Before leaving home in the morning, you do a personal pat down—keys, phone, wallet. You’re making sure that you’ve got the essentials you need for the day. Over the past few years, some companies have been inventing technologies that will simplify this morning ritual. They want to take away your wallet.
They’re not pickpockets. They’re credit card companies, payment companies, and wise investors like Anton Levy, Managing Director of General Atlantic, a longtime supporter of innovation in e-commerce. He’s so confident in the growth of this industry that he currently sits on the Board of Directors of Klarna, a Swedish payments company that recently launched in the United States.
Payment service providers are the invisible forces that seamlessly process your online purchases. They’ve done their job well if the experience of paying for your purchases was so effortless that you barely noticed it. Payment service providers are part of a vast financial network of electronic payment companies and include credit card companies, bank-supported debit cards, and real-time bank transfers.
E-commerce innovators recognize the essential key to success in the digital retail world. It’s not only about a selection of trending items, a prize-winning mobile site, or a flawless fulfillment service. Getting customers to regularly spend their money on your products or services requires a friendly payment process. The easier it is for customers to make purchase, the more likely they are to buy more items and shop more frequently. Payment services Stripe, Klarna, Wallet, Square, and Adyen are competing for your attention behind the scenes of your favorite ecommerce retailers.
Profits woven into the fee-based transactions are at the heart of electronic cashier systems and are the key to attracting investors with deep pockets. Payment services generate revenue from fees attached to each transaction. Some companies receive a percentage of each transaction and others receive a fixed fee for each transaction. The cashmere sweater you splurged on at your favorite e-commerce store provided profit to the manufacturer and the vendor. But the big money is made when the minuscule fees associated with your purchase are multiplied a million times over.