Mike Camerling, Chief Product Office, AEVI, discusses how an open ecosystem, based around a marketplace of value-added apps and services, is set to bring banks and acquirers closer to their merchants by enabling them to offer solutions that go above and beyond simple payments.
The needs of brick and mortar merchants are changing, and banks and acquirers need to be able to change with them. Merchants are more demanding than ever, wanting to cut-costs and be more efficient, whilst still offering great customer service and a unique shopping experience. 2016 saw a 42% rise in mobile payments, and for small merchants to compete with online retail giants like Amazon, they need to be able to offer payment solutions that meet the changing needs of their customers.
Due to the stranglehold that hardware vendors currently have on the market, price point and technical specifications are the only obvious differences when it comes to choosing a payment terminal. However, multiple Fintech start-ups are developing alternative payment tools, alongside more complete business solutions, that are going beyond payments to help meet the demands of small businesses.
The Open Ecosystem
A move towards an open ecosystem is the logical evolution for the payments market as incumbents look for a way to keep pace with these changing demands.
This new ‘open’ payments platform’s greatest asset is the value-added B2B apps and services (VAAS) that are available to merchants via bespoke marketplaces, much like Google’s Play Store or Apple’s App Store. VAAS allows banks to offer complete transaction solutions that fit more in line with a modern SMEs needs, whilst encouraging them to embrace electronic payment methods as standard. It is estimated that by 2017 46% of all point of sale systems will be mobile-based, with apps and services playing a major role in the transaction process.
Banks will be able to create bespoke packages complete with multiple-payment options, intuitive loyalty schemes, and back-end business tools each designed to offer greater flexibility and choice to their merchants. With the combination of apps and mobile POS terminals, banks and acquirers will be able to regain control over customer attrition by offering their small merchant clients innovative ways in which to compete in an increasingly competitive environment, without ever having to sacrifice control back to the hardware vendors.
A change is coming, and if banks and acquirers get on board and start to collaborate with Fintech companies offering these alternative payment solutions, then it will give them the ability to break from the shackles of hardware vendors once and for all, and pioneer a new path in the industry.