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FinTech 2.0: Software as the future of payments distribution
Journal of Payments Strategy & Systems,
13
(3),
226-236
(2019)
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
The full article is available to subscribers to the journal.
Author's Biography
Ashley Paston is an investor on the Bain Capital Ventures team, focusing on payments and financial technology. She previously worked at McKinsey & Company in the Strategy and Corporate Finance practice, advising financial services clients on strategic investments and growth opportunities. She holds a bachelor’s degree from the Wharton School at the University of Pennsylvania, where she concentrated in finance.
Matthew Harris is a partner at Bain Capital Ventures, where he focuses on investments in financial technology and services. Prior to joining Bain Capital Ventures in 2012, Matt worked at Village Ventures, a firm focused on early-stage FinTech investing that he founded and ran for 12 years. Matt began his investing career at Bain Capital Private Equity, having worked previously at Bain & Company. He attended Williams College, where he studied political economy.
