What is Fintech and how can it help my company?


Industries are constantly evolving – and thanks to rapid technological developments, plenty of companies have been left struggling to keep up with that rate of change. That’s why so many entrepreneurs have started to take an interest in “Fintech” and its implications for small businesses.

People want transactions to be quicker, and they want more convenient payment options. On the flipside, business owners need better ways to manage their income and make trading more efficient. These are the solutions Fintech companies are working to solve, and the results have been phenomenal.

But if you’re still fairly new to the concept – or aren’t quite sure how your company could be utilising Fintech developments – we’ve compiled a quick guide to help you tackle all the basics and join the e-commerce revolution.

What is Fintech?

Simply put, Fintech is a combination of the words “financial” and “technology”. It’s a term that can be used to describe any application of technology that seeks to deliver financial products and services to businesses and consumers. It covers everything from banking, investment and insurance. Today, the UK Government estimates Fintech contributes some £7bn to the economy, and employs over 60,000 people.

Although it’s a fairly new concept to a lot of business owners, Fintech has actually been around for decades.

The invention of the ATM in the 1960s, internet shopping, online banking, contactless cards and crowdfunding all fall under the Fintech umbrella. If you own a company, these are the types of developments that are bound to maximise your chances of making a sale or landing new clients.

That’s why it’s so crucial your business embraces emerging Fintech opportunities – and over the past couple of years, huge companies have started rolling out new products that you can’t afford to pass up.

How to use and accept mobile payments

So, what’s the quickest and most lucrative way to hop on the Fintech bandwagon?

According to researchers at Deloitte, four out of five UK adults now have access to a smartphone. And because users rely so heavily upon their devices, developers at industry leaders Apple and Google have rolled out two rival Fintech platforms that enable users to leave their wallets at home and simply pay for goods with special smartphone apps.

Launched in 2014, Apple Pay has totally revolutionised the way smartphone users approach leaving the house. By downloading the iOS app, Apple users can upload card details and make secure purchases above the £30 contactless limit in shops, apps and on the web. So long as shops are equipped to handle Apple Pay, smartphone users simply scan their phones in exchange for goods and services.

It’s that simple – which is why it’s hardly surprising customers have been quick to adopt the app. According to Juniper Research, Apple Pay now enjoys some 86 million users.

There’s no reason your company shouldn’t try and capitalise on that growing user base, and accepting Apple Pay is incredibly simple.

To accept Apple Pay, all your company will need is a contactless payment-capable point-of-sale (POS) terminal. Because payments on the app are made using preloaded card details, Apple Pay works with Visa, Mastercard, American Express, Discover, Interac, eftpos, China Union Pay, Suica, the iD and QUICPay networks, and most card issuers and payment providers.

Best of all, you won’t be charged any additional fees for accepting Apple Pay. You won’t be liable for fraudulent transactions, either. They’re treated exactly the same as fraudulent card transactions.

Opening a business bank account in the UK as a non-UK resident

Silicon Valley rival Google was a little later to the party with its Android Pay app – but Google’s huge command over the smartphone market means the app could ultimately end up overshadowing Apple Pay.

Android Pay works just like Apple Pay. Customers simply install the app, upload their card details and start making purchases. So long as your company has a contactless-enabled payment terminal with near field communication (NFC) readers switched on, and your point-of-sale software system is able to receive contactless payments, your business should be able to accept the payments.

If you haven’t got a contactless terminal yet, they’re cheap and easy to find. Companies like iZettle and Square offer small terminals that are simple to use. If you’re running a fairly small shop or like to take your business on the road to trade shows, you can even operate the devices using an app on your own mobile phone.

If your company buys or sells goods, this is a market you are going to want to explore. By 2018, the number of NFC mobile payment users is expected to reach 166m. And because your business probably already has the capabilities to be accepting these payments, it would be counterproductive not to accept mobile payments. More important still, actively promote the fact that your company uses the platforms.

These revolutionary Fintech payment methods aren’t limited to mobile, either. Credit giant Mastercard also recently launched the new Mastercard PayPass platform – which enables registered users to pay for goods by tapping a wristband or keychain to your company’s POS terminal. Just like mobile payment platforms, as long as your company is already capable of accepting contactless card payments, you can start accepting PayPass transactions.

How to use and accept online payments

Apple Pay and Android Pay are great for in-store transactions – and you can use them online, too. But the two most powerful Fintech players in terms of online transactions are still PayPal and Stripe. Just like mobile apps, accepting payments via these platforms is simple, too.

So, what is PayPal?

Established in 1998, PayPal has emerged to become one of the web’s prolific Fintech giants. In the first quarter of 2017 alone, the e-commerce platform transferred $99bn between users and businesses via 1.7bn transactions. Using the site and associated apps, anyone can sign up for a PayPal account, upload bank account or card details and start making payments.

If you’d like to sign your company up to accept PayPal payments, you’ll be making life simpler for potential 203m customers around the globe. At present, 7m businesses around the world accept PayPal – but unlike its mobile cousins, PayPal operates a “freemium” model for companies.

In order to start accepting PayPal payments, you’ll need to register for a business account. You can choose from several account tiers. The platform’s Web Payments Standard package is designed for smaller companies without an online payment solution, and does not include a monthly fee. All you have to do is sign up, create a PayPal button and embed the generated code onto your website.

If your business already has an online shop, you might not even need to go that far. PayPal already has partnerships set up with online shop providers like Shopify, Magento and PrestaShop. If you’re looking for a full package solution, PayPal has a huge list of partners so that you can shop around for precisely the sort of online shop provider your company needs.

Like the sound of PayPal and it’s revolutionary online payments system? It’s worth taking a look at competitor Stripe, too. Founded in 2011, Stripe is a slightly more efficient – if slightly more complicated – payment service provider that’s great for creating a bespoke online payment experience for your customers.

You can either register your company with a free pay-as-you-go account, or you can choose from a range of enterprise packages. That being said, it’s worth pointing out that if you choose the pay-as-you-go option, you’ll be charged a certain rate for each transaction. Each comes with its own set of benefits, and so it’s worth doing a bit of research before signing up.

PayPal and Stripe definitely aren’t the only Fintech companies operating in the online retail space, either. For those companies planning on steady or larger transactions, it’s worth looking at package services offered by businesses like Worldpay.

Adopting Fintech in the office

Fintech isn’t all about accepting payments in weird and wonderful ways. If you’re running a service-based company or partnership, there are all sorts of ways you could be incorporating Fintech developments in order to improve various business processes in your workplace environment.

One of the most obvious financial technology platforms your company should be taking advantage of is an efficient accounting software platform. If you’re running a small business without a huge income, it could be tempting to try and record your takings with a pencil and notebook – but you’ll be missing out on a huge range of features that could both save you money and help you fulfil limited company accounting rules.

Should I open a business bank account for my company?

There are plenty of platforms to choose from, and they all offer their own unique selling points. But the vast majority of software providers are now offering products that help companies produce basic, automatic invoices and bill payment services – as well as automatic cloud storage.

According to one recent survey by MarketInvoice, one in four small businesses in the UK are now taking advantage of cloud-based accountancy functions. It’s not difficult to see why, either.

By taking on cloud-based accounting apps like QuickBooks Online or Neat, you can access information and documents from any internet-connected advice, quickly extract data and vastly reduce the amount of time you’re spending entering and exporting data manually. You can even stay connected and update your company finances from your mobile phone using various service provider apps.

That frees up your time to do way more exciting business tasks.

You’ll find a wide range of freemium and subscription models, and the platform you choose will depend heavily on what it is you think your company needs.

If you need a bit of help getting started, there are plenty of technology sites that analyse and rank business accounting software so that you’ll be able to quickly identify which features your new limited company does or doesn’t need in order to succeed.

Welcome to the revolution

Fintech often gets placed on a pedestal, and small business owners mistakenly believe it’s super complicated and expensive – and some Fintech products are expensive and complicated. But the truth is, there are loads of quick and simple Fintech developments your company can adopt today. More important still, these technologies are efficient and they’re cheap.

It doesn’t matter if you’re a technophobe. You’ll be able to figure out mobile platforms like Apple Pay or Android Pay, and you’ll receive fantastic guidance from e-commerce companies like PayPal or Stripe if you’re keen on enhancing your company’s website. Meanwhile, managing your finances with simple Fintech software will save you a whole lot of time and money.

Get out there and experiment. But don’t forget: you should definitely shop around before committing your company to a new service, and this list is by no means exhaustive. Fintech start-ups are rolling out all sorts of brilliant new products every single day, so you should always be scanning the horizon for new technologies that will be perfect for your new limited company.

About the author

James Howell

James Howell, Financial Controller of 1st Formations, is the driving force for the company’s financial department and is focussed on the success of the business. Throughout the growth of the business and harking back to his many years of previous experience in accountancy practice, dealing with all types of SMEs, he has developed a keen interest in all aspects of company formation and company secretarial work. In his spare time, James is a father to 2 young children but keeps up strong interests in both music and sport.

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By James Howell