, essentially creating a blind spot that impacts the very process that keeps their business running.
This lack of transparency is a glaring omission in the e-commerce sector, with merchants eager to learn more about how their business secures sales, but unsure how to go about it.
Here Patel, addresses the impact of payment partnerships on the e-commerce landscape and provides insights for merchants seeking to navigate the world of secure and successful sales.
The payments industry has always relied on successful partnerships to create mutually beneficial outcomes. Recent findings from PWC reveal that 86 per cent of surveyed professionals in the payments sector agree that traditional payments providers will collaborate with fintechs and technology providers as a primary of innovation. Collaboration is a well-established practice in our sector.
With digital commerce projected to reach a total transaction value of $6.03trillion in 2023, the rise and continued growth of digital e-commerce, which 89 per cent of payments industry experts believe will persist, has led to an increased focus on business-to-business (B2B) and payment partnerships.
While the payments sector possesses expert knowledge of payment-making processes and partnerships, merchants often lack awareness of the nuances in partnership types and the benefits that can be derived by forming them.
This lack of understanding can impede business growth, market competitiveness, and limit opportunities for higher profits and reduced risk.
What Is a payment partnership?
A payment partnership occurs when two or more businesses utilise each other’s infrastructures for mutual benefit. Typically, one business provides the technological components to facilitate secure domestic or cross-border payments, while the other offers one or more sales channels and customer bases.
Partnerships depend on various factors such as sector, demographic, products, and market size of the partnering businesses. They can also be flexible or fixed-term, dependent on sales and payment success figures. Partnerships can encompass a business’s entire operation or focus on specific aspects, such as customer bases in a particular region or payment processing technology designed for a specific customer base or payment method.
The benefits of payments partnerships
The first benefit of partnerships is increased reach and exposure, leveraging partner networks to tap into new customer bases. By doing so, businesses can explore untapped markets and tailor their product and service offerings to newly-gained demographics, positioning themselves for faster growth opportunities.
It’s important to understand that partnerships are not limited to domestic or established markets.
They can be just as, if not more, effective in markets primed for growth. Let’s take the UAE as an example, the region ranked as the fastest-growing e-commerce market in the world in 2022 and has a projected value of $17.2billion by 2027.
At Nucleus365, we have seen an increase in merchant exploration into rising markets, utilising our service to create effective partnerships in regions such the UAE – namely Dubai, alongside the likes of Hong Kong and Europe.
Accessing new yet established markets also provides valuable market data, performance history, and experience to inform business decisions. Partnerships enable businesses to enter the market more swiftly by leveraging established supply chains and relationships of their partners, eliminating the need to start from scratch.
Making informed decisions
Payment partnerships actively work to reduce risk, which is one of their key advantages. The insights and customer bases previously unobtainable through partnerships allow businesses to make informed decisions without the trial and error processes that often come with increased risk.
Moreover, accessing new markets diversifies sales, mitigating the negative impact of diminishing returns and a market downturn in a specific region, should it occur. By partnering, businesses can share the financial burden of payment investments and no longer rely solely on their own business performance, thus increasing operational resilience.
Businesses often underestimate the benefits of partnerships in encouraging information-sharing between companies. The most successful partnerships go beyond market growth, new customer bases, and risk reduction. By treating partnerships as collaborative learning experiences, businesses can quickly gain insights that would have otherwise been unavailable. In doing so, businesses can generate new ideas, streamline operations for efficiency, and position themselves for more strategised growth trajectories.
Payment partnerships in the future
The benefits of payment partnerships are numerous, positioning businesses for increased growth and resilience. However, partnerships require thorough due diligence. Relying on an experienced and trusted intermediary to form partnerships can mitigate risks, establish immediate partnership trust, and ensure mutually beneficial outcomes for both businesses.
Partnerships will become increasingly common as the e-commerce sector continues to expand into emerging markets. The rise of technological infrastructures in developing markets will encourage the formation of new partnerships to access these regions safely. Ultimately, consumers will benefit from the increased robustness of global merchants, who can offer products and services to demographics at an accelerated pace, all while ensuring safe and secure payment facilitation.