To read Merchant Acquiring – Winning in a Digital World (Part I/II), click here.

Architecting Value for Growth

The mandate for merchant acquirers is clear. The merchant segment is a complex, at-scale business and market leadership require a laser-like focus on rapid value creation. Each model discussed above is underpinned by certain foundational capabilities that make it work. For example, acquirers that want to succeed must have a flexible payments tech stack that offers an integrated payments experience; evolve an open services ecosystem to deliver contextual experiences that create customer delight and invest in intelligent risk management frameworks.

Simplify the Payments Stack

As retailers transform their business to serve omnichannel customers, acquirers need to step up to simplify the payments stack and support cross-channel commerce experiences — online-to-offline or vice versa. Acquirers that can provide all-in-one omnichannel acceptance capabilities position themselves to successfully deliver a simpler payment solution to their customers. The key benefits include:

• Eliminate complexity and operational redundancies that a multi-back-end architecture creates, such as channel-specific merchant onboarding, numerous settlement file formats and multiple settlement cut-off times.
• Enable easy integration via application programming interfaces (APIs) and provide choice to merchants related to channels and payment methods
• Leverage high-quality API opens new routes to market through third parties and create a channel for complementary value-added services (VAS)
• Improve payments coverage via acceptance of multiple payment methods, especially local and alternate payment methods across channels
• Optimise infrastructure costs for merchants via support for low-cost payment acceptance modes -Soft POS, QR codes
• Stable, reliable processing capabilities to accommodate spikes in transaction workloads
• Configurable parameter and product flexibility along with seamless, cross-channel integration of offerings-both standard payment acceptance offerings and value-added services-is essential
• Data-driven architecture to enable acquirers leverage descriptive and diagnostics data that can be shared across the enterprise for real-time response to specific customer and merchant triggers

Build a Strong Pool of Value-added Capabilities

Price differentiation is becoming less relevant when compared to the range and the quality of VAS offered to merchants. Traditionally acquirers have offered dynamic currency conversion and basic fraud prevention tools. The challenge – and the opportunity – is to extend this approach to add an innovative catalogue of ancillary services that enrich the customer experience. Examples include EMI at checkout, working capital loans, instant virtual cards at checkout, recurring subscriptions, lending products and autonomous payments — that can be seamlessly accessed by customers to manage their financial lives.

Monetize New Data Flows

Acquirers are leveraging data for deeper insights to provide new ways to expand a merchant customer base and to reduce a merchant’s overall transaction cost and risk of accepting payments. Rather than relying on just one stream of data, acquirers are combining data sets to get a full 360º view of the merchant and customer shopping experience. For example, leveraging data insights to offer working capital loans to small merchants or loyalty-integrated payments. It is also possible to gauge the demand for “buy now, pay later” (BNPL) payment methods and other emerging trends such as QR codes and self-checkout.

Strengthen Fraud and Security

Intelligent, data-driven anti-fraud technology that can authenticate transactions seamlessly in the background based on customer and merchant risk profile — mitigating risk, and permitting more qualified transactions to occur—thus lowering merchant cost and increasing revenue.

A fast-expanding market is fuelling massive changes within the payments landscape and will require acquirers to adapt their strategy, business and operating models, and go-to-market approach to keep pace. At the core of this change is the need for technology agility. Pure play technology processors such as FSS are gearing to support these transaction scenarios by providing robust, industrialised plug and play infrastructure that acquirers can plug into to serve global at scale merchants as well as smaller businesses.