How the payment consolidation will affect a customer’s desire to run to the small guys

first_imgFidelity National Information Services, better known as FIS, recently closed a significant acquisition, merging with international payments firm Worldpay, Inc. This move enhances the global technology position of both companies. It enables them to serve banks, merchants, and capital markets better. The new company will be able to offer best in class payments, and enterprise banking. They can also provide e-commerce capabilities for companies and financial institutions worldwide.Another recent merger is that of First Data Corp. and Fiserv Inc. The companies said users would enjoy a “highly complementary combination.” They announced the transaction on July 29. The new company offers a range of financial and payments services, including digital banking, payment processing, and integrated payments. The deal has made Fiserv one of the world’s largest fintech and payments providers.The third mega-deal is between Total System Services (TSYS) and Global Payments. Combined, the two companies will provide payment services to about 3.5 million enterprises. Their client base consists of small and medium enterprises throughout the world. They will also serve 1300 financial institutions, spanning 100 countries. The new company expects to realize $100 million in annual synergies. These savings will occur as they cross-sell through a combined distribution network.Traditional Role of Payment ProcessorsPayments processors have traditionally enabled merchants to receive credit and debit card payments. How do they do that? By providing a connection to the acquiring bank. They check whether transactions are valid and approve them. To do so, they use anti-fraud measures to ensure that the payment comes from a legitimate source. The credit card associations hold processors to stringent standards. If any of the major payment processors are not available, the merchant can lose customers. This loss is especially likely if he or she is accepting payments online. Your merchants’ customers must be able to use popular payment methods. The ability to take credit and debit cards is essential in the modern era. Most payment processors accept Visa and MasterCard. However, they don’t all process American Express. Online businesses need payment processors. Why? Because it’s an easy method for customers to pay for goods and services.Does the Modern Consumer Want to Run to the Small Guys?Credit unions serve many small and medium enterprises. As the payment processors merge, they become more efficient. It then becomes easier for them to cater to the needs of this demographic. They can offer more services at a lower cost to the merchant. So, there isn’t much that would entice modern consumers to run to the small guys for merchant services. How can credit unions up their game?One of the ways is to offer merchant services through one of the large payment processors. However, it’s essential to know that you may see an increase in costs. Mergers decrease the competitive pool, so there’s less incentive to reduce fees. You may face other challenges soon after the merger. The payment processors will need some time to sort out their operational details. However, as the dust settles, you will have the advantage. Your credit union will be in a much better position to offer merchant services to the public.Another way in which credit unions can up their game is to offer a wide selection of payment options. For example, you can offer mobile payment options to merchants, complete with an app. Alternatively, you can offer branded payment portals. Such portals allow members to make payments using debit and credit cards. They also enable ACH payments and eChecks. Use them to expand your merchants’ pool of options. In that way, they can offer greater versatility to their customers. Bear in mind that some customers always jump ship after a merger. Did your credit union already have a relationship with one of the merged entities? Then you can expect some of your customers to go. Why do customers leave? Some are anxious about whether the deal will work out, while others may go because of new fees. Some customers will put the new institution “on probation” to see if any problems show up. This attrition is normal, and will level off after the first few months.Significant disruption is taking place in the payment processing industry. Your credit union can turn this disruption into a significant financial opportunity. With the right partner, you can take the payments revolution to the next level, and reap huge benefits. Take an in-depth look at the different offerings that are now available and negotiate the best value. Your merchant clients will thank you! 2SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr,Christina Camacho Christina Camacho is the Founder and CEO of Ivy Lender. Christina spent her banking career working with SME businesses as well as Fortune 500 companies at the top Financial Institutions … Web: www.ivylender.com Detailslast_img