It’s A Hard Knock Life: Digital Transformation for Payment Service Providers in the New Payments Ecosystem
Is it a hard-knock life for processors and PSPs? Margins are constantly under pressure, and there’s the need for constant innovation, not to mention rock-solid #SleepAtNightability of solutions. And if there’s even the slightest crack in the fundamentals, customers will surely let you know all about it!
As a processor, you are expected to have nothing less than the world’s best Non-Functional Requirements (NFRs); you need to scale to account for unpredictable demands across an ever-expanding set of new payment types whilst retaining 100 percent availability, and ensure excellent serviceability to your customers in the roll-out of updates, mandates, and new services. Many customers in the payments chain don’t appreciate the value of their processing partner, until they hit an unhappy payment flow. If your NFRs are the foundations of your payments business, then your processing prowess is the backbone of your customers’ business, onto which they build their value-added services.
Merchant acquiring and digital transformation
Merchant acquiring is the ‘hot’ space in payments, the coalface of customer interaction where the payment is initiated. Providing a service that is mission critical to the New Payments Ecosystem positions merchant acquirers to capitalize on the digital payments explosion, as well as improve their customer experience to win market share from competitors.
The industry is starting to do more in terms of tailoring its offerings to customer requirements, whether that is offering varying fees and funding options within a tiered model for high-value complex clients, or creating ways to find margin in traditionally underserved segments such as SMEs or those with a higher risk profile. For many merchant acquirers, it’s about creating certainty in payments for their customers and themselves, with more accurate fees calculation, including for cross-border payments, allowing both parties to grow their business in a globalized world.
As the digital transformation of merchant acquiring takes place, we have to remember to protect our foundations. Layering value-added services onto your core business is great, but puts pressure on the NFRs, and so the conversation often turns towards TCO (total cost of ownership). It’s too easy to focus on consolidation and efficiency, without concentrating on your values and #SleepAtNightability. But maintaining rock-solid foundations is about protecting your existing business so you can build the new.
Innovation at the coalface of payments
I’m excited to be working with customers and partners who are innovating at the coalface of payments; the exchange between merchant and customer, as well as in the changing payments ecosystem for processors. Discover more about the transformation of the payments ecosystem, watch the video series on the Hierarchy of Payment Needs: https://www.aciworldwide.com/lp/npe-overview
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Can you believe it! Snowflakes in the Northeast, which means getting the skis tuned up to race down (steep) hills. And speaking of racing, businesses are racing to complete their 2019 plans and put the finishing touches on remaining 2018 campaigns, which I hope are resounding successes. It also means (delicious or disgusting egg nog… #judgementfree), office holiday parties and prognostications galore!