1、1Payments:The Next Differentiator for Platform EcosystemsA guidebook for marketplaces,payroll providers,and gig,freelance,and creator platforms.2IntroductionBusiness is increasingly global,digital,and flexible.To meet the needs of the market,digital platforms are playing an ever greater role in the

2、global economy,growing from a small corner of business activity to what MIT refers to as a global phenomenon.As more businesses embrace global talent,there are increasing pressures on employee experience,hiring,service delivery,and global expansion.The technological innovations and increased online

3、connectivity behind platforms have created a world where businesses can source labor,products,and services from anywhere in the world.Payments across these ecosystems carry more expectations than ever beforepresenting both an opportunity and a challenge for platforms to differentiate and earn loyalt

4、y.As the platform concept expands and reshapes the economy,its very definition evolves.In the context of this guide,we consider platforms as digital services that bridge two entitieseither B2B or B2C,including:On-demand talent platformsMarketplacesPayroll platformsMatch workers to gig,freelance,or c

5、ontract jobs;often referred to as the gig or creator economy.Connect sellers and buyers on a single platform and user experience.Automate and simplify global salary and wage disbursement from an employer to an employee.Why payments are key to platform success Challenges in delivering effective payme

6、nt processes Advantages of the right payment partner Payment partner selection considerationsIn this guide,well explore:3Platform markets are not only entrenched in the economies of North America,Asia,and Europe but also South Asia,Latin America,and Africa.Likewise,platforms have become a force beyo

7、nd businesses-to-consumer and consumer-to-consumer transactions;they are now in businesses-to-business environments,too.”11 MIT,“How a Decade of Platforms Has Upended the Global Economy”,20224Platform businesses are experiencing growthand increasing competition Platform business models have seen rap

8、id growth,powered by technology and changing market preferences from both consumers and businesses,often outstripping growth in the economy at large,including within the digital economy:B2B Marketplace GrowthYearMarket size($)Source:DigitalCommerce36020202021$24.34$56and has been predicted to pass t

9、he size of the full-time workforce by 2027.The gig workforce grew by30%during the pandemicUS$9.2Bat a compound annual growth rate(CAGR)of 15.3%during 20212026.The global freelance platforms market size is projected to reachThe creator economy market size has more than doubled since 2019 and is curre

10、ntly estimated at$104.2 billion.130%differential562%Online marketplaces account for of all e-commerce spending.5xThe number of B2B marketplaces has grown by more thanover the last three years.US$55.69BAccording to Allied Market Research,the HR payroll software market is expected to reach by 2031 wit

11、h a CAGR of 9.2%,reflecting a higher projection than pre-COVID-19 estimates.6While these businesses have been enabled by the growth of digital technology and market conditions,they also face three key challenges:Competition and Growth Facilitate successful interactions between the parties they conne

12、ct while offering unique value-added capabilities.Add and retain new participants,including customers,sellers,workers,and/or services.Expanding Technology Connect workers and creators and the businesses seeking to hire them in an increasingly global economy.Provide payment services that embrace newe

13、r ways to pay that may not be typical in a traditional B2B setting.Adapt quickly to new technology,balancing opportunity and risk.Provide a more complete and experiential service to customers.Add new territories and payment methods to suit user needs in different geographies.Manage ever-changing com

14、pliance and regulation considerations to avoid embarrassing and costly disruptions.Use payments to unlock revenue streams for the business.As the shape and size of platform offerings expand,competition changes.In a rapidly growing market,businesses must balance differentiation with reliable delivery

15、 of the basics:Create an effective and efficient business model that can retain sufficient margin on transactions.Remain fully compliant in all the territories in which they operate.Consumer-facing innovation often leads to the later application of that same innovation in B2B.Platforms need to bridg

16、e the gapand possible technology divide between parties:Enabling Payments Payments on a global scale can be slow,inefficient,and expensive and yet payments orchestrated through these platforms are key to brand experience and loyalty:7Corporates,as well as smalland medium-sized businesses,will pay to

17、 alleviate friction from arcane processes and legacy B2B payments,to initiate payments as a service within enterprise resource planning(ERP)solutions,or to present payment buttons within invoices to simplify reconciliation.”2 2 Forrester Vision Report.“The Future of Payments.”Morgan,Jacob.February 1

18、,20228Payments drive platform success While gig work,marketplaces and payroll are nothing new,the shift to digital has changed the rules for connecting dispersed networks of individualsparticularly when it comes to scaling,growth,and retention.Some experts are predicting that by 2023 the gig economy

19、 will represent more than half the U.S.workforce,with more rapid growth overseas.Meanwhile,worldwide B2B marketplace sales are predicted to reach an estimated$3.6 trillion by 2024,up from an estimated$680 billion in 2018.This puts huge pressure on these platforms to service the financial needs of th

20、eir users.Platforms are not just responsible for connecting parties to find work and servicestheyre responsible for making sure parties are paid quickly,securely,and conveniently.This means the quality of payment processes is a key part of platform value propositions and a poor experience can limit

21、or slow the whole business and revenue model.9Payments are integral for platform growthWhether entering a new marketor expanding in an existing marketattracting and retaining workers,sellers and payroll customers requires the ability to not only facilitate payments but to do it in a competitive way.

22、Key considerations to be a preferred platform include:Consistent reliability to meet expectations of both sides of the transactions for service and security.Managed settlement times in line with the financial needs of users.Options for real-time disbursement.Offering multiple payment options:to bank

23、 accounts,cards,and wallets according to the market and client.According to PYMNTS.com,73%of independent contractors are prepared to leave their freelance marketplaces for better payment experiences,highlighting a need for continued evolution and for marketplaces and employers to consider payment ex

24、periences as an opportunity to differentiate,attract and maintain top talent.73%of independent contractors are prepared to leave their freelance marketplaces for better payment experiences.10Strategic decisions about payments influence business marginsFor platforms,the fees charged on transactions a

25、re the core of the revenue model.However,different markets can require more complex payment routing through multiple partners,institutions,and payment service providers(PSPs),raising the number of touchpoints and the cost of moving funds.Platforms have to choose between absorbing these costs,cutting

26、 into their margin,or passing them on to sellers/workers in the form of higher transaction fees.A higher take rate on transactions typically leads to lower transaction volume for customers,limiting overall revenue and harming seller experience.This leaves users open to moving to other platforms in e

27、xchange for a more attractive rate structure.Platforms need a flexible payment system that can provide more control over their cost structures,turning payments into a strategic tool for managing margin and retention.11Platforms face challenges making payments work Global payments are hardPlatforms l

28、ive and die on the network effecttheir ability to attract and retain stakeholdersand then use that scale to attract more users.As the quality of money movement increasingly impacts the user experience,a payments strategy can directly affect the growth of the platform.Payment strategies must be adjus

29、ted to specific market needs based on cultural considerations and maturity of the infrastructure,but this requires solving a wide range of back-end systems,licensing issues,and technical challenges.For example,emerging markets such as South East Asia,Latin America,and India are a huge expansion oppo

30、rtunity for talent,with a wealth of available skills and a young,educated workforce,but there are challenges:Payment systems in these markets are not always well connected to domestic rails.Wire transfers and other traditional payment methods are often ill-equipped to keep international partners and

31、 employees satisfied.Real-time payments are becoming the standardWhen it comes to payments,speed is a key issue for workers across all regions,with an August 2021 poll finding that four out of five workers in the U.S.between the ages of 18-44 believe they should have access to earned wages at the en

32、d of each day.This preferenceor even requirementcan be even more acute in emerging markets.In Malaysia,for example,55%of on-demand workers have less than three months financial buffer.Meanwhile,in India,88%of the on-demand workforce These transactions pass through an average of six financial institu

33、tions(FIs),and wire transfers can take as long as five days to arrive.As the global nature of commerce continues to increase,businesses must partner to effectively address the complexity and deliver excellent experiences on a global scale.12runs out of money before the month is even out.Two-thirds o

34、f gig workers are forced to use their savings to meet expenses on time,which is why unpredictable payments are one of the most common reasons independent workers switch employers.It can cost five times as much to attract a new customer as it does to keep an existing one and platforms must carefully

35、balance the payment needs for both sides of the equation as key to the retention imperative.27%of SMBs say it takes two to three days for them to receive outstanding payments from digital marketplaces.Sixty-three percent of SMBs have indicated they would switch to offering their goods on other marke

36、tplaces if it meant getting faster access to funds,according to PYMNTS data,and 61%of individual sellers echoed the sentiment.66%of companies surveyed by PYMNTS and The Clearing House believe real-time payments will replace paper checks and cash entirely.Meanwhile,30%of consumers list real-time paym

37、ents as an important factor in banking relationships.To solve these challenges,platforms need to embrace the right payment solutions to enable their business to grow.13Payment partnerships unlock scale,speed,and customer experience Competing in the platform economy requires the right payment experie

38、nce.This means using payment rails to deliver the experience that users,sellers,businesses,and workers expect in a way that differentiates your brand.While platforms can theoretically build their own rails,compliance,and security infrastructure,the rapid pace of expansion and the challenges involved

39、 make this unfeasible,expensive and slow.Working with a payment partner,platforms can benefit fromFaster expansionStreamline new market entry by connecting to existing rails and licensing.Reduced costsAdopt multi-currency wallets and direct access to a global network to reduce the number of stops in

40、 the payment chain.Flexible customer experienceProvide users options in how,where,when,and in what currency they get paid to help differentiate your brand.Improved retentionKeep users happy with faster payments and value-add services such as cards.Unlock revenue:Get products to market faster,add int

41、ernational payments,and consider multiple revenue models turning payments from a cost to a profit center.14The Nium AdvantageNium is the global platform for Modern Money Movement focused on helping businesses accelerate global growth.Modern money movement is the emerging standard of moving capital q

42、uickly,easily,and using diverse payment methods and currencies,to anyone across the worldwhile meeting all risk and compliance obligations.Through our platform,we deliver:Local and global reach:True global connectivity requires building individual links with banks,obtaining payment licenses on a ter

43、ritory-by-territory basis,and optimizing onboarding as well as maintaining that infrastructure in the face of new technology and regulation.API-based modularity:Linking together a modern suite of application programming interfaces(APIs)to connect internal and external systems,sharing information sea

44、mlessly,compliantly,and securely,enabling businesses to focus on their unique brand experience.Multi-currency,multi-method:Enabling money movement through a diverse range of payment modes and methods,from cash to virtual cards,fully currency agnostic,as well as being crypto-currency ready.Real-time

45、functionality:Moving money instantly and transparently,in a way that can be optimized for revenue models over time by payments teams and financial experts.Niums platform adapts to the needs of markets,business models,and technology stacks to help platforms build the service they need and scale faste

46、r.“Losses from payment delays,nontransparent payment flows,and payment fraud in cross-border transactions have been significant for businesses.Innovation-driven cross-border payment solutions can liberate businesses from these costs and operational inefficiencies and drive digital business growth globally.”33 Forrester Tech Tide Report.“The Forrester Tech Tide:B2B Payment Augmentation,Q1 2022.”Liu,Meng and Jacob Morgan.March 23,2022.15visit NTo find out how you can enjoy the value of a truly modern payment systemto book a consultation with one of our payment experts.