In this article we are going to explain
- What processing-related problems private equity and venture capital companies face;
- How investment companies with large portfolios can increase their performance;
- Why solid payment gateway technology is the essential success component for investment company
What is an investment company?
Private equity and venture capital companies specialize on investing money into emerging businesses and rapidly growing startups. In exchange, they get their share of ownership or equity in these startup businesses. So, the major purpose of private equity companies is to improve the efficiency of businesses from their portfolios and partake of their growing revenues. You can achieve such efficiency boost through
- Cross-sharing and mutual referral of individual businesses’ customer bases;
- Optimization of inner production, accounting, and processing.
Lower processing costs mean higher revenues
One of the ways to increase profitability of a company, based on recurring revenue, collected by means of electronic payments, is to lower its processing cost. Indeed, this is a fairly un-intrusive way to accomplish immediate profitability. Individual portfolio members often do not have substantial volumes to negotiate better processing terms with their respective acquirers. Even if better processing rate can be negotiated (based on consolidated processing volume), the new processing solution for the entire portfolio is often difficult to implement, due to technical limitations of acquirers’ legacy platforms and labor-intensive process of integration with the underlying payment platform. So, a unified payment gateway technology can serve as the essential enterprise-level payment middleware that allows to considerably simplify this undertaking.
But how exactly can you (as an investment company) organize payment processing for businesses from your portfolio? (We should keep in mind, that the industry is still largely dominated by legacy platforms that have to be replaced).
The best option is to put a robust payment gateway solution between startup businesses from the investment company’s portfolio and these legacy processing platforms. Provider of this payment gateway solution will simplify the situation for you. It will do most of the work associated with integration with this or that acquiring bank. Plus, it will serve as an adaptor placed between the legacy technology of the acquirer and individual payment platforms with sophisticated needs. It will compensate for the deficiencies of the underlying processing platform, and satisfy the needs of software platforms for advanced functionality.
Why unified enterprise payment technology works for an investment company
In order to get the efficiency boost, an investment company, usually, tries to consolidate payment processing within its portfolio. As we know, any payment solution involves a technical aspect and a business aspect. So, implementation of a solid payment gateway solution allows it to smoothly handle the technical aspect of the problem. This consolidation makes things easier for the private equity company and its portfolio members. The reasons are as follows:
- Payment processing and reporting become much more transparent.
- You can optimize other internal processes. For example, you can replace a bunch of accounting departments of your sub-merchants with one unified accounting department.
- Transition to the new universal acquirer/processor (if necessary) is easier when the volume is consolidated. This new acquirer is often willing to offer better processing terms than current acquirers of individual businesses from the private equity company’s portfolio.
- A robust and unified payment technology allows you to easily adapt to the newly emerging needs and conditions. (Especially, if it is an open-source-code product created, maintained, and supported by a large team of developers, specializing on integration works, addition of new functionality, and migrations of merchants from one system to another).
Enterprise payment technologies provide a robust and solid basis, allowing investment companies to significantly improve their performance with minimum efforts. Implementation of a unified payment solution allows investors to consolidate payment processing for their portfolio members and overcome functionality limitations.
If you are an investment company seriously considering implementation of a unified solution in your payment ecosystem, you are welcome to consult our payment experts at UniPay Gateway on the subject.