Hardly a week goes by without another payment innovation being announced, adding to the choice that is already available. But this proliferation of choice is becoming confusing for merchants and consumers, who are trying to guess which payment type will gain critical mass, as well as the banks that need to decide how to approach this rapidly changing payments industry.
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The merchant acquiring industry, which enables merchants to accept a range of payments, has been built up around plastic cards and point-of-sale (POS) terminals in stores. These days, however, payment is no longer just about cards, the POS has gone mobile, and many consumers are not even paying for goods in the physical world.
Merchant acquiring is a scale game and requires continuous investment to keep the speed, reliability and security that is necessary for the processing of payments. As in-house technology platforms come to the end of their investment cycle, banks need to decide whether they are fully committed to acquiring or not.
In recent years, many banks have decided that acquiring is not strategic and have sold off their acquiring divisions to non-bank acquirers. Some banks have opted for partnerships with the likes of First Data, while other banks have decided that acquiring is definitely a strategic priority.
These banks, however, need to have the scale in their acquiring so it gets the attention it deserves from the top of their organisation. Aside from the investment in the technology platforms, banks need to focus on the added value to the payments. They should not get lost in the choice and should focus instead on what makes each of the latest propositions compelling and allows merchants to sell and consumers to pay more easily.
