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The payment industry’s rebirth

Explosion of online commerce has sent businesses looking for alternative payment options

The explosion of e-commerce in 2020 brought with it immediate problems for businesses that had never sold online before. Suddenly in survival mode, they quickly learned that deciding to sell online was only one part of the equation – they also had to figure out how to accept payment.

“The payment industry is experiencing a renaissance – a rebirth,” Stoyan Kenderov, chief product officer of Plastiq, told Modern Shipper. “We have seen unprecedented [growth] and it is being driven by the re-platforming of commerce.”

For many businesses – both B2B and B2C – the decision to accept credit cards as a form of payment took place long ago, but there is still a subset of industry that does not accept plastic. According to a 2020 Nilson Report, 10.7 million merchants accept Visa and Mastercard, while 10.6 million accept Discover and American Express. Nilson’s January report projected 642 billion credit card transactions will take place by 2025, a 41.4% increase over 2020.

Credit card acceptance, though, comes with monthly fees, per-transaction fees or interchange fees, commonly called swipe fees, that average between 2% and 3% of the transaction price. Online card acceptance may carry even higher fees, and there could be currency conversion fees for businesses selling across borders.

Some businesses, therefore, simply refuse to accept credit cards. With global commerce moving online, that decision could lead to lost sales.

Kenderov said that credit card payments represent only about 10% of global gross domestic product, but still that makes it a $14 trillion a year business.

“All businesses have some form of credit issued to them on credit cards. Unfortunately, they can’t [always] use it to buy goods because the vendor doesn’t accept cards. And that is limiting,” he said. “We’re seeing a gradual expansion of this credit card payment slice as part of the global economy and it’s happening because more and more businesses are finding themselves in a business cash [crunch].”

Plastiq acts as a middleman for commerce. The company will accept credit card payments and then process that payment to the other party – even if that party doesn’t accept cards. Unlike typical credit card arrangements where the merchant must pick up the transaction fee, Plastiq charges the purchaser a 2.85% fee for processing the payment – the merchant pays nothing.

Kenderov said most payers accept the fees, particularly businesses that often use cards with cash-back rewards that may refund the 3% of total purchases, in essence making the transaction fee free. The business is also able to eliminate time and cost associated with processing manual checks.

“We flipped the traditional credit card payments model on its head,” Kenderov said, adding that it is a great option for small businesses and e-commerce platforms. “If they are invoicing customers, they are waiting for checks to clear, business is waiting and cash flow is impacted.”

Plastiq can delivery expedited payments on the same day through wire transfer. The company also handles currency exchanges, allowing e-commerce brands to sell globally without worrying about currency variances.

Kenderov said that Plastiq is different from a platform like Venmo, which requires both parties to be part of the platform to conduct a transaction. On Plastiq, only one side of the transaction needs to be signed up with Plastiq. If the merchant is not a member, payers can have Plastiq send an ACH, wire or check. If a merchant signs up with Plastiq, their customers can pay quickly through a guest checkout feature without signing up for a Plastiq account.

The company can export those reports to Quickbooks currently, but will soon be adding additional accounting programs to the process.

“We’re making accounting a breeze on the payments side so people don’t have to spend that eight to 10 hours a week,” Kenderov said.

Plastiq can automate recurring billing and payment for vendors and payers (with approval of each). It can also notate what the payment was for (rent, utilities, materials, etc.) and connects with tax agencies (it captures tax information and flows this information to the appropriate agency). It also integrates with payroll systems, including ADP.

Click for more Modern Shipper articles by Brian Straight.

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One Comment

  1. Really nice article and very insightful. One always thinks payments have been fully optimized, but alas, they keep evolving in interesting ways!

Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at