The Impact Of Payment Partnerships for business growth in the E-Commerce Landscape

Managing fast and secure financial flows has always relied on successful partnerships designed to create mutually beneficial outcomes. Recent findings from PWC reveal that 86% 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 across the financial sector, be it banking, payments or e-commerce, with the benefits reaching far beyond the ability to deliver cross-border solutions.

With digital commerce projected to reach a total transaction value of US$6.03tn in 2023, the rise and continued growth of digital e-commerce, which 89% of payments industry experts believe will persist, has led to an increased focus on 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 of forming them. This lack of understanding can impede business growth, market competitiveness, and limit opportunities for higher profits and reduced risk.

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 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 and secure financial flows 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.

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.

Anjulie Patel VP of Partnerships Nucleus365

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 strategic growth trajectories.

The benefits of payment partnerships are numerous, positioning businesses for increased growth and resilience. However, like the management of money in any instance, partnerships require thorough due diligence. Relying on an experienced and trusted intermediary can mitigate both short and long term risks and ensure mutually beneficial outcomes for both businesses. In the fast moving e-commerce landscape, the speed of setting up partnerships must be considered and choosing the right provider can accelerate this collaboration.

Partnerships will become increasingly common as the e-commerce sector continues to expand into emerging markets with more payment-making flexibility. 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.