Payment facilitation is a buzzword in the industry. Fundamentally, it just means a platform or a software that sits in the middle between buyer and the seller, and it facilitates just a transaction or a payment between those two parties. It actually allows them to own the underlying client experience. So that goes anywhere from servicing, or a more integrated experience from a solution technology standpoint, and then it also provides them an ability to offer differentiated solutions around their core offering.

Payments are complex because there are so many different variables, more than just taking in payment. There is the compliance aspects, the fraud. Data security is obviously implied. It's creating frictionless consumer experiences because that's their expectation. It is an easy payment experience. And then also just managing the back end fees and the costs associated with it, it's oftentimes one of the top five line items for any direct-to-consumer business.

On top of that, it's a global marketplace. So you have to look at this cross-border transactions and alternative method of payments and ensuring that you're authorizing the most transactions or approving the most transactions coming in at the lowest possible cost. The biggest differentiator that we have in this segment is that we are an acquiring bank but also the largest issuer of credit cards here in the US. That enables us to bring our merchants a different perspective and insight, intelligence, and data around who their own customers are so they can better serve those customers as well as reach new ones.

So we do have a different line of sight and lens into the end-to-end payment ecosystem than most other providers. We've got amazing people who know payments. And we support our clients anywhere from that small micro merchant and SMB all the way up to global multinational corporations. And they lean on us for our expertise and guidance on maneuvering through what can be an extremely complex marketplace and a evolving and changing marketplace.

So you want to be in payments. I think everybody is in payments. The question is is, what role do you play in payments? That can be anything from a simple buyer-seller relationship where you're accepting payments for a widget that you sell, or it could be as complex as owning an end-to-end solution on behalf of merchants or sellers.

When it comes to payments, payments are very complex, but they're probably the most important facet when it comes to being able to conduct business. Transacting is the lifeblood of the economy, and understanding the role that you, as a platform, can play within that landscape is key to optimizing how you're trying to meet the business goals of touching the payment itself. The way we look at payments is on a spectrum or a continuum. You're either a payment acceptor, or you're a payment facilitator or somewhere in between. But at the end of the day, finding the right place along that continuum is going to be important for you to be able to sustain your business long-term in order to meet those goals, both for you and your clients.

The key is understanding what role you play along that spectrum and knowing which questions to ask because I think the thing that gets companies upside down at times is not knowing what they don't know. I think one of the key times where you start thinking about payments a little bit differently is when payments evolve from being a product to a strategy. So once it becomes a strategy, what does that mean for you?

When we think of the term platform, that means different things to different people. It could be something as simple as a merchant that has built a platform from which to accept payments of which it has direct relationship with customers, or it could be a platform where you're actually facilitating payments on behalf of downstream merchants. Lots of terms that you hear out in the world today like payment facilitator and marketplace and service provider, those all denote and require different things.

They all sit on that payment spectrum, but understanding what impact that has for you as a business is key to your long-term sustainability in terms of building out your payment strategy. We are here to help you understand all the aspects of what it means to be in that payment flow, everything from regulatory and knowing who your customers are and onboarding your customers and managing them to what it means to be in or not be in managing the settlement of the funds themselves.

I'd say when you think of payments, most people are just thinking of I have a platform, that platform has clients, and those clients have cardholders and I just need to get money. That is easy as it is. Simplistically were just taking payments from a cardholder and funneling it back to the person accepting those payments but there comes a lot of oversight in that.

So when you think of oversight from a card brand perspective, and the brands all have ever changing guidelines that govern the way credit cards should even be taken from an authorization and settlement perspective, they also have guidelines when it comes to PCI compliance-- how are you building your environment? How are you engineering your software to protect that cardholders personal information and cardholder data? These items change constantly. And having a business model where in your payments facilitation journey accepting the fact that you're going to take on all of that yourself, you're going to hire that KYC officer, you're going to hire that PCI compliance manager, you're having to do it all. You're having to understand that and can constantly keep in mind.

So I would say the biggest risk of that is simply doing it wrong, is not understanding the complexities that come with that and not keeping the lines I of the relationships that are required. And then on the back end outside of the brands I would say there's compliance regulations where there's money transmission. Overall just rules and regs the Fed pushes down or banks have to ensure that you are transmitting funds appropriately and correctly, so you're not violating any money laundering or KYC, you're abiding by all the regulations. So biggest risk is one not understanding the amount of effort it takes to know all of those items and keep yourself attuned to all of those items as the future goes but getting it wrong.

Road to becoming a payment facilitator is a journey. A lot of organizations have to assess many different components-- is it monetization? Is it controlling the user experience toward your brand as a software platform is front and center to your clients?

Or is it just simply understanding and supporting KYC, AML, and all the regulatory considerations? When you look at that, organizations really have to assess where they feel their core competencies lie and where they feel they need support. That helps organizations in the here and now and also helps organizations grow and build their payment platform in the future.

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About 10 years ago, a pretty famous venture capitalist put forth the theory that software is going to eat the world. I think we can see now the truth of that statement. And what we're also seeing is payments are eating the world next.

As we think about the offerings we have for clients who want to become an integrated payments provider, we have a lot of different things for people to choose from. On the most advanced and complex of all of those offerings is becoming a payment facilitator. And the reasons that clients embark on that journey are the ability to really maximize the economics they're going to see out of their payment offering, the ability to have complete control over their payment stack end to end, to build a set of diverse financial services products embedded within their tech, and lastly, they're increasing enterprise value. If you're thinking about a partner who can help you navigate all of the challenges necessary to achieve those goals, these are the kinds of conversations we are having with our clients every single day.

Payment facilitators for us aren't just a source of revenue, they are helping us on our mission to serve small businesses with financial services embedded in world-class technology. When we think about what a small business really needs and how a payment facilitator client of ours can benefit from our solutions to serve their clients, a lot of it revolves around moving money quickly. JP Morgan Chase was one of the leaders in real-time payments, but we offer a suite of solutions that help our clients pay their customers as fast as possible while maintaining control.

Control of funding is really key to the payment facilitator model. Everybody who works with a small business knows that cash flow is a key consideration. And if you're offering your own payment solution to SMB clients in the United States, you need to be able to think about how quickly they can get their money. Next day funding isn't fast enough in many cases. How do you do that if you're going to want to keep control of the funding? If you're going to want to have money flow through accounts that you have control over?

Since JP Morgan that has both its own treasury platform and its own merchant platform, completely owned and fully integrated, we're able to work with our clients on really creative and forward-thinking ways to ensure that they can support faster funding while still controlling the money movement. 

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Payment facilitators want to focus on the one thing that they do well, which is serving their customers, selling their product. We focus on the payment piece of it. So we manage that for them. We manage the challenges associated with that, so that they're able to do the one thing that they're in business to do, which is to serve their customers. They're not really focused on the payment in terms of the complexity surrounding that, they are relying on us to help them with that.

We are in the business of payments. And we work with merchants of all shapes and sizes selling multiple different products, solutions, and services. And our focus is on facilitating that payment for these companies, so that they're able to do what they really started business to do, which was to serve their customers.

Everything is about the consumer experience. It's the most important interaction you have with your customer. JPMorgan gets that, we understand that. And we are going to be with you every step of the way as you work with your consumers to ensure that it's a good experience. Bottom line, we're there to help you grow your company and celebrate your successes.

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