This article originally appeared in PaymentsSource.
A storm of innovation in technologies and business models is shaking up how consumers make—and businesses receive—payments.
Well-prepared and adaptable merchant acquirers can turn the disturbance to their advantage—that is, if they can meet the following major challenges.
Avoid disintermediation by controlling the payment interface and the merchant relationship. Acquirers have historically operated in both transaction capture/payment gateway and pure acquiring markets, renting point-of-sale (POS) terminals to smaller merchants and providing e-commerce gateway services. This has allowed them to control the full merchant relationship and, therefore, capture the end-to-end profit margin.
The dynamic is changing, however, as new entrants target the interfaces, potentially wresting control and relegating acquirers to the status of commodity providers.
Businesses increasingly look to technology providers for a payments solution integrated with other components of hardware and software. This hands an important distribution role to the software vendor or technology reseller—or, in the online world, to the Web developer. Commercial success with technology distributors requires a different set of capabilities for today’s acquirers, including ease of integration and the ability to serve up a portfolio of products, such as payroll functionality, that can easily integrate into a broader software stack through cleanly written application programming interfaces (APIs).
Glen Williams is a partner at Bain & Company.