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12 Days of Payments: 12 Bold Predictions for Merchant Services in 2021

12 bold predictions for merchant services in 2021 from the XUP team.

  1.  Banks will take back the customer experience – Craig, Chief Revenue Officer

Banks have historically outsourced the merchant acquiring experience to a third party, which may or may not meet the bank’s standards.  This leads to high friction service and a 1:1 acquire to attrition ratio.

  1.  Banks will begin to operate in a multiprocessor environment – Zach, Head of Product

Banks have not had the luxury of having more than one processing partner.  Now they do with FinTechs and will be able to capitalize on least cost routing the way it was intended.

3. Banks will begin to monetize payments by going vertical – Anna, Product Management

Payments are not the same in every industry…healthcare, logistics and insurance all have different opportunities to monetize and remove friction from the payment chain.  We are going to see this trend continue.

  1.  Payment Facilitators will become more mainstream – Chris, President

Despite what you hear, payment facilitation is still a new concept.  Many companies think they are a payment facilitator, but more so they are a non-compliant money transmitter.  New tech stacks, processor capabilities and regulations will continue to become more prevalent in 2021.

  1.  Banks will reimagine payments stacks – Dave, Tech Lead

Open Banking and Bank-as-a-Service is changing the game by integrating best-in-class payment solutions for merchants, ACH, transfers and bill pay…leading banks are integrating, not building it all.

  1.  Data is the new currency for all things payments – Kyle, Head of Development

Banks have a unique opportunity and solution set for merchants.  ISOs and FinTechs are typically one-dimensional.  Banks have payments solutions that are far reaching – knowing how to use the data can bring solutions to merchants like no one else can

  1.  Merchant services will grow organically at a faster pace – Mandy, Head of Marketing

Transitioning to contactless payments and eCommerce gateway integrations will open the door for banks to offer innovative POS and merchant solutions.  Banks should focus on the 92% of existing clients that don’t process with the bank to penetrate.

8.  Merchant transaction volume will accelerate while new bank-customer acquisition will remain flat – Mark, Payment Strategy

A merchant who processes with a bank is worth about $5/day in revenue.  Merchants don’t just ‘switch banks’ easily but will start to see credit card transaction volume accelerating again as we enter 2021.  Banks need to focus on and go after the $5/day in revenue.

  1.  Contactless payments will surge only if the equipment price is right – Margaret, Product Management

Small businesses are very cost conscious.  While they do see the need for contactless payments, the equipment and service price will lead the way in their decisioning.  Banks need to offer the right promotions and incentives to target merchants.

  1.  Helping merchants set up their equipment is even more important to drive conversion – Don, Program Manager

Over 40% of business owners will pay more for a banking service if it is easy.  Offering an installation service for gateways and POS will differentiate banks at the national scale.  Banks should put themselves in their merchant’s shoes – would you prefer to install and configure your advanced POS device on your own instead of focusing on growing your sales?

  1.  Commercial onboarding will need to go digital to meet rising demand – Emily, Product Manager

It takes an average of 14-16 months to install POS equipment for a franchise or commercial client.  Banks will need to leverage digital capabilities to simplify the process and bring that time-to-market and cost down to compete and accelerate their return on investment.

  1.  Merchants will be responsive to a one-stop shop for banking and merchants – Keith, Customer Success

No one wants multiple digital logins to their banking, accounting, and merchant services solutions.  With the right integration patterns, banks can offer the merchant a single login hub for all their financing needs.

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