Latest news with #merchantacquiring
Forbes
18-07-2025
- Business
- Forbes
How The Battle For Merchant Acquisition Is Coming To Main Street
Fiona Roach Canning is the co-founder and CEO of Pollinate. Recent years have seen America's banking system waking up to the true value of merchant acquiring. This is a market forecast to hit $41.75 trillion globally by 2026. Despite this, banks have found themselves outflanked and losing market share to fintechs, processors and other nonbank financial institutions. This is especially the case when it comes to providing merchant services to the more than 36 million small and midsized businesses (SMBs) that form the backbone of the U.S. economy. Fintechs and payment processors have made significant inroads with the U.S.'s SMBs, depriving banks not only of merchant services revenue but also of the ability to cross-sell deposit and lending services, which fintechs are increasingly offering themselves. This represents a significant challenge for the banking sector, which is now drawing upon its considerable resources to fight back. In recent years, for example, we have seen Bank of America (registration required) and Wells Fargo recalibrating their approaches to merchant services, with the cessation of joint ventures. Likewise, Huntington Bank has pivoted in its approach, too, and more will likely follow. These moves not only mean greater revenue share for the banks but also more customer primacy, meaning increased deposits and better lending decisions. The U.S.'s corporate banks are recalibrating, but what about Main Street? What about the many small and midsized banks across the U.S., serving local communities and businesses diligently, but which don't necessarily have the scale and budgets necessary to take the fight to the fintechs? Merchant Acquiring Models The examples above highlight a trend among larger, full-service banks toward greater ownership of merchant acquisition and the merchant journey. For Main Street banks, however, buying out merchant acquisition partners isn't always an option. As it stands, most of America's Main Street banks operate a referral model when it comes to merchant services. These banks leverage their customer bases to act as a distribution channel for payment processors in return for revenue share and cross-selling opportunities. In many ways, this model works well. It allows Main Street banks to offer their business customers, mostly drawn from America's 36 million-plus SMBs, integrated payments solutions with the overhead and management of associated costs and risks. It also comes with some downsides, however, and as competition for merchant acquisition grows, these downsides may become ever more obvious. Outsourcing merchant services, even to a valued partner, can lead to a complicated and disjointed customer journey and a loss of emphasis on the vital relationship between SMB and business bank. There is a range of other players competing for merchant services, too, and offering a smoother customer experience. Based on my company's proprietary analysis, Main Street penetration of merchant services among their own business customers is often as low as 3% and attrition as high as 20%. At the other end of the banking market, it's for these reasons that Wall Street is rethinking its approach to merchant acquisition, but what options are available to Main Street? Moore Bang For Your Buck Moore's Law was originally designed to describe the decreasing cost of semiconductors over time. Anybody who works in the tech sector, like I do, can't fail to notice this trend playing out across tech as a whole. In sectors from finance to software development, growing access to sophisticated tech tools is lowering traditional market barriers and allowing smaller and mid-market businesses to compete with their larger counterparts. And this competition will only speed up. The recent launch of Truist Merchant Exchange is an example of this. (Full disclosure: My company has partnered with Truist.) Here we see a bank reclaiming the merchant relationship with a platform that offers SMBs the tools needed to make business easier. Crucially, this platform also gives business customers the kind of experience that, following years of customer experience (CX)-focused fintech growth, they've come to expect. Whichever model banks choose when it comes to merchant acquisition—whether the referral model or a more bank-owned approach—a major stumbling block when facing digital-first fintech-driven merchant services has been CX. The banking industry has long recognized its 'experience gap,' with some estimating that up to 20% of customer attrition can be attributed to poor CX. To paraphrase the great political insight, when it comes to winning back merchant acquisition, 'It's experience, stupid.' Technological solutions, however, especially in merchant services, can help smooth the customer journey, create a more seamless experience and offer more opportunities for banks to own the customer relationship and the selling opportunities that come with it. This isn't just better for the customer but also can have a real impact on the bottom line. My company's own work in this space has seen an improvement in merchant growth of 15% year on year, double-digit upticks in monthly deposit balances and product adoption rates and customer relationships that last on average 10% longer. Thankfully for Main Street, experience-driven platforms are putting great CX within reach and changing the dynamics in the competitive world of merchant acquisition. The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
Yahoo
11-07-2025
- Business
- Yahoo
The great payments shake-up: Why consolidation Is reshaping everything
The payments industry is undergoing a tectonic shift—and no one can afford to ignore it. As margins shrink and tech demands rise, consolidation has become the name of the game. Banks, processors, software giants, and payment gateways are all scrambling to future-proof their businesses. The goal? As PwC explains, bigger scale, tighter integration, and deeper customer relationships. If you're not moving, you're falling behind. Merchant acquiring is right at the heart of this consolidation wave—and the stakes are getting higher by the quarter. Look no further than Worldline, which has been snapping up regional players like Axepta Italy and Eurobank Merchant Acquiring to extend its European footprint. These aren't just vanity acquisitions; they're strategic power plays that lower unit costs on essentials like KYC/AML compliance, fraud mitigation, and network integration. Why it matters: In today's margin-compressed environment, scale isn't just a benefit—it's a lifeline. PwC has even warned that processors commanding 'super majority' volumes may lose their edge unless they evolve beyond price competition and start offering bundled, end-to-end solutions that add real value. Translation? Mid-size regional gateways with strong merchant relationships are sitting ducks for acquisition. If they can't grow, they'll get bought—or left behind. The line between software and payments is disappearing fast. Shopify, QuickBooks, and Salesforce have all embedded payments into their platforms. As one expert points out, Stripe is leading the charge, treating payments as just one feature in a much bigger merchant toolkit. And PayPal's move to acquire iZettle helped it break out of the browser and into the real world of small businesses and POS terminals. This isn't just feature creep—it's a takeover strategy. By owning the payment flow, these platforms become stickier, smarter, and more indispensable to their users. It also helps merchants simplify vendor management and get more out of their software investments. Why it matters: Payment capabilities are becoming table stakes for platforms. That means smaller, standalone gateways that can't integrate or offer added-value services like fraud detection, reconciliation, or analytics are at risk. They'll either partner up, sell out, or get boxed out. Banks have historically viewed payments as plumbing—necessary but not exactly glamorous. That's changing fast. According to PwC, forward-thinking banks now see payments as a revenue driver and a powerful way to keep customers engaged across multiple channels. By acquiring or building their own merchant acquiring arms, banks are taking control of the entire transaction lifecycle. Imagine a local bank offering a card terminal to a small café—and then layering on rewards programmes, business loans, and data analytics. Suddenly, payments aren't a cost—they're a customer touchpoint and cross-sell engine. Why it matters: Banks are turning themselves into two-sided ecosystems. They own the data. They own the rails. Now, they want to own the merchant relationship too. That spells opportunity for small acquirers with local roots—and serious competition for traditional processors. The winners in this new landscape will be those who combine size with smarts. It's not just about being bigger. It's about being better connected, more innovative, and ruthlessly efficient. Here's where to keep your eyes: Mid-tier PSPs and regional acquirers: Prime takeover targets or consolidation catalysts. Software platforms acquiring gateways: To keep control of payments and deepen user engagement. Banks building or buying merchant services: To turn a cost centre into a growth engine. But let's not pretend this is without risk. When big players dominate, innovation can take a back seat. Regulators will be watching—and so will merchants who don't want to be locked into closed ecosystems. Still, the direction is clear: strategic consolidation offers a way to cut costs, unlock new revenue streams, and respond to merchants' demand for simplified, seamless solutions. Those who adapt will lead the next era of payments. Those who don't? They'll be left behind. Roger Alexander serves as a key advisor to Chargebacks911's Advisory Board and its CEO, Monica Eaton, assisting the company with its expansion initiatives "The great payments shake-up: Why consolidation Is reshaping everything" was originally created and published by Electronic Payments International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. 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