Tarsadia releases new whitepaper diving into the growth and transformation of payment operations
October 03, 2023 09:00 AM Eastern Daylight Time
NEW YORK–(BUSINESS WIRE)–Tarsadia Investments, a multibillion-dollar firm that makes high-conviction investments in category-defining companies globally, announced today the release of its whitepaper titled, “Payment Operations Software: The Multi-Hundred Billion Dollar Market to Optimize Payments.” In the whitepaper, Tarsadia dives into the transformation of the payments landscape, specifically outlining payment operations software as a key driver in boosting merchant power and efficiency.
“We offer an in-depth overview of innovations in payments as well as actionable insights for customers,” said Rikhil Bajaj, Head of Fintech & Software for Venture, Growth & Private Investing (“VGP”) at Tarsadia. “We’ve compiled key insights from 200+ payments founders, 50+ merchants and Tarsadia portfolio companies. Our proprietary mapping of the vendor landscape, capabilities of each vendor and market gaps includes 275+ companies.”
The paper is topical as it helps explain the increased competition experienced by modern payment processors, as evidenced by the over 50% decline of Adyen’s (AMS: ADYEN) stock price in the week following its August 17th, 2023 earnings announcement. Payment operations software players are now intermediating access to payments and increasing the power of merchants. New technology is critical since software and e-commerce led payments distribution channels are growing around 4-5x faster than the traditional ISO channel. Payments complexity is also increasing since 74% of volume is marketplace intermediated, 28% is cross-border and card acceptance rates can be as low as 77%.
Key themes from the whitepaper include:
Payments Optimization Tools Increasing the Power of Merchants: Analytics and optimization platforms (e.g., Tarsadia’s portfolio company Pagos) are helping merchants increase authorization rates, reduce payments costs and increase processor flexibility.
AI/Software Intermediating Access to Domestic and Cross-Border Networks: New payments schemes increase demand for software intermediaries to route payments intelligently based on conversion and cost (e.g., routing engine necessary to access FedNow since it will take years to become ubiquitous).
New Generation of Emerging Markets and Marketplace Processing: Innovative emerging market gateways can solve for low card acceptance or alternative payments in ways incumbents cannot. In addition, Tarsadia is seeing new processors build two-sided pay-in and payout capability to better service marketplaces.
Global Re-Bundling of Fraud/Compliance Technology: Tarsadia is seeing merchants combine solutions in-house or with orchestration vendors, while entirely new vendors are focused on emerging markets and solving for data scarcity.
Rise of Vertical-Specific Payments Optimization Capability: Unique vendors emerging to solve complex, multi-party payments (e.g., healthcare, insurance or supply chain), embedding payments into software (e.g., travel and hospitality) or solving for unique fraud or compliance issues (e.g., gaming or digital assets).
Sponsored by a permanent capital base, Tarsadia offers entrepreneurs maximum alignment, often partnering over a decade-plus investment horizon. Tarsadia combines deep thematic research with decades of operating experience to make high-conviction investments across multiple stages. Tarsadia’s multi-disciplinary and collaborative approach across venture, private equity, and public markets drives unique insight and support for founders across the business life cycle. Additionally, the firm’s flexible mandate enables creative deal structures, including financing growth, recapitalizations, or acquisitions of significant competitors.
For more information on Tarsadia, visit tarsadia.com.
About Tarsadia Investments
Tarsadia Investments is a multibillion-dollar private investment management vehicle that makes high-conviction investments in category-defining companies globally. We are a supportive and value-enhancing investment partner and have a history of seeking out and working with exceptional management teams. We’ve invested across stages from idea to public ownership, with often a decade-plus investment horizon. We use our domain expertise in financial services, healthcare, real estate, and technology to support founders on growth, talent, and M&A and capital raising.
Caliber Corporate Advisers for Tarsadia