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What Are Platforms – And Where Are They Leading?
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There’s lots of hype around platforms these days. It used to mean a technical base – like a computer and operating system from which to run software and processes or develop other technologies.

Today, it means much more than that. Fueled by cloud computing, the internet, and algorithms, modern platforms can push out real-time, on demand services, support digital frameworks, and empower new ecosystems and economies.

Flexible foundations
Platforms are structures that allow multiple products to be built within the same technical framework. Companies invest in platforms in the hope that future products can be developed faster and cheaper, than if they built them stand-alone.

Platforms can:

  • support other platforms e.g. Apple iOS, Google Android,
  • provide digital tools for the creation of market places. e.g. Shopify and Magento
  • facilitate their own retail markets e.g. Amazon and eBay
  • deliver services e.g. Uber and Airbnb

Integral to payments

If you want to enable transactions, either from a physical location or a webstore, then you’ll need a payment platform.  This provides the core systems and technology that allow you to accept a sale. It can be contained in a POS, a mobile app or an ecommerce system.

Depending on your business, it can be simple (based on standard processes and templates) or complex with high degrees of customization including hardware and software integrations to enhance the customer-facing UX or to streamline back office processes.

If a platform is “open”, it will work with apps from third-parties and may support their development through Open APIs and software toolkits. Online payment platforms normally incorporate a processing gateway and some form of security software or process (e.g. point to point encryption and tokenization).

So, what are the benefits?
Apart from empowering organizations to do specific jobs, modern platforms using open-source software, cloud storage and computing provide the scale required to cut cost.

They grant immediate access to vast computing resources, and information and communication technology tools, lowering barriers to usage and opening opportunities to do much more with less resource and effort.  

For example, in the past five years or so, we have seen the rise of ‘payment as a service’ platforms where merchants can outsource or rent commerce capability rather than having to own or build entire computing systems. This makes payments an operational rather than a capital expense and reduces the burden of compliance (e.g. minimizing PCI DSS scope).

Creating new ecosystems
As businesses shift from traditional to digital models, services are becoming faster, cheaper and more accessible through apps and over the cloud. For example, video rentals have been replaced by the likes of Netflix, vacation rental and taxi businesses have been superseded by Airbnb, Uber and Lyft.

Increasingly, platforms are becoming economic tools with software layers added to facilitate apps that exploit data over the internet, creating new extended ecosystems. It’s likely we will see the emergence of more digital marketplaces as synergistic businesses collaborate and connect using central platforms to support new gamechangers such as IoT, blockchain and cryptocurrencies.

The result will be an explosion of service choice for users and many new revenue generating opportunities for merchants. Welcome to the platform economy!

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