Network effects in payments
The effect by which each additional verified business on a payments network raises the value of the network for every other member, as more relationships, history and signals become available to all.
Network effects in payments describe how each additional verified business on a payments network increases the network's value for every existing member. More participants mean more verified identities to transact with, more payment history to learn from, and more signals to detect risk.
A standalone accounts payable tool does not improve when another company buys it; your copy works the same regardless. A network is different. When a supplier is verified once, every buyer who deals with them benefits, and every payment recorded adds to the behavioural picture the whole network can draw on.
This is why the model compounds. The first members carry the cost of building the connections; later members inherit a richer, more useful network, which in turn attracts more participants.