FinTech 2.0: Software as the future of payments distribution

Ashley Paston and Matthew Harris

Journal of Payments Strategy & Systems, 2019, vol. 13, issue 3, 226-236

Abstract: While the trend for leveraging integrated payments software (FinTech 1.0) offered bank acquirers a new channel to disseminate payments, the current wave of FinTech (FinTech 2.0) consists of software companies integrating payments into their core offering. FinTech 2.0 companies are able to capture more of the payment economics and offer merchants a better experience. While a software company can pursue multiple pathways to offer payments to its customers, the only way to fully capture the benefits of FinTech 2.0 is to become a payment facilitator (payfac). Thanks to the emergence of dedicated infrastructure providers, this is now much easier. This paper discusses the historical, current and future state of merchant acquiring distribution, the benefits of new-age software-based distribution models, and the options available to software companies to capitalise on payments in this new model.

Keywords: payments; payment facilitators; integrated payments; verticalisation (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jpss00:y:2019:v:13:i:3:p:226-236

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