On the Chinese Zodiac calendar, 2019 is the year of the Pig - symbolizing wealth and good fortune. The economy in this remunerative year is strong, as evidenced by several big payment processing companies living “high on the hog” with mega acquisitions, consolidations and mergers.
The payment processing industry is a competitive market when it comes to earning a merchant’s business. It is not possible for a processor to compete on rates alone. The recent wave of acquisition and merger announcements are further blending the traditional model where acquiring banks and credit card processing companies are separate entities. Square, a payment facilitator (PAYFAC) designed for merchants with less than $10K per month processing volume, for example, is a non-traditional acquirer because they are also a credit card processor and are most known for their payment processing services above all else.
Acquiring bank - An acquiring bank issues credit limits to the merchant (business that collects credit card payments from customers) and handles the settlement of payments or chargebacks and returns. Some examples of acquiring banks are Bank of America, Citibank and other popular banks. The merchant gets paid by the acquiring bank for his daily sales transactions. The merchant is charged various fees by the acquiring bank for this service. Conversely, an issuing bank is the bank that approves the card and a line of credit to the consumer (cardholder) rather than the merchant. Issuing banks are responsible for paying the acquiring bank on behalf of the consumer. All this communication and sensitive credit card data flowing between the merchant, the banks, and the consumer are handled by the payment processors.
Payment service providers - Payment service providers (PSPs) and merchant service providers (MSPs) work directly with the merchants, payment processors, and acquiring banks. These providers should be expected to provide all necessary support and servicing that your payment processing workflow needs as well as to facilitate and negotiate on your behalf to the processors and acquiring banks. A payment service provider should not simply collect a fee for connecting you to banks but provide and develop solutions that increase operational efficiency, enable automated savings, and position your business for the greatest competitive advantage in the market.
Choosing the best payment service provider is difficult because there are so many options in the marketplace and merchants who are not experts in the payments industry often won't know what to look for. The various types of fees and confusing merchant statements are enough to make it difficult to compare providers but the blurred lines between acquirers, processors, and MSPs make it even harder for merchants to decipher the best payment solutions for their business.
In the current marketplace, payment service providers can’t compete on low rates alone. Merchants want low rates and fees but they also need a variety of functionality, guidance and up-to-date education for this constantly changing industry, and quality support with customer service they can trust. Merchants service providers that offer the best solutions for their merchants will be all-in-one shops with integrated solutions that provide the range of capabilities and services necessary to fit your unique business needs, including: mobile, eCommerce, POS, ERP, multi-currency, multi-store, PCI-DSS compliance, real-time online reporting, reliable customer service, integration to other business applications like accounting, sales order, EDI, bank reconciliation, and more.
This year, there were several acquisitions and mergers that can impact the credit card industry in unforeseen ways.Some of these mergers are intended to expand their ability to reach more global markets, some are expanding the services and capabilities for combining complementary services around payment processing, whereas some may be merely seeking to expand on opportunities of scale.
It’s still too early to know fully how these acquisitions and mergers will impact merchants. Complementary companies may decrease costs for their merchants or increase processing capabilities for global brands, however, a possible downside may be increased processing, acquiring, or servicing costs as the purchaser attempts to recoup costs associated with the merger.
You can count on REPAY to keep you fully informed at every possible development. We are the payments industry experts working for you. No matter what changes in the market, REPAY will remain a secure, reliable full-service integrated payment service provider. Our commitment to constant improvement sets us apart as we develop and support integrated credit card processing solutions for every business. We work diligently to provide our merchants with the best solutions and the lowest credit card processing rates by leveraging our industry expertise and helping B2C and B2B businesses reduce risks, labor, and costs. REPAY is fully integrated with hundreds of ERP, eCommerce, POS, and Mobile applications for a seamless experience in any workflow.
If you are concerned about any possible disruption in your service with the payments processing companies you are using, contact REPAY today for your FREE discovery.