Banks are waking up to see that merchant processing is one of the most lucrative products they can offer to their business clients. Those that pay attention to merchant see 5x higher checking account balances and 3x longer tenure with customers.

But why has it taken so long for banks to realize this?

It’s simple – attention. Right after the 2008 crisis (yes, we’re still talking about that), banks hunkered down and focused primarily on their core business. For many, that meant outsourcing merchant services to leaders such as FirstData (now Fiserv), Vantiv (now Global) or Elavon. Most of these deals were signed with a 10-year agreement that will soon expire. Banks are now exploring how they can get a better deal to reap the benefit of high balances and longer relationships.

Now is the time to negotiate smarter for your merchant processing partner. New fintech companies are emerging quickly, taking market share from traditional processors. Having the right framework when exploring a new processor agreement will position you to deliver a better customer experience.

Here are some XUP’s recommendations for selecting the right merchant processor:

Understand the value of your portfolio – This is both for the merchant product and relationship. It’s safe to say that nearly 100% of your merchant book banks with you. So consider this – if you switch from your current processor, you may be impacting more than just the merchant portfolio.

Value what you bring to the relationship – Surprisingly, if you are like most banks in the US, less than 10% of your bank portfolio has merchant with you. Where is the other 90%? That’s a huge back book that can be incredibly valuable.

Own the customer experience – This is one of the newest trends in the industry – historically, banks relied on their acquirer to own the customer journey but some learned that’s not always the best idea. Banks need to take control of the experience and Bring the Bank – not just merchant.

Explore corporate and technology strategies – Many banks today have the ‘digital first’ model. Is that true for your selected processor? It’s essential to make sure their technology, training and sales support aligns with your strategy.

Reap the benefits – With so many different pricing models (cost plus, rev share, etc), you must make sure you compare apples-to-apples when dealing with potential revenue.

These are just 5 recommendations to kick start your thinking around merchant processing. Making this a product decision will continue to limit your bank from all the benefits. XUP has developed new software, methodology and pricing models to jointly incent everyone involved to drive transactions (and revenue) up.