Payment Infrastructure (Video Series Part 8)

Fintech Market Map Deep Dive Cont.

In this post I continue the fintech market map deep dive video series. In part 8, I explore another infrastructure segment - payment infrastructure. I try to highlight some of the nuances and exciting trends in this space. Click on the video for the full take and check out the highlights below.

What is it?

Payments infrastructure companies are the rails and tools that enable money to flow to a business both efficiently and accurately. This includes the payment service providers, or PSPs, themselves, but also companies that are providing tooling for businesses to make sense of and handle the complicated nature of payments at scale.

A hot take

This is not a solved problem. Yes, there are a ton of PSPs. I probably wouldn't start a new PSP today because of the amount of options already in the market, but there's so much opportunity to improve processes on top of them, whether it's routing optimization, operational workflows internally or reconciliation, to name a few. In payments, it's all about bps, or basis points, in lift when talking about revenue optimization.

Prediction for the winner in the space

A company that can drive real results relative to the costs will be adopted. On the cost front, it's also all about margin. Revenue operations is very expensive from a headcount perspective, as well as a regulatory one if mistakes are made. Companies truly, and the key word is truly, making this easier will be successful because it's a hair on fire problem.

Companies on the rise

Proper Finance in the Redpoint portfolio is providing ledgering and reconciliation as a service to make it easier and more straightforward for companies to reconcile and keep track of both their balances, but also their money movements.

Basis Theory is compliantly tokenizing payments data, which is been a huge pain point for many companies.

Butter Payments is driving reactivation from failed payments.

What am I most excited about?

More companies like the three I just described that are making payments outside of core processing better for their customers, either through revenue lift or cost reduction.

What do you want to see?

In order for these products to win, we need to continue to see a movement among fintech operators and founders to buying best in class products versus building everything in-house. Historically they have had to build everything because of a lack of other options. But this isn't the case today. Today, there are best in class companies that can drive down their time to market and ongoing operational costs without eliminating the core differentiators of the business. And as we continue to see adoption increase, we'll see increased innovation as potential founders see more opportunities to build large companies.

Check out the previous episodes if you haven’t yet:

  1. Consumer Trading & Wealth Planning

  2. Identity, Fraud and Risk Infrastructure

  3. B2B Payments

  4. Lending & Issuing infrastructure

  5. B2B Financial Management & Workflows

  6. Data Aggregation & Normalization

  7. Income Verification & Payroll Infrastructure

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Medha Agarwal