How a company is organized and run can have a big impact on the quality of the partnership you have with it.
When it comes to picking your payments partner, how the company is operated can make a world of difference to the chances of your relationship succeeding — or not. Though you should rightfully focus on the core questions of the technology on offer and the level of support your prospective payments partner can provide, don’t make the mistake of overlooking the nuances between a private payments company and one that’s publicly traded.
Compare and contrast: private vs. public company.
Before looking at the differences, take what private and publicly traded payments companies have in common. Both engage in run-of-the-mill corporate activities like hosting annual meetings, documenting proceedings from these events, and assembling a board of directors — experts who help steer the roadmap and vision. Regardless of the private vs. public company question, companies of either type are also required to track who controls shares and how much they control.
But that’s largely where the similarities end. If you want to break the public vs. private company comparison down to its most essential point of departure, consider this: A publicly traded company has sold most if not all of its shares to a general public that’s now invested in its revenue- and profit-generating potential. A private company has not, limiting its share ownership to key stakeholders like the founders and other top executives.
Being public has its perks — mostly financial. Privately-held payments companies aren’t allowed to raise more than $2 million in public funds per year. In fact, that’s usually the motivation behind the decision to go public: Gaining unfettered access to investors’ checkbooks. Plus, public payments companies tend to be bigger, with valuations topping $1 billion. Privately-held payments providers can operate under various formats, including limited liability corporation (LLC), partnership, or corporation — the latter of which represents the vast majority of public companies. Then there’s the regulatory component: Public payments companies are subject to a tighter leash while their private peers operate with much greater freedom.
What to look for in a potential partner.
Who controls a company’s shares might mean very little to you at first glance, but the implications could add up and work against you in the long run. How much freedom and flexibility your payments partner enjoys has a lot to do with how they’ll work with (and for) you. Owning stock in a public firm gives shareholders more of a “yea” or “nay” in virtually every move they make. Private payments companies aren’t hamstrung by these same hurdles but have the agility to operate with a customer-centric, partner-first mindset.
Battling through bureaucracy and getting tangled up in red tape means a public payments company is more likely to be bogged down with minutiae when it should be rapidly innovating and iterating for you. And beware: Private payments firms that get snapped up by big public companies often see their partner programs pushed to the backburner or cast aside altogether. That’s probably because the public payments company is looking at little else than the bottom line and trying not to “share the wealth.”
When you’re sizing up your options, be sure to line up with a payments company that treats you as a true partner and won’t leave you out in the cold at a moment’s notice. You’re more than just a cog in the salesforce wheel, and the company you keep — private or public — can influence whether you'll sink or swim in this competitive sector.
Contact North American Bancard to learn more today.
