NetworkNewsWire
Editorial Coverage: Payment processing companies are seeing
impressive growth and may present attractive investment options by
providing diverse services.
- Changing technology and spending habits are forcing payment
systems to change.
- New providers are emerging to challenge banks and old
providers.
- By providing diverse services, these providers cater to a range
of specific markets.
- Adaptable technology helps to future proof these
innovations.
Net Element (NASDAQ: NETE) (NETE
Profile) is capitalizing on this growing space by
providing an integrated payment solution that includes online,
mobile and smart point-of-sale payments solutions for merchants in
diverse industries. Square Inc. (NYSE: SQ) is
working with trends such as bitcoin and in-app payment.
PayPal Holdings Inc. (NASDAQ: PYPL), the big name
in the sector, processes over $155 billion a year in mobile
payments. The process is still connected to the cash economy
through systems such as the ATMs of Euronet Worldwide Inc.
(NASDAQ: EEFT). Services being developed include shopping
without a checkout and online fundraising, areas Global
Payments Inc. (NYSE: GPN) is working on.
To view an infographic of this editorial, click here.
Boom Times for Payment Processing
The first quarter of 2019 has seen payment processing companies
continue their strong
performance. It’s a trend that reflects ongoing changes in the
way payments are made and the way the industry works. Once
dominated by banks, the payment industry is now a fractured and
diverse sector, with businesses catering to the shifting desires of
the millennial generation and to the specific needs of different
consumer markets.
This means that payment processing companies must adapt fast to
keep up with the times. From blockchain to security to contactless
payments on the high street, the pace of change has been relentless
and shows no sign of slowing. It’s no longer enough for payment
companies to respond to the latest trends — they have to be
preparing for an unknown future as well.
The Millennial Market
At the turn of the millennium, payment processing was almost
entirely driven by banks and the small number of companies
supporting them. But in the years since, the market has been
transformed, allowing newer companies such as technology-driven
group Net Element
(NASDAQ: NETE) to make its presence felt.
A number of factors have driven this change. One of the most
obvious is the rise of the internet and online shopping. These
online advances have created a need for online payment services,
such as PayOnline, which
allows retailers to quickly and easily get set up to take
electronic payments. More recently, the options have extended to
mobile payments, which have created a bridge between online and
offline shopping, as consumers use internet-enabled phones to make
payments on the high street.
Online shopping has contributed to the rise of a globalized
economy, in which people are increasingly making payments across
borders. Some newer payment companies such as Net Element have kept
a strong focus on growing markets, where
traditional payment systems are less developed and there is an even
greater need and desire for technological solutions. And with
prosperity rising in emerging markets such as China, the growth
potential is huge.
Then there’s the behavior of the millennial generation. An
increasing number of consumers have grown up with electronic
payments. These individuals are not just used to making
transactions without cash — they prefer it. This attitude has
created a space in which the domination of the banks has finally
been broken, and companies with innovative electronic payment
solutions can thrive.
A Diverse Industry Rising
From micropayments to macroeconomic trends, the whole market
seems set to support and encourage the growth of payment companies.
It’s a shift that saw Net Element named as
one of the top retail payment service companies in 2018, thanks
to its ability to provide the services customers are seeking; the
company has also made Deloitte's Fast Growth Companies list two
years in a row (2017 and 2018).
The conversation around payment processing is no longer driven
by banks. It’s primarily the work of fintech companies, which are
developing payment systems that work faster and more efficiently,
and at lower costs. Making these payment options user friendly is
crucial, as adoption is driven from the ground up by consumers.
The result has been a staggering rise in
the value of some older payment technology firms but also the
emergence of upstart contenders for the payment processing crown.
By covering a range of electronic payments, these newcomers can
quickly carve out important niches for themselves. For example, Net
Element’s mobile payments solution effectively turns mobile phones
into point-of-sale devices through Unified mPOS, its Unified Payments subsidiary. The company also covers
point-of-sale systems through subsidiaries such as Aptito and Restoactive,
online payments through PayOnline, and end-to-end solutions through
Tot Group, allowing it to profit from all areas of electronic
payments.
Catering to Specific Markets
The business side of payments isn’t the only piece of the
process that has become fractured — the customer base has also been
affected. Both individual customers and business customers seek
solutions better tailored to their specific needs and desires, and
the more agile companies are happy to help. Net Element has shown
how this can work by catering to specific industries.
An example of Net Element’s flexibility and agility is how it
serves the U.S. events industry. Currently, this sector is worth
hundreds of billions of dollars and employs millions of people.
Large events have complex requirements, selling different sorts of
tickets, tracking those sales, taking payments at events, and so
on. The solution offered
by Unified Payments, a Net Element subsidiary, caters to the
unique needs of a large, established industry making seasonal sales
for huge events.
Net Element is also eyeing other underserved industries to
identify ways in which it can provide the services these sectors
are searching for. By catering to specific business sectors,
payment companies such as Net Element can ensure the satisfaction
of their customers and distinguish themselves from the rest of the
market.
Future Proofing
One of the big challenges for payment providers is future
proofing. So much has changed over the past 20 years, and that pace
of development looks set to accelerate rather than slow. To ensure
long-term survival, providers have to create systems that can
adjust to changing habits, security concerns, technology and
regulations.
This sort of flexibility is shown in Net Element’s payments platform Netevia. A
multichannel platform, Netevia provides end-to-end payment
processing from multiple different inputs. By integrating with
other payment platforms, it allows users to adapt to circumstances,
while additional security and fraud prevention features help
retailers to keep their payments and their customers’ information
secure.
The company also launched Netevia Light POS, a seamless and
secure mobile payments acceptance software that operates on smart
terminals by PAX technology. Combined together, Netevia Light POS
and PAX’s Android-based interactive smart payment terminals provide
a robust, flexible, state-of-the-art solution that offers a
convenient way to do day-by-day operations through a modern,
accessible user interface and allows seamless transactions across
multiple touch points.
Changing with the Financial Times
Different companies are adapting payment systems in different
ways. Mobile payment provider Square Inc. (NYSE:
SQ) is one of those that has made technology to help
merchants turn their phones and computers into point-of-sale
systems. This approach makes it easier to adopt electronic systems,
both for businesses and for customers. Last year, the company
worked on integrating
bitcoin into its systems, as that experiment in online currency
reached its peak, a move that boosted Square’s share price. It has
since announced a software development
kit for in-app payments, which will allow the creators of apps
to integrate Square’s system for easy payments within those apps.
This puts the company squarely at the heart of one of the decade’s
biggest technological and social trends.
No company better represents the changing face of payment than
PayPal Holdings Inc. (NASDAQ: PYPL), whose
email-based payment system has become ubiquitous. Last year, the
company added to its capabilities through the acquisition of Hyperwallet, which had created a
comprehensive payments solution including multicurrency payment
distribution and disbursement options. PayPal processed $155 billion in mobile payments in
2017, and as a major player in the mobile payments game, it
looks set to keep growing.
With a focus on making payments convenient and affordable,
Euronet Worldwide Inc. (NASDAQ: EEFT) is showing
the customer-friendly approach that payment companies need to
prosper. Though digital payments are replacing physical ones, many
people and transactions still rely on cash, and Euronet caters to
payments of both types. The company provides ATM networks and has
recently made a deal with a
Spanish bank that will provide that bank’s customers easier
access to their funds.
Global Payments Inc. (NYSE: GPN) is
experimenting with another approach to commerce in the form of
unattended retail, or grab-and-go solutions. In this model,
shoppers can select items from the shelves and walk out of the
store without having to deal with checkout, and the process is
predicted to be worth $13 billion within five years. As well as
catering to retailers, Global Payments is supporting charity
fundraisers through its Greater Giving software, which has recently been expanded to Canada. Online fundraising
has become increasingly important in recent years, and companies
such as Global Payments are making it easier.
By covering a range of needs, from cash to cryptocurrency and
fundraising to fast checkout, payment processors are helping the
global economy move forward at ever greater speed. Net Element
appears to be one of the companies leading the way forward, and
savvy investors are paying attention.
For more information on Net Element, visit Net Element
(NASDAQ: NETE)
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