Building A More Transparent Payments-as-a-Service Marketplace

With close to $1 trillion on the line, picking the right platform for cross-border expansion can pose a wide array of challenges.

Merchants often struggle to find their perfect match, a partner that can help them take their operations to a wider market. From managing business operations, improving performance to increasing cross-border conversion rates and building out a payments process, the search for a good partner can feel like an overwhelming task.

Merchants aren’t alone, as it turns out. Finding the right platform to grow their business upon is a problem so big that it has created a platform-as-a-service (PaaS) market worth $7.5 trillion, a recent study found. That’s a conundrum that APEXX, a PaaS connectivity provider, is hoping to solve through its platform.

PYMNTS recently caught up with Rodney Bain, cofounder and managing director of APEXX, about the challenges merchants face when it comes to picking the right PaaS provider, channeling through the maze of regulatory hurdles and the need for greater transparency in the payments process of cross-border trade. Bain spoke with PYMNTS about how adding greater transparency to the payments market is making cross-border commerce less “overwhelming” for merchants as they pursue their own expansion plans.

Bringing Order to a Confusing Market

When it comes to picking the right PaaS service, one size doesn’t always fit all. Different merchants have different payment needs, and different global regions have different regulations.

Resolving these pain points for merchants often means finding a bespoke solution made up of the right combination of acquirers, point-of-sale gateway providers and other financial services providers. The equation, however, isn’t just complex on the merchant’s side. Acquirers, much like merchants, specialize in different markets and products, each handling risk and regulations in their own way.

Finding the right match, Bain said, is a process that can leave merchants reeling.

“Merchants are being overwhelmed with the complexity and choice of suppliers in the payments industry, and they end up making the wrong decisions,” he said.

For a seamless cross-border expansion, merchants need to have access to a switchboard-like platform that can help determine the right payments provider, Bain explained — something, which APEXX is offering through its API-based platform that can connect merchants to relevant suppliers using a single API.

The company, Bain said, has taken a consultative approach for determining what global partners would be the most appropriate to meet the expansion needs of merchants.

“We really hold the customer’s hand through this process so we make sure they get [everything] that they need, as opposed to most of what they need,” he said.

At the same time, Bain noted, it’s imperative that businesses keep their agility when it comes to handling their changing business needs or moving operations to the other side of the world.

The dynamic needs of businesses today call for working with a platform that would allow merchants to handle such switches without leaving the connectivity platform which they work on. In that respect, said Bain, the company’s platform offers a way for merchants to “future-proof” their operations against unexpected changes.

“You have to rip off the Band-Aid today, but going forward, you never have to do it again,” he said.

Making Global Payments Work Better

With 940 million cross-border shoppers expected to spend approximately $1 trillion on eCommerce transactions by 2020, merchants’ global interest in the cross-border business is heating up fast.

However, the process of expanding operations internationally is often rife with payment-related challenges. For merchants, one of the challenges that rise from international trade is getting charged for cross-border transactions that haven’t been optimized, Bain said.

Recent findings of a Saxo Payments study corroborate Bain’s argument. Nearly half of merchants involved in cross-border trade are reportedly unhappy with the costs associated with their international payments. Eighty percent of those merchants said they would consider changing suppliers if it helped reduce costs.

For APEXX, helping reduce costs has meant working with a network of acquirers, gateways and other providers that makes comparison between processing fees easier and allows for automated matching of partner merchants with the right platform.

Additionally, by processing a high volume of transactions, the company has been able to bring greater transparency into cross-border transactions, which has ultimately reduced costs associated with processing credit, debit and alternate payment forms. Too often, Bain said, merchants are in the dark about the costs associated with processing payments.

Merchants “wouldn’t be aware of it, or if they were aware of it they perhaps didn’t act on it,” he said. “These are the sort of things we would advise and say, ‘Has your acquirer briefed you since this happened?’ And often the answer is no.”

Bringing new information to the attention of merchants not only helps save money, it also spurs acquirers to get more competitive with their pricing, which ultimately works to the merchants’ advantage.

“Like Economics 101, we’re encouraging these acquirers to essentially compete with one another for the business, which ultimately benefits the merchant directly,” Bain said.

Machine Learning Ahead

APEXX might be a young company, but Bain said it has big plans for expansion. These plans include implementing a machine learning program that can automatically determine the most appropriate acquirer for a merchant. The additional benefit of using machine learning to determine an acquirer could offer the company more independence and not allow them to be swayed by one partner’s input over another’s.

Using machine learning for fetching optimal pricing, however, means collecting and processing vast amounts of data. In the coming years, Bain said, APEXX is working toward getting to the point where machine learning tools could automatically route cross-border transactions to the most optimal payment processing option.

“Going forward, what we want to … be able to do is have merchants firing all of their transactions at APEXX and then being routed by transactions to the best possible acquirer,” he said.

But doing so means capturing large amounts of customer data. And for that to happen, the FinTech newcomer must demonstrate its value to merchants and build up a reputation for reliability.

“Ultimately, we have to make sure we get the trust of … all of our merchants first,” Bain said.

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To download the June edition of the PYMNTS.com Payments-as-a-Service Tracker™, click the button below…

About the Tracker

The PYMNTS.com Payments-as-a-Service Tracker™ is designed to give an overview of the trends and activities of merchant platforms that not only enable payment processing of new and old technologies but also integrate with other features to improve the merchant’s experience, including customer engagement, security, omnichannel retail, analytics, inventory management, software and hardware management and more.