Finix becomes a TPPP payment processor

Finix, a payment infrastructure startup, wants to compete with Stripe, first becoming a payment facilitator, and now becoming a payment processor. A third-party payment processor (TPPP) is a company that provides payment processing services to merchants and other entities.

FACTS 

• Finix announces direct connectivity to all major U.S. card networks (American Express, Discover, Mastercard, Visa).

• According to co-founder and CEO Richie Serna, there are around 25 payment processors on the US market: 

  • And only four of them account for around 80% of the total market share: 

    • The "Big 4" payment processors Serna refers to include Fiserv (First Data), JPMorgan Chase, FIS (Worldpay) and GPN/TSYS. Bloc (formerly known as Square). 

• Last year, Finix announced that it would become a payment facilitator, a move that puts it in direct competition with Stripe.

• However, there are some nuances:

  • Finix has 130 employees, compared with 7,000 in November 2022.

  • Finix has raised around $133 million in financing, compared with nearly $9 billion for Stripe.

• Today, Finix says it processes:  

  • "Tens of billions of dollars for tens of thousands of merchants".

CHALLENGES

• The end of outsourcing with a payment processor: processors are companies that connect directly to the major card networks to transmit payment transaction data and funds on behalf of merchants. Payment intermediaries must work with payment processors to transfer funds. This is a thing of the past for Finix, which becomes its own processor.

• A solution built from scratch, as a competitive advantage: Serna believes that Finix's technology is characterized by the fact that it is built from scratch, rather than through a series of acquisitions as is the case with some incumbent operators.

• Control over its payment offering: because Finix is no longer dependent on third parties, it believes it can offer companies "faster integration, better economics and the possibility of reducing interbank fees".

• A complete international solution: the CEO also stresses that Finix integration will not be limited to the USA, as is the case with other processors. This is unlike other processors, which require players to forge several partnerships with processors depending on their field of action. In contrast, Finix now has direct network integration, enabling it to work with banks worldwide to offer a multi-country, multi-currency processor and other alternative payment methods.

MARKET PERSPECTIVE

• The payment market is constantly innovating, with recent developments including Tap-to-Pay, QR code payments and tokens.

• Other recent news also concerns the arrival of new players on the payment market. The partnership underway between Crédit Agricole and Worldline to create a new player, or the partnership between Société Générale and Lemonway, to create a payment offering for marketplaces. 

• As for Stripe, they had announced in an annual note that they had noted a slowdown in growth, but that they intended to partner with young startups and continue to focus on a diversification strategy to complement their core payment offering.