White-Label Partnerships Emerge as Key to B2B Payment Monetization Strategies

In any technological — and especially payments-related — endeavor, there are several strategies a bank, B2B software provider or platform can employ: build the technology in-house; buy a firm that already has the functionality; or choose a white-label partner that allows the providers’ products and services to be rebranded as part of the providers’ own offerings.

The various strategies are especially important amid the growth of embedded finance, where non-financial companies can realize new revenue streams and other benefits by housing financial services, from payments to lending, within their own customer-facing interactions. As Justin Downey, vice president of product at Maverick Payments, told PYMNTS, regardless of which strategy is employed, “the key attraction is adding true value to your services and stickiness to the customer relationship.”

By adding payment components to vertical SaaS and customer relationship management tools in particular, Downey said he believes that ancillary benefits come in the form of better data, analytics and new revenue streams tied to what he termed “participating in the payment experience.”

But getting there is no easy task, Downey said. Payments are complex and marked by regulatory and compliance concerns, especially when it comes to securely processing payments and protecting cardholder data. For platforms, the “build, buy or white label” debate hinges on how quickly the provider may want to go to market with new payments functions, and how they plan to support those features over the long term.

“If you are building something out, and you are not specialized, or a FinTech … having to develop something from scratch takes significant time, costs and resources,” he said. “It can take years to fully develop a system. And then additionally, beyond the initial build, you need to continually invest in ongoing development, support, regulatory compliance, infrastructure and costs to maintain it.”

At the same time, payment network rules can change quickly, and integration challenges can arise. When it comes to buying payment capabilities, Downey said he recommends potential buyers look for providers that are PCI compliant, complete their SOC audits and have a support team that is readily available to offer support and advice for the payment products and services after the deal is closed.

“For many of these banks and B2B software/platform providers, building the technology in-house or buying a firm will take too much time, attention and resources away from your core focus to allow you to maximize the full potential of this new revenue stream,” he said.

The white-label option can be attractive to B2B software and platforms. It can help buyers and suppliers shift more fully into the digital age by going to market quickly without the added costs, risks and distractions of building the technology in-house or buying a firm and providing ongoing support for the added functionality.

In a B2B-themed example, Downey brought up white labeling and embedded finance. White labeling enables embedding payments in a way that adds value to existing services and fully promotes a brand throughout the experience, versus building another system or promoting the FinTech provider’s brand.

“That means that the customer spends more time positively interacting with your name and logo,” Downey said. “This is what we mean by adding stickiness with customers.”

The mechanics of the white-label relationship mean that customers don’t have to “jump” to another, outside party to complete a payment, he said. In that setting, buyers and suppliers can interact, exchange invoices, get those invoices paid and choose among various payment methods, from virtual cards to ACH — and instant payments, as connectivity to real-time payment rails becomes more widespread.

There’s another advantage inherent in connecting to a white-label platform, which comes in the form of risk mitigation.

“It is absolutely possible for banks and B2B software/platform providers to securely offer payments as a component of your system through white labeling,” Downey said.

Partnering with FinTech providers with an API-based integration that complies with SOC and PCI security guidelines ensures the security of data transfers and other critical payment-related information, he said.

After all, fraudsters are evolving and launching more sophisticated attacks at companies from all angles, using advanced technologies, such as artificial intelligence, to do so.

In the very best scenarios, white labeling gives banks and B2B software/platform providers control over their payments experiences with the added benefit of gaining a true partner to provide industry expertise, guidance and back-office operational support.

“You’ll need to look for full-service payment providers that are partner-driven, meaning they are focused on your success,” Downey said. “They should not only provide comprehensive payment technologies and can flex with your business but should be fully white labeled as well. You’ll also want to seek out a payments partner that can help you go to market quickly by lifting the operational burden from your team and can advise and guide you through industry changes.”

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