Fintech start-ups are known for being agile and efficient and they now have their eyes on the banks’ revenue sweet spot. These new entrants, have a well-established online presence, they are targeting merchant services and managing to hold on to them through mobile access.
To stave off this threat, banks need to work with merchants to strengthen their offerings via new and dynamic merchant solutions. Merchants are striving to keep pace of the payments revolution by developing a comprehensive payment strategy offering, some of these include:
Attaining regional/global reach and acceptance
Regional and global giants like Google, Facebook, Amazon, Apple are dominating the industry, putting pressure on subscale players. The primary objective for banks is to meet the increasingly critical demand of merchants for global reach and acceptance, across all geographies and payments types. Merchant solutions are offering cost effective and low maintenance payment forms that include smartphone payments via merchant apps. One example of merchant app use is the ability to allow customers to place their order via the merchant apps for in-store pick-up, these apps can also collect customer data, which can then be used for driving customer loyalty programs.
Become a digital / Omni channel champion
With increasing consumer expectations, and their demand of products and services that can be integrated into their daily lives, the leading merchants (and service providers) understand that payments (the last step in their purchase cycle) can no longer be controlled by the banks. Today more than ever, an integrated and seamless payments experience is a critical part of a customer’s shopping journey. Amazon is a perfect example of this, they have payment related initiatives like amazon cash, prime rewards, amazon pay UPI (real time payment), and amazon lending. These initiatives have not only enhanced the customer experience but increased their market share and profitability.
Lowering fraud rates and knowing which frauds are prevalent in the industry
Partnerships with digital upstarts and innovators can help merchants get access to better and faster technology (such as real-time fraud detection and monitoring) which allows them to improve their back-office processes without building the capabilities in-house.
Turning acquisition into a competitive advantage
Recently a large global acquirer digitized the on boarding journey, reducing time to market from two and a half weeks to less than four hours. While this is impressive, it is still well short of the capabilities of leading tech-savvy acquirers—PayPal, Stripe, and Square. These companies can accomplish the same feat in as little as five minutes.
Banks need to work with payment Start-ups and Fintech companies who have already invested in merchant acquisition technology, and have an established market-share. There is some healthy scepticism between merchants, retailers and payment fintech firms when it comes to payment transactions. However, through strategic partnerships between larger corporates and banks, these merchant acquisitions can become more seamless and help them keep ahead of the payments revolution and in-line with customer expectations
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