🐒 What we discussed with our colleagues this week: Why are commissions in the high-risk segment now almost at low-risk levels?

🐒 What we discussed with our colleagues this week: Why are commissions in the high-risk segment now almost at low-risk levels?

Because the market has matured and become much more consolidated.

A few years ago, there was more information asymmetry in the market: fewer people understood how to set up a payment channel (P2P as a viable flow started be know a few years from now), how to find merchants, agent networks, or white-label providers. The market paid a high premium for that knowledge and those contacts.

Now it’s different. Many more people have entered all high-risk sectors: brokers, agents, operators, affiliates, payment providers, arbitrageurs. There is more information, as well as more specialized channels and events. Breaking into the circle, finding contacts, and acquiring basic knowledge has become easier. And, given the difficult situation in other sectors of the economy, there will be more and more newcomers to the industry.

Hence the pressure on fees. When supply is broader and there are more alternatives, competition intensifies: execution has gained prominence over information. What used to be expensive due to exclusivity is now becoming cheaper, and skills in building and managing infrastructure are coming to the forefront.

Yes, in some segments – especially in complex markets like India – you can still find very lucrative processing fees. But it’s no longer easy money for everyone involved. This requires specific expertise and a solid infrastructure; otherwise, you could be in for big trouble 👮‍♂

In short, the picture is simple: the high risk hasn’t gone away, transactions are still happening, processing is alive and well, and P2P is alive and well. But the market has become more mature, more transparent, and more competitive. And that means margins are shrinking on average, and now only those who have: a) a solid product, b) extensive experience, or c) access to resources and manage them efficiently are really succeeding.

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