How Payment Providers Can Increase Profits

In 2023, the global payments industry generated $2.4 trillion in revenue. By 2028, this number is expected to hit $3.1 trillion.  

However, growing competition distracts payment service providers from meeting consumer needs. And as more consumers embrace digital payments, businesses embracing cutting-edge tech have more opportunities to stand out. 

In this guide, we’ll explore actionable strategies to help payment providers — especially those dealing with cryptocurrencies — increase profits.

Understanding the Growing Trends in Payments 

To stay ahead of the curve, payment providers should watch the trends shaping the future of payments. Here are some of the biggest developments transforming the payment space:

Digital Wallets

Digital wallets have become increasingly popular because of their convenience and security. By 2026, the number of digital wallet users is expected to exceed 5.2 billion globally — a 53% increase from 2022. 

Unlike physical cards, digital cards are more secure because none of your account information or actual card numbers are stored within the digital wallet. 

In the event someone steals a credit card, it’s quite easy for them to use it. A digital wallet, on the other hand, has several added layers of security: facial recognition, fingerprint scan, or password protection. Digital wallets are also easier to replace or lock if compromised. 

Integration of Blockchain Technology and Cryptocurrencies

If you want to enhance your digital asset infrastructure, blockchain and cryptocurrencies are definitely worth considering.

Although blockchain and cryptocurrency are often used interchangeably, they are distinct concepts. Blockchain is an extensive distributed database that records all transactions in real time. This technology makes transactions secure and easily traceable. 

Cryptocurrency is a digital asset that relies on the aforementioned technology. Crypto has made payments faster, cheaper, and more transparent by eliminating middlemen like banks.  

Increased Focus on Security and Fraud Prevention

A report by Alloy revealed that, in 2024, around 25% of financial organizations reported fraud losses totaling $1 million. Meanwhile, consumers experienced over $10 billion in fraud-related losses. These numbers highlight the need to focus on innovative tech solutions that protect consumers and businesses. 

With more online transactions than ever before, traditional security measures like passwords no longer suffice. That’s where advanced tech like biometric authentication steps in. Using facial recognition, fingerprints, or even voice recognition adds an extra layer of protection. 

However, security doesn’t stop there. PSPs are also adopting real-time monitoring systems to detect suspicious activity immediately and mitigate threats before they escalate.  

Use of AI and machine learning

AI and machine learning are also revolutionizing payment systems. First, they’re enhancing fraud detection by analyzing transaction patterns in real time. Machine learning algorithms can learn and adapt, continuously improving over time. 

These technologies can also personalize user experiences. They leverage customer data to predict and recommend what a user may find interesting or useful, while also providing tailored payment solutions.    

In addition, AI and machine learning help optimize transaction processes through automation. Automating processes improves everything from payment speed to processing accuracy. As these technologies evolve, payment systems are becoming more secure. 

5 Strategies for Payment Providers to Unlock Revenue Growth Opportunities

You need a strategic approach to navigate the competitive, evolving market of payment services. Here’s how providers can stay ahead of the game. 

1. Optimize Transaction Fee Structures

You can boost profitability by optimizing transaction fee structures via strategies like:

• Tiered pricing: Offer lower fees for higher transaction volumes to incentivize merchants to process more payments. Providing tiered pricing not only increases transaction volume but also encourages long-term partnerships.  
• Dynamic pricing models: Adjust fees based on payment method, transaction size, and geographic location. For example, you can charge higher fees for international transactions because they typically come with higher processing fees.   

 

A good transaction fee structure is flexible. It should capture value in places where you can afford to charge more while staying competitive in lower-margin transactions. 

2. Expand Value-Added Services

Offer value-added services to tap into more revenue streams and deliver more useful solutions to consumers and merchants. Some of these services include:

• Digital wallets: Enable customers to hold their cryptocurrencies in one secure place.  
• Crypto custody and security: Offer secure storage solutions for digital assets to customers entering the crypto space. 
• Crypto liquidity provision: Provide crypto liquidity during high trade volumes or when offering cross-border payments to ensure that assets are available for buyers and sellers.
• Tokenization and asset digitization: Help businesses and individuals convert assets like traditional currencies or loyalty points into digital tokens. 
• Blockchain integration and consulting: Assist merchants in adopting blockchain technology for transparent transaction tracking. 

 

Offering value-added services is a smart move that positions PSPs as innovators. For instance, AlphaPoint collaborated with Wenia to launch the Wenia Card. This crypto debit card allows users to spend their digital assets like Ether (ETH) and Bitcoin (BTC) as easily as traditional currency. 

3. Leverage Cross-Border and Crypto Payments

Whether sending money from abroad or buying an item online, global payment solutions connect businesses and people like never before and increase financial inclusion. Just look at El Salvador’s Chivo Wallet, which has enabled 4 million Salvadorans to use BTC for affordable transactions and remittances.  

Payment providers that offer crypto payments and international transfers enjoy several benefits, including:

• Revenue growth: PSPs can tap into international markets, servicing businesses and consumers seeking faster and more cost-effective ways to transact across borders.
• Reduced transaction costs: Cryptocurrencies cut out traditional intermediaries, lowering transaction fees — especially in cross-border transactions.
• Faster processing times: Crypto payments settle almost instantly, enhancing customer satisfaction and streamlining operations.
• Expanded merchant ecosystems: Offering crypto payment solutions will attract merchants looking to stay ahead of digital trends.

 

Embracing cross-border and crypto payments is a growth opportunity you can’t afford to miss.  

4. Form Strategic Partnerships

Collaborate with fintech companies, banks, and technology providers to unlock growth opportunities. Here’s how strategic partnerships can help payment providers grow: 

• Access advanced technology: Partnering with fintech firms can help you leverage payment technology you may not have access to on your own.  
• Larger customer base: Collaborations with banks and tech firms can open doors to broader audiences and introduce you to untapped markets. 

• Improved services: You can integrate advanced features like real-time fraud monitoring into your offerings. 
• Cost efficiency: Sharing resources with partners reduces operational costs, allowing you to focus on scaling your business.

 

Strategic partnering can enhance your service portfolio and solidify your position in the competitive payments industry.  

5. Embrace Open Banking and API-Based Models

Open banking is the sharing of data between fintech companies, banks, and payment providers. APIs streamline open banking by making data sharing secure and efficient. Here’s why you should consider embracing open banking and API-based models:

• Increased innovation: Sharing customer data can foster the creation of new products and services. For example, the involved parties can use data to provide personalized financial services.  
• Seamless integration: API-based models make it easier for payment providers to create an interconnected ecosystem by integrating accounting software, loan platforms, or budgeting apps. This provides users with a unified financial experience.  
• Cost savings: APIs reduce the need to build infrastructure from scratch. For example, instead of developing a payment gateway from the ground up, you can integrate an existing API for secure payment processing. 

 

Unlock New Revenue Growth Opportunities with AlphaPoint

Standing out in the competitive payment industry requires providers to adapt to the changing needs of consumers. Value-added services, innovative tech, strategic partnerships, and open banking are excellent strategies that can help you create new revenue streams and drive customer loyalty.

Don’t have the team or resources to integrate these solutions into your platform? That’s where AlphaPoint comes in. Our battle-tested white-label solutions enable you to launch new digital asset services quickly, efficiently, and securely.

With more than ten years of experience working with fintechs, exchanges, banks, and brokerages, we can help you transform your payment system and capitalize on the latest industry trends. 

Ready to unlock growth and increase profits? Request a demo today!