The payment technology market, often shortened to simply "paytech," falls under the fintech umbrella. However, because of the rapid rise in payment market popularity, it has become its own subset of fintech that deals exclusively with transactions and payment methods.
In fact, by the end of Q1'23, paytech companies had raised $8.1 billion and accounted for 9.7% of all fintech deals. Paytech has become an interesting space for startups because it allows for the disruption of entrenched finance models, something that existing institutions like banks struggle with.
This spotlight on payment technology is completely changing the existing payment and transaction landscape, which is great news for consumers, affiliate marketers and entrepreneurs alike.
Payments Are Now More Than a Basic Financial Exchange
Thanks to this relatively new intersection of finance and technology, payments have now grown beyond a simple exchange of money into a crucial part of the customer experience. Many now consider paytech a type of brand-building opportunity. By expanding their cashless payment capabilities and staying up-to-date on the latest payment methods, brands are working tirelessly to separate themselves from competitors and position their businesses as industry leaders.
The COVID-19 pandemic forced the global community to accelerate the process of shifting how we interact with money, and there is no going back to the pre-pandemic days. The reduction and removal of payment barriers and explosive growth of e-commerce has made us more connected and also changed our expectations for convenient transactions, regardless of where or how we use our money.
For example, QR code integration and instant payments are considered two of the main players in this paytech paradigm shift.
– QR Codes
For businesses, QR codes offer the ability to give customers a fast, convenient way to send payment via mobile device. This is a massive boost to their bottom line and overall customer experience. Beyond this, peer-to-peer transactions that can be completed with a quick tap and scan of a QR code allow users to move money in a fast, simple way. Juniper Research estimates that nearly a third of all mobile phone users will be utilizing QR code payments by 2025.
– Instant Payments
With instant payment, there are two sides to consider: The sender and the recipient. In both cases, each party wants their end of the transaction to be cleared as quickly and seamlessly as possible. For most services, it can take hours at best and weeks at worst to send and receive payments, particularly if the amounts are large or it is a cross-border transaction. Paytech disruptors in the instant payout space are aiming to change this, though. New research shows that the market is expected to maintain a 29% CAGR through 2025, so we can expect to see a continuous evolution of instant payments.
How Instant Payment is Revolutionizing E-commerce and Performance Marketing
For industries like martech and e-commerce, where affiliate publishers and loyalty program participants often must wait for weeks before receiving the money they have earned, this shift toward instant, seamless payments is especially important. In the past, performance marketing platforms and cashback services had to wait for an extended period of time before reimbursing participants, which made it difficult for publishers to earn a steady income.
Deferred payments have always been a core part of these industries that rely on cost-per-action, and it has been a pain point on both sides for years. The delay happens because companies must wait for "approved actions," such as an affiliate sale being completed past the brand's return policy or a travel booking being used after booking months in advance. (Think of a cash-in and cash-out model: If the company doesn't get paid, it can't pay the publisher.)
However, with the introduction of more sophisticated AI in the payment space, this lengthy period of nonpayment can be drastically shortened without causing a huge burden of risk for the company. Admitad Instant Payout Pro is currently a leader in this space thanks to AI-powered algorithms. It made it possible to predict with at least 95% accuracy whether an action will be considered approved, allowing marketers and loyalty programs to pay out nearly instantly.
Other companies like Sopra Banking Software are offering their own instant payment services, helping users clear payments of up to €100,000 in under a minute. These companies are frontrunners in changing the fintech landscape by offering innovative solutions and better supporting a secure digital payment infrastructure.
Paytech and AI Are a Perfect Match For Companies of Any Size
AI's ability to analyze data and forecast outcomes is one of its unquestionable strengths. In the paytech world, this allows companies of all sizes from a wide range of industries to leverage this power to create better, faster, more innovative ways to transact.
Beyond martech and cashback services, AI can improve payment structures for individual marketplace sellers on platforms like eBay and Amazon. It can even facilitate faster payouts to app developers who put programs in the App Store or Google Play.
Paytech is an exciting space to watch because innovations are coming as fast as developers can think of them. In the near future, we will likely see a completely borderless, barrier-free transaction landscape for the entire global community.