But the market has changed and the attitude of retailers has too. Traditional product vendors still exist and many retailers still run their own payments systems, but the trend is now clearly towards outsourced service providers – in some cases these are cloud-like payment services. The trend is largely driven by potential “operational expenditure” cost benefits and by the ever-increasing burden of security regulations and practices; point-2-point encryption (P2PE) being one of them. As a reaction to this, many of those traditional product vendors have evolved to use their own technology as the basis for payments services.
The choice of the right payments service provider (PSP) is a complex one for retailers. Price is always a significant factor. Retailers are master negotiators by culture and they want the lowest cost with the least risk. But for many, flexibility and control must not be sacrificed to achieve this. There are a number of PSPs that provide a simple ‘vanilla’ service – sharing the same payments service across many retailers. You get what you are offered with little flexibility but all bundled-up and ready-to-go with the bank relationship in place, the POS terminal (or PIN Entry Device) included and a rapid onboarding process. But if a retailer that has opted for vanilla needs something with a different flavor; wants prioritization over competitors; wants a change made quickly; wants a different acquirer; wants a different POS terminal; or wants to enter a new market, the answer may well be “no” or “it’ll have to wait” but the retailer is locked in.
The more flexible unbundled approach may come at a higher price but would likely include a dedicated payments system customizable to the specific needs of that retailer. So, it is still the retailers “own” payments system, but with some of the advantages of it being run by a service provider. The PSP operates it but with an ability to configure, customize and shape the service to their retailers’ demands. The more innovative the retailer seeks to be and the more the retailer sees payments as means to differentiate itself from others, the more the demand will be for the flexibility that a simple vanilla service cannot offer.
It’s this non-vanilla service that will allow those retailers to react to their business drivers for mobile app payments, faster payments, biometric payments or whatever else is coming down the line. Long-term roadmaps for payments are difficult for retailers to establish because the rate of change is so rapid. Having a flexible payments service provider at least positions the retailer so that it can adapt to meet that challenge of change, and react to the unpredictable.
Getting the balance right is the dilemma. It’s clear that retailers won’t be running their own payment systems much in the future, but when it comes to finding a supplier to provide a payments service, each will need to decide whether they choose from the set menu or the a la carte.
ACI Enterprise Payments Platform 
