San Jose, California: In a bid to cash in on the next big things, online payment processors are working directly with merchants, from global giants to local minnows, in order to refine, reinforce, and rebuild the infrastructure that facilitates the exchange between merchants and customers.
While online payments still represent a small percentage of the global volume of transactions — between five and ten per cent according to analysts — the proliferation of smartphones is presenting a once-in-a-generation opportunity to introduce a new paradigm within which consumers will purchase products and transact with businesses in simple, digital purchases.
Earlier this year, Pinterest introduced Buyable Pins, which iOS users can click whenever they see a photo featuring an interesting product. Pinterest said that it would be using BrainTree and Stripe to process the credit card payments.
BrainTree chief executive officer Bill Ready said online payments only represented about 10 per cent of the global volume of payments, but the deal with Pinterest was an example of creating a new "context" for users to make purchases.
He likened the inter-dependent rise of eBay and PayPal as an example of how the rising tide of mobile commerce would provide a new wave of growth for the payment companies.
The company had "stepped through trash in the streets" to establish relationships with companies like AirBnB and Uber, when they were just fledgling start-ups. It also uses its BattleHack hackathon event to incentivise developers to use its application programming interface (API) in innovative ways.
In Australia it works with Marketplacer, which operates online marketplaces including bikeexchange.com.au, and recently raised $10 million. Marketplacer is a beta tester for v.Zero, which integrates PayPal into websites. It also partnered with Australian start-up BigCommerce to integrate payment functions for their customers.
"If you look at the Uber experience, it's a physical world transaction where you swipe a card with the taxi driver but everything occurs completely online. So you wrap an experience around the payments. With Uber, so many problems are being solved, but you manage to kill the card swipe as well."
Stripe works with some of Australia's biggest start-ups including 99Designs, RedBalloon and Catch of the Day. Managing director Susan Wu said the company has focused on ensuring that there is no downtime for customers, which can often affect banks.
"We've implemented a fully-redundant network for re-routing all of our users' transactions in the event of any availability issues our banking partners may experience - which ensures unparalleled reliability for our Australian customers," Ms Wu said.
Australian payment gateway developer eWAY signed on 5000 new merchants since July, including Kikka, which provides instant loans between $,000 and $100,000. It has also developed a SmartPOS, which integrates physical payments with online software such as Xero and Shopify.
Managing director Matt Bullock said the future of the industry is around "diversification and innovation".
"That's the end game," Mr Bullock said. "Merchants rightly so expect more service from their multiple platforms and expect them to play a role in their growth — no one business is the same, so you need to have a suitable range of services on offer."
Stripe's Ms Wu said less than five per cent of global consumer spending happens online today, making payments "the last hard infrastructural problem of the internet".
BrainTree's Mr Ready said the world was at the beginning of a massive digital transformation of the market and the presence of companies such as Apple, via its Apple Pay feature, would benefit the entire industry.
"AirBnB and Uber sounded like crazy ideas at the time. They wanted to reinvent the world. We supported them and now what sounds crazy actually makes a lot of sense."
The writer travelled to Braintree's BattleHack hackathon as a guest of the company