From banks to payment service providers, merchants, and eventually consumers, the payments industry is built on and connected by partnerships. Strategic partnerships are at the core of innovation, driving the evolution of our industry and the way consumers can pay both now and in the future.
The adoption of digital payments and the acceleration of globalisation and the internet have facilitated faster and easier transactions. A 2023 KPMG study revealed that 75% of Australian financial institutions now view strategic partnerships as “very important” or “critical” to their growth strategy, up from 45% in 2018.
For payment service providers, it’s crucial to partner with a modern payments infrastructure that keeps pace with these changes and provides reliable, trustworthy and fast transactions. This strategic partnership ultimately contributes to business growth in this fast-moving and competitive landscape.
How can strategic partnerships impact a payments business?
What are the main differences between legacy systems and modern, partnership-driven infrastructures?
What is the future of partnerships in payments?
Learn how an innovative, effective strategic partnership can impact your payments business…
What are strategic partnerships in payments?
Strategic partnerships in payments are collaborative agreements between two or more entities in the financial services sector. These partnerships allow companies to combine strengths, enhance service offerings, improve operational efficiency, and ensure regulatory compliance.
Successful collaboration can benefit technological integration, market expansion, and customer experience enhancement. While a consumer’s payment experience highly depends on the company’s capabilities, strategic partnerships with payment service providers can significantly broaden these capabilities.
Modern partnerships can offer fast transactions and data-rich messaging, making connecting and exchanging information much easier and more convenient. Meanwhile, companies operating with legacy systems may struggle to meet rapidly evolving consumer demands and technological advancements.
Deloitte’s 2023 Australian Financial Services Outlook found that companies engaged in strategic partnerships reported an average revenue growth of 18%, compared to 7% for those operating independently.
How do strategic partnerships work?
As an ecosystem, strategic partnerships in payments typically include various participants. These include traditional banks, fintech companies, payment gateways, payment processors, technology firms, and regulatory bodies.
These partnerships allow businesses to offer cutting-edge payment solutions to their customers. They also enable the sharing of expertise, technology, and resources needed for a company to stay competitive in the rapidly evolving payments landscape.
Legacy systems vs. modern partnership-driven payment infrastructure
Legacy payment systems were established in a much different landscape from where we are today. In the current environment, these systems cannot fully serve the needs of modern businesses and their diverse customers.
Here are the main challenges of legacy payment systems that make them less effective in today’s payment ecosystem:
- High maintenance costs due to outdated systems
- Monolithic payment architecture makes it difficult to perform quick changes.
- System adaptation for new products/services is slow and complicated.
- Dependence on various third-party services
- Security issues
- No room for innovations and additional features
- Little customisation options to meet individual business goals
- Banks and financial institutions built these systems when the industry lacked unified regulations, transparency, and standardisation.
- Reduced ability to meet diverse customer needs
New regulations focused on consumer needs and accelerated the development of innovations in the payment industry.
This is seen through open banking, which has enabled financial data sharing with authorised parties via secure APIs. As a result, fintech companies started developing innovative solutions that greatly expanded the offerings of traditional financial services.
Expanding services and new financial solutions called for strategic partnerships to modernise payment infrastructure.
What are the benefits of strategic partnerships in payment infrastructure?
The rise of electronic payment transactions, the widespread development of instant payment systems, and constant industry innovations call for strong, strategic partnerships across the payment landscape.
Here are some of the main advantages of these partnerships:
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Flexibility
Traditional legacy monolithic payment architecture lacks the flexibility that modern, partnership-driven infrastructures can offer, where they can integrate additional functionalities much more quickly.
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Reduced operational costs
Developing and integrating various payment methods becomes much easier and more cost-effective. The payment process becomes much more efficient through access to specialised solutions without additional intermediaries.
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Enhanced security and compliance
Partnering with the right entities means leveraging collective expertise in security and compliance. This not only reduces the burden on individual companies but also enhances the overall security of the payment ecosystem.
The right partner can manage compliance and adapt to ever-changing financial environments. For example, suppose a partner already complies with relevant security standards like PCI-DSS. In that case, your business can benefit from this compliance without investing heavily in developing these capabilities independently.
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Better customer experience
Consumers are at the core of payment system modernisation. Quicker, safer, and more convenient payments are the ultimate goal of these collaborations. After all, if customers don’t find their preferred payment methods that are fast and easy, they’re more likely to go to a competitor.
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Omni channel capabilities
Modern, partnership-driven payment infrastructures can provide seamless omni-channel experiences. Customers can use the same payment method, whether online, in-store, or mobile. This level of integration is often challenging with legacy systems.
The future of strategic partnerships in payment infrastructure
The rapid pace of digital transformation, coupled with increasing payment complexity and evolving regulations, is driving a clear trend: those who seek payment solutions must embrace collaborative, modern solutions or risk obsolescence.
Those who embrace partnerships sooner will enjoy the benefits of modern payment infrastructure and see business growth. Companies that hesitate to collaborate risk losing their clients and falling behind in an increasingly competitive market.
Future trends are set to transform the payment landscape further. Through strategic partnerships, payment processors and their clients can leverage new technologies and modern payment infrastructure to deliver their end customers enhanced efficiency, security, and user experiences.
Choosing a Reliable Payments Partner
For payment processors looking to navigate the evolving payment landscape with a trusted, leading solution, selecting a reliable payment partner to facilitate their transactions is crucial. A good partner should offer comprehensive support, including security, compliance, technology, and innovation.
At EFTEX, we provide personalised payment solutions, ATM, POS, Online/ CNP acquiring, transaction processing, clearing and settlement, and tailored support to meet our individual clients’ needs. Chat to one of our experienced team members today to learn more about the possibilities of partnering with EFTEX.