Gross Payment Volume (GPV) is a term commonly used in payments to “describe the total monetary value of transactions that pass through a payments system (Merchant, Payment Facilitator, Payment Processor, etc.) within a defined period of time.”
As noted in an update from Finix Payments, we tend “to focus on this number because the bulk of payment fees are percentage-based, not flat, so the number of transactions matters less than the value of those transactions.”
The Finix Payments team pointed out that it is also “the metric by which payments businesses are measured, as it indicates relative size and growth of the company.”
However, the Fintech firm asks “what level of GPV do you need in order to make integrating payments practical and beneficial?”
At Finix, they originally put out a number in the ballpark of $50 million…but they’ve “since rethought that number (and our approach to integrated payments infrastructure).”
The firm wrote in a blog post that they “realized that reaching our mission to create the most accessible financial services ecosystem in history was going to be a tough go if we didn’t work with companies processing less than $50 million in GPV.”
The company goes on to ask “what’s the minimum GPV you need to process in order to integrate payments into your company’s software platform?”
The firm reveals that it is “literally $0. Zilch. Zip. Nada.” That means that you can “take advantage of integrating with a Payment Facilitator before you’ve processed a single transaction.” However, “why would you?”
As explained in the update, if you are not processing a lot of volume already, you might “wonder what the advantages are of integrating payments right away versus working with an ISO and dealing with higher fees, and then transitioning later when you have more volume and there is more revenue to be made off of payments.”
The firm adds that they are here to tell you that “it matters now.”
The company added:
“We’ve talked a lot about how integrating payments into your software platform provides a lot of value for both your customers (merchants) and their customers (consumers). White labeled payments infrastructure makes onboarding and management of merchants easy and the payments experience for consumers seamless.”
They also mentioned:
“But the benefits of integrating payments doesn’t stop at the experience. In fact, some companies would consider the improved experience purely a bonus, while the additional revenue generated from integrated payments is a benefit to your bottom line.”
They further noted:
“When you choose to get set up with a product like the base level of Stripe Connect, yes, you can get up and running through a self-service process, but there are several factors that make this a less than ideal choice.”
The firm concluded that if you are a software company integrating payments with a product like Stripe Connect, you “may be leaving money on the table and providing a lackluster customer experience; no matter how small your payments volume is.”
The firm added:
“Here at Finix we like to remind ourselves on a regular basis that we are a consumption-based business model. That means that our profit comes after your profit. As a result, when we take on software companies that aren’t processing any payments volume, we are taking a chance on these companies and the possibility that they will process payments in the future.”
They also noted that they “want you to be successful, because your success is our success, so we’ll work hard to make sure that our payments infrastructure enables you to reach your goals.”
The firm further noted that you may begin processing payments “with an ISO or a provider like Stripe Connect, but the chances are more than likely that you will come to a place where that’s not cutting it anymore and the payments revenue lost will start to become painful.”
They further explained that if you start “with one payments provider and decide later that you need to switch to another, you’ll need to migrate all of your payments data safely and securely from one to another.”
According to Finix, this can be “a time consuming and painful process, so most companies won’t take the decision to switch lightly.”
If you choose to integrate with a payments infrastructure company right from the beginning, you can “avoid the pain of a transition later, while earning more revenue from payments right away,” the firm explained.
The firm pointed out that they “truly believe that this is one step on the path to making financial services more accessible; by lowering the barrier to entry to the profit center of payments.”
They also think that software companies with the foresight to put thought and energy into integrating payments “are very likely to be successful in the long run.” They confirmed that they “want to help these companies get there faster.”
The firm also noted that when more small and growing firms have access to this revenue stream they’ll be able “to build their businesses faster, while taking a bigger piece of the revenue that would normally be passed on to large processors and banks.”