How Electronic Money Institutions are Reshaping the Business World

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As the collapse of the Wirecard empire is making us all too aware, relying upon one banking provider for your business is not only a disaster waiting to happen but also it could be terminal for your business. The fintech company which is one of the biggest European payment processors and financial service providers is now in the spotlight.

We will now analyze the facts behind why is that so and what are the potential market consequences.

For those of you not aware of what happened with Wirecard, and its card payment and banking solutions, the company which is also one of the biggest fintech firms in the industry, has gone from segment leader to bankrupt shell of its former self within the span of less than a month after it was revealed that a supposed $2 billion reserve didn’t actually exist. Recalling the complex accounting methods of previous scandals like that of Enron and Worldcom, Wirecard’s demise was swift, ignominious, and final. There will be a hard coming back from this and the whole solution has highlighted the need for agile, modern firms to have robust lists of options when it comes to digital payment and digital banking solutions.

Research has identified five primary reasons for the need for diversification in digital payment solutions. These are the potential loss of revenue for the merchant, disruption in the flow of business for clients and customers, potential liquidity crises, an inelegant pivot to new vendors, and quirky tech solutions that do not work with your operation.

Loss of Revenue for the Merchant

Possibly the single biggest problem with relying upon one payment solution provider is the fact that you could potentially get cut off – whether by your own actions or through no fault of your own – and thus also have your business’s connection to the flow of money in the market severed as well. But it isn’t the loss of revenue in the immediate sense that will make life difficult but rather the loss of potential revenue and customers. You cannot let your business falter or stumble for even a second or you will lose the confidence of your customers and clients. And they have plenty of other options. You should have plenty of other options when it comes to how you handle payments.

Disruption in the Flow of Business

Having to explain technical difficulties with payments is perhaps the most painful thing a company can do. It not only raises questions about the stability of your operation but also it makes clients wary. That doesn’t mean they won’t give you space or exercise some patience but “time is money.” You cannot suffer a disruption to your business that could be caused by using one virtual IBAN and digital banking solution. You should have a range of people that you work with and many partners upon which you can call when things get difficult.

Potential Liquidity Crises

If you are facing a payment issue, you will need to rely upon your credit lines and cash reserves. Not every company keeps these on tap for such a purpose and, indeed, it would almost seem to be a waste of capital to have money sitting around waiting for a what-if your payments processor stops working. A liquidity crisis will not only cripple your company’s ability to do business but could put even a healthy business out to pasture if it lasts long enough.

Difficulty Pivoting to New Systems

If you are facing a payment issue, you will need to rely upon your credit lines and cash reserves. Not every company keeps these on tap for such a purpose and, indeed, it would almost seem to be a waste of capital to have money sitting around waiting for a what-if your payments processor stops working. A liquidity crisis will not only cripple your company’s ability to do business but could put even a healthy business out to pasture if it lasts long enough.

Tech Problems

For companies that rely upon eCommerce and the Internet, you can’t have a complicated or highly centralized payments issues holding you back. Not only does implementing a new system take time and expertise, but also it requires testing – outside of the real world and within it. Depending on how complex your website technicalities or business model are, this could be a huge hassle – not to mention extremely expensive.

Time is money

Concluding on the above sated we have to repeat that indeed “time is money”. There are numerous advantages of Monneo’s digital banking services that we have successfully deployed among our client’s business operations. Spend your time wisely. Contact us to learn more about how can help you with digital payment solutions or apply directly for your virtual IBAN on our website.

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