This is the latest installment in The Official Merchant Services Blog’s Knowledge Base effort. Well we want to make the payment processing industry’s terms and buzzwords clear. We want to remove any and all confusion merchants might have about how the industry works. Host Merchant Services promises: the company delivers personal service and clarity. So we’re going to take some time to explain how everything works. This ongoing series is where we define industry related terms and slowly build up a knowledge base and as we get more and more of these completed, we’ll collect them in our resource archive for quick and easy access. Today’s terms are Revenue Share and Strategic Partnership.
At its most general definition, Revenue Sharing refers to the sharing of profits among different groups. One form shares between the general partner(s) and limited partners in a limited partnership. Another form shares with a company’s employees, and another between companies in a business alliance.
When applied to the Payment Processing Industry, revenue sharing is a bit more specifically involved in a cost per sale sharing of profits and accounts for about 80% of affiliate compensation programs. E-commerce web site operators using revenue sharing pay affiliates a certain percentage of sales revenues generated by customers whom the affiliate refer via various advertising methods. Another form of online revenue sharing consists in people working together and registering online in a way similar to that of a corporation, and sharing the proceeds.
A third form of revenue sharing on the internet consists of enticing internet users to sign up and create content by offering a share of advertising revenue.
A strategic partnership is a formal alliance between two commercial enterprises, usually formalized by one or more business contracts but falls short of forming a legal partnership or, agency, or corporate affiliate relationship. Typically two companies form a strategic partnership when each possesses one or more business assets that will help the other, but that each respective other does not wish to develop internally.
To Learn More …
To learn more about Revenue Sharing, you should: Register for Host Merchant Services Free Webinar on Tuesday June 12, 2012 at 10 a.m.