The shift from ownership to access is coming to in-store acquiring

Payments acquirers serving in-store merchants face major challenges, some of which are so significant they need a completely fresh approach.

New ways to pay are proliferating, such as digital wallets and crypto – and these require terminal upgrades and new security features.

Meanwhile the demands of national and international regulators continue to increase, all at a time when pressure on margins and costs are higher than they’ve been for decades.

As we argue in our new white paper, acquirers also need to reduce complexity to succeed. At present, managing point of sale (POS) estates – from software updates to hardware upgrades – is time-consuming and expensive, especially in recruiting and retaining specialist staff.

Merchants expect easy-to-use solutions that can be adapted to the needs of their business: meeting this expectation for the 90% of the market outside major retail chains is no easy task. Completing the picture, merchants themselves want to reduce complexity, seeking an “always on” solution capable of handling any kind of transaction across any device, 24/7/365.

In-store acquiring – Reduce complexity, transform delivery

Successful acquirers must deliver on all these elements while managing costs to ensure predictability of revenue, reducing risk to a minimum and innovating to compete against newcomers.

Above all, for the sake of their own business, acquirers urgently need to reduce “churn” among their customers – the 25% of merchants who switch acquirers every year in the search of lower fees, treating acquiring as a commodity service.

The core problem is that both merchants and acquirers are burdened by extensive capital expenditure for hardware replacements and upgrades – alongside unpredictable (and rising) operational expenditure costs relating to software updates, risk management and other factors. In Terminal as a Service: competitive advantage for next-generation acquiring we explain how we have drawn on the experience of other industries for inspiration in responding to these manifold challenges.

In-store acquiring – From ownership to access

Across the economy, businesses and consumers are switching from owning things to accessing them as required. Think about bicycles in major cities, automobiles…more or less anything which requires significant capital to purchase and maintain can now be found as a service to be accessed as required. In the financial sector, this has meant the advent of a “bank in a box”, or “banking as a service.”

A “bank in a box” enables any organisation holding a banking license to offer a wide range of digital banking services, all managed by outsourced providers – from customer onboarding to risk management and fraud prevention. The result has been a revolution in business banking, with banks employing this model recording growth rates in recent years.

At Ingenico, we’ve applied this idea to acquiring through a concept we call “Terminal as a Service”, or TaaS.

We offer acquirers a fully outsourced, scaleable service under their own brand, including the option to purchase their existing terminal estate and manage it on their behalf.

Our clients work out a service level agreement (SLA) with us to cover both POS hardware and software interfaces. Our fully flexible service portfolio operates across the POS terminal life cycle, from a branded unboxing and set-up experience for merchants through to terminal replacement at end of life.

Services including everything from software updates to regulatory compliance, as we explain in our white paper.

TaaS offers acquirers a fully flexible and scaleable solution that responds rapidly to new developments such as contactless payments, wearables, APM and crypto-currency payments, as well as the evolving demands of regulators and card systems.

By reducing risk and cost while improving performance and enhancing merchant satisfaction, TaaS generates greater predictability of cost and profit in an acquirer’s business model, and allows acquirers to allocate operational and capital expenditure with greater confidence across a three to five year business plan.

To find out how TaaS can transform your merchant offering, download our white paper.