3 min read

Why we founded getpaid

With the recent rise of the platform economy, payments has got a lot more strategic and needs solutions specifically for platforms.
Written by
getpaid Team
Published on
May 13, 2024

From e-com age to platform era

The E-Com boom gave rise to the biggest payment players we all know. Adyen, Stripe,Checkout, Mollie - you name it. Companies which focused entirely on enabling the internet economy to accept payments online and worldwide.

It was a sweet deal for both sides. E-Com was growing so fast, that it didn’t matter that payment companies were reaping well over 90% in margins for their service. Payments seemed so complex that it was not worth it for businesses to engage.

But the moment Amazon opened up its gates, suddenly something changed. Suddenly merchants started to care less about their own webshops but more about the exposure to a big brand which ensured constant lead generation and at the same time provided tools for business operations. Suddenly, the whole dynamic gained a new layer.

And it was not only them.

In recent years we have seen a massive push from software companies (also called Software-as-a-Service or in short SaaS) which built their foundation on this changed dynamics. From helping merchants and businesses to sell more products, book appointments, manage business operations to accepting payments - marketplaces and SaaS companies (platforms) started to see the competitive advantage by owning the complete value chain in a given industry.

After all Marc Andreesen’s saying that software is going to eat the world became true.

But something still seemed off in the context of payments. Back then, we (the founders) worked at different positions in the payments industry. From talking to friends running tech companies to customers who were in the midst of big projects - payments for platforms still seemed more of a struggle rather than a piece of cake.

That's why we spent the last months speaking with several platforms ranging from startups to multi-billion businesses and have listened to their problems.

Payments made for platforms

Platforms operate under a multi-layer hierarchy - meaning a business model that entails having customers, that have customers. Which means that they have fundamentally different needs and opportunities. They don’t trade in goods and services like merchants, they trade in technology and knowledge.

Legacy payment providers (as young as 10 years old) which grew with the E-Com boom didn’t account for that. They have built up their entire infrastructure on the promise that a merchant sells directly to a customer. This led to scenarios where platforms were forced into the payments provider infrastructure and not the other way around.

And while integrating mere payments is easy for developer teams, CEOs and CFOs struggle with the amount of extra resources they have to deploy (in some cases full departments) to effectively manage payments after integration. End-to-end reconciliation of transactions and SKUs, booking flows of multi-merchant and geography baskets, and integration into ledgers as well as the right accounting data and communication of the status of “settled” to merchants require tons of resources and manual work in the back office to enable a platform’s concrete business model.

Above all, platforms have more sophisticated business ambitions than merchants as payments are run as a business unit and not as a tool to get goods sold. Rather than being a reseller of payments services, platforms understand themselves as an enabler running on their own ecosystem, owning their data, drawing their own insights from it and helping merchants to grow even more. After all, payments is strategically too important to be a Salesforce for Stripe, Adyen and the likes.

And then there are the costs.

For years it seemed that paying 1,4% + a fixed amount per transaction was an unspoken standard. Even for platforms, who essentially operate under much more volumes than single merchants (and in some cases paid more). When adding all the add-ons required to have a complete solution (eg. billing, fraud, payouts), platforms margins are completely gone.

For us, this seemed completely wrong. As a merchant and business enabler, platforms should not be forced into a one size fits all pricing solution.

Because for them, it's all about control and providing increased flexibility. Being able to configure pricing plans for different clusters of sub-merchants or to capitalize on lower prices and bundle different payment pricing structures into the SaaS fee model. This would allow platforms to turn payments from a cost center into a revenue opportunity.

With all this feedback, it became clear that it lacks a platform payments infrastructure, which acts as a similar key driver for platform expansion, like the legacy payment providers were for the E-Com boom.

So we founded getpaid.

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