Viewpoint

Payments: Thriving in a New Market Reality

Karan Mehta, CFO, Cross River

November 30, 2023

3 min read

Fintech companies are driving innovation and competition, creating new and better ways for businesses and consumers to send and receive money. At Cross River, we are not only part of this change; we are also enablers, helping our partners to adopt and integrate these advanced payment solutions.  

Three distinct trends are taking place within today’s payments industry. Firstly, simple experiences are winning in the technological innovation race; secondly, the market is incredibly ripe for consolidation; and thirdly, regulatory compliance remains front and center.   

Seamless experiences are winning the technological innovation race  In the fintech world, technology is not a luxury; it is a necessity. The key to success in payments technology is to make payments faster, easier, and more accessible, anywhere and anytime. This is evident in global infrastructures like PIX and UPI, which are surpassing the traditional U.S. systems, and setting new standards for speed and efficiency. Within the U.S., faster payment rails like Real-Time Payments (RTP®), same-day ACH, and FedNow® enable new capabilities, including within sectors that aren't traditionally known for simple experiences, like insurance, healthcare, and payroll. The most transformative technologies in payments will be those that prioritize ease and optionality. 

We believe that payment infrastructures that allow interoperability among different faster payment systems, including international ones, will broaden access and increasingly shape the payments market. We’re seeing more optionality and convenience domestically but also for international payment solutions.  Push-to-card services, like Visa Direct and MasterCard Send, are changing how fintechs handle financial transactions, deepening the focus on API-based payments.  

These advancements promise a future where payments are not just transactions, but seamless experiences. 

Today’s payments market is ripe for consolidation  A scarcity of capital will lead to consolidation in businesses that have strong financial fundamentals but lack optimal scale. There's a growing preference for multi-functional services under one umbrella. Payment firms venturing into new sectors and modernizing antiquated transaction methods, but require support to scale, will be particularly a sought-after target. Furthermore, the escalating requirements for regulatory compliance are demanding more resources, which is particularly challenging for startups and smaller entities.  Regulatory compliance and risk management have never been more important  The past year demonstrated the importance of regulatory compliance and risk management in financial and fintech services, essential for both business success and consumer protection. Our partners are expected to adhere strictly to laws and regulations backed by strong systems for managing compliance. This high standard is vital for safeguarding end-users and maintaining a trustworthy financial system. 

As the fintech payments market progresses, the emphasis on ensuring interoperability, worldwide reach, and smooth integration across various platforms is becoming more and more important for serving a wide and diverse group of consumers. The ongoing development of this sector will persistently highlight the significance of technological advancements, trends in market consolidation, and the necessity of adhering to regulatory compliance standards. This focus is essential for adapting to what consumers need and making sure our fintech payment systems remain robust, user-friendly, and compliant with the changing regulatory landscape.