Fintech and Payments: Brief Guide

Fintech

15.05.2025

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Fintech, or “financial technology,” is a technology used to deliver financial products or services to the market. Fintech companies develop advanced payment gateway solutions. A payment gateway acts as a central hub between online stores and financial institutions involved in transaction processing: banks, card issuers, and processors. Fintech payments change the way you send and receive funds, actively displacing traditional methods.

In 2024, global fintech funding in the payments sector alone reached $21 billion, which indicates continued investment in the industry. In this guide, we’ll cover how fintech works by taking a closer look at the modern payment gateway ecosystem.

Understanding the Payment Gateway Ecosystem

Global e-commerce is expected to reach roughly $6.35 trillion by 2027. Fast, secure, and efficient fintech payments are critical for this dynamic rise. The key players lay down standards, regulatory frameworks, and technological solutions to ensure the efficiency of online transactions. Let’s see how they make everything work smoothly:

• Merchant. The merchant represents a business or an individual selling goods and services online. They create a merchant account, integrated into the payment gateway, to receive funds from online transactions. Researching and selecting a reliable provider is critical for smooth and secure operations.
• Customer. Customers are central participants of the payment gateway ecosystem. They purchase products and services, using bank cards, net banking, and other payment methods. Their actions kick off the whole process and make the other players get involved.
• Acquiring bank. The acquirer is the destination for transactions forwarded through the gateway. It has the special infrastructure to receive digital fintech payments on the merchant’s behalf.
• Issuing bank. The issuer represents the customer who makes the payment. It may support various payment methods and charge payment gateway fees for processing. The issuer aims to approve the funds to be sent to the acquirer.
• Payment gateway. The gateway acts as the bridge between the merchant’s platform and the banks. It ensures your financial details are verified and securely transferred.
• Payment processor. The processor is responsible for the technical aspects. It connects the dots between the gateway, acquirer, and issuer by enabling smooth data exchange and ensuring funds reach the right account.

The payment ecosystem has many players beyond those mentioned above. Mobile payment systems, digital wallets, point-of-sale systems, and international payment solutions can be background characters. They help make online payments easy, fast, and secure. Every time you make a purchase, you take advantage of the well-organized ecosystem in action!

Critical Technologies Driving Fintech Payments

Fintech companies are constantly looking for technologies that improve the merchant and customer experience. With new payment solutions appearing on the market, they manage to offer customized payments fintech experiences. The critical technologies include but are not limited to:

• Artificial intelligence (AI) is changing different aspects of financial services, from customer support chatbots to fraud detection mechanisms. Machine learning algorithms reduce the need for human interactions.
• Cloud computing solutions offer scalable and affordable infrastructure to deliver financial services. This technology creates data storage and improves processing capabilities, especially for large enterprises.
• Digital identity verification may include biometrics and document recognition, which enhance the security of financial operations. This tech solution reduces money laundering attempts and ensures compliance with legal regulations.
• Payment processing technologies speed up online transactions. Companies can enhance customer satisfaction and operational efficiency through the convenience and accessibility provided by these tools.

Fintech is demonstrating rapid growth. Staying current with innovative technologies is critical to improve overall user experience.

The role of blockchain and cryptocurrencies in fintech payments

Blockchain has transformed the financial sector once and for all. Cryptocurrencies have become the decentralized alternative to fiat currencies. Additionally, many fintech companies learn how to integrate crypto payments into their business. Here are some reasons to get started:

• Higher security. Blockchain technology takes payment security to a new level. Each financial operation builds part of a block connected to the previous and following blocks. This connection creates a unique chain, standing strong against fraud and any other scam.
• Quick processing. Traditional transfers may last days, especially when sending money abroad. Blockchain solves this problem by speeding up transactions, regardless of the sender or receiver’s location.
• Reduced costs. Blockchain minimizes transaction costs by removing middlemen like banks and other payment systems. Affordable fees turn out to be a significant advantage for businesses considering the value cost of blockchain solutions.
• Transparency and traceability. Every blockchain transaction is recorded on the ledger. This transparency helps users keep track of their transactions, enabling trust in the system.
• Decentralization. Blockchain is based on a network of computers, which democratizes financial operations. Crypto transactions are decentralized, which makes them, independent of any regulators.
• Accessibility. Blockchain is available for everyone due to anonymity and confidentiality. Businesses and consumers don’t even need a bank account to make a crypto payment.
• Fraud reduction. Blockchain’s ledger reduces the chances of fraud in payments. Once recorded, the information can’t be changed, which automatically enhances data accuracy.

Blockchain helps fintech companies explore the potential of the digital economy. Fintech payments based on this technology are getting massive adoption and authorization these days.

Strategies for Minimizing Payment Gateway Costs

Whether you’re managing an online store or a brick-and-mortar shop, businesses have to pay processing fees when accepting card payments. These fees assist card issuers and processors in covering the service costs. On average, they range between 1.5% and 3.5% of the transaction size. This might seem like a small amount. However, paying fintech payment fees for multiple transactions can turn into a solid expense that impacts your profits over time.

When working with a processor, there are certain things you can do to reduce your credit card processing fees. Let’s take a closer look at some effective strategies to try for your business.

Negotiating Transaction Fees with Providers

As your business grows and flourishes, your processing approach might change. Does your transaction volume increase? Do you need better security measures? All these factors may need you to negotiate with an existing provider or find a new one. Organize annual reviews with your provider to discuss more attractive rates based on your processing background.

When navigating through the market and searching for a reliable payment provider, a company should consider several available options. It’s important to understand exactly how they make money. A high rate on one credit card fee may be compensated with a low fee elsewhere. You should analyze the pros and cons of each quote before you make the final choice. Narrow the search results down to one or two providers that offer the best deal possible. Here are the basic instructions to follow:

• Don’t go with the first offer. Look around and check rates from several payment processors. Many of them are open to negotiations, especially if your business manages large, frequent transactions.
• Consider bundling. Use different services from the same provider (e.g., point-of-sale system and digital payments), you can get a discounted package deal. Ask them to explain each fee and service standing behind it.
• Check out your contact in detail. Read through your contract and contact your provider to discuss lower fees based on your increased amount and size of transactions.

It’s in your very best interest to get the best cost possible. The result of negotiations will have a direct impact on your profits.

Choosing the Right Pricing Model (Tiered, Interchange-Plus, Flat Rate)

The payment fintech processing statement comes with varying percentages, fees, and terms. Your company should optimize those costs and get the best deal on the market. Choosing the right pricing modern for the integration into your business is essential for commercial success. Here are the main options for these days:

Tiered (bundled) pricing allows the processor to offer their products and services at different price levels (tiers). This model consists of a transaction and processing fee. All transactions are split into several categories: qualified, mid-qualified, or non-qualified. The price rate depends on the category the transaction falls into. Unfortunately, processors don’t reveal how transactions are going to be organized into those categories, which makes things a bit shady. The processor may do excellent advertising by promising a low rate but then classify most transactions under the more expensive tiers.

Despite its drawbacks, tiered pricing can be suitable for:

• Businesses supporting different types of transactions;
• Merchants offering mainly non-rewards cards;
• Businesses seeking simpler statements over optimal pricing;
• Merchants accepting standard payment methods.

Interchange-plus pricing allows the processor to charge a fixed fee in addition to the interchange fee charged by the card network. Unlike the tiered model, its monthly credit card statement reveals the fees for each transaction. The company can check exactly what they pay. No hidden fees, no sudden charges. Interchange-plus pricing doesn’t let you predict the exact number and type of transactions you’ll get each month. This complexity makes it more unpredictable and harder to make any financial planning.

Interchange-plus pricing is perfect for:

• Businesses with a growing transaction volume;
• Merchants boasting a dedicated accounting team;
• Businesses looking for maximum control over financial resources;
• B2B businesses issuing corporate cards.

Flat pricing allows the processor to charge a single, fixed fee for a service or product, regardless of the circumstances. This model includes both the interchange or wholesale rate in addition to the processor’s markup. It’s easy to understand. With flat-rate processing, your company pays the same amount for every transaction. It saves a lot of time for checking statements and managing financial accounts. The simplicity and predictability of flat pricing may bring additional costs, which won’t be revealed in the financial statement.

Flat pricing is convenient for:

• Small businesses with fixed budgets:
• Startups with predictable costs;
• Businesses located in multiple regions;
• Merchants dealing with a high monthly sales volume.

Payment processing is an integral part of most businesses. When choosing a specific pricing structure, companies should rely on their corporate needs and expectations. While the tiered model promises to be the least recommended, flat and interchange-plus models happen to be a more common choice.

Leveraging Volume Discounts and Bundled Services

Offering goods or services in smaller quantities usually means a higher cost for every unit. This approach increases the procurement costs and decreases the overall profits. In this context, leveraging the power of volume purchasing helps companies get appealing pricing rates. Here is the way to go:

• Secure long-term contracts to get reasonable pricing terms from the processor.
• Partner with several payment processors to increase negotiating power for volume discounts and enhance customer acquisitions.
• Demonstrate value potential to reach competitive volume discount rates.
• Explore bundling services to maximize savings through consolidated purchasing arrangements.

The last one is getting more and more popular among e-commerce businesses. When buying in bulk, it’s essential to negotiate volume discounts. When it comes to a growing transaction volume, you can convince processors to provide percentage-based discounts. Here are the main bundles:

• Comprehensive packages: Some providers carry out bundled services that address multiple needs at a discounted rate.
• Custom packages. Some providers deliver custom packages adjusted to the unique needs of high-risk businesses.

Some providers come up with bundled services at a lower cost. This is a great way to save money in the long run. Bundling services can minimize organizational tasks and reduce costs. However, businesses should choose the bundled services that provide the level of quality they require. For example, an e-commercial company might enter into a special pricing agreement with a payment processor, securing a fixed price for a certain type of transaction for a year.

Why Choose PayAdmit for Your Business

The financial market is constantly changing, which makes payment fintechs face new challenges again and again. To minimize financial risks, businesses must find a reliable payment provider like PayAdmit. We offer a wide range of transaction processing tools for corporate clients. With our help, your company can manage all financial operations quickly and efficiently. Our gateway ensures the security of sensitive data and provides both the merchant and the customer with accurate transaction updates.

PayAdmit provides dozens of payment methods to companies operating in different industries and located in different parts of the world. We stick with individual requirements, guarantee simple integration, and ensure software maintenance around the clock. With us, you don’t have to worry about receiving customers’ payments. Let us be your smooth partner for payment processing.