Merchant acquiring business belongs to a few top players in the US. The top 10 merchant banks control 88% of the market. The processor market is even more tightly held by the top players. The top 5 acquiring processors control 85% of the market.

As shown in the diagram below, there are quite a lot of models in the acquiring value chain. It becomes more complicated when players compete, co-operate and collaborate to provide services to the merchant.  Very recently, Visa also has entered into the acquirer processing market. This creates a strong undercurrent in the relationship between the players.

A typical acquiring processor provides basic services such as:

Merchant setup, POS terminal setup Maintenance,  servicing Billing Management Technical support Connectivity to payment networks Fraud management

There is intense competition within the acquiring landscape – resulting in partnerships, acquisitions, more value added services such as mobile payment acceptance, card linked offers, couponing, loyalty systems, flexible back-office capabilities, advanced analytics, etc.

The mobile mantra for processors seems to be attacking at all levels – core services, value added infrastructure services, value added application services as shown below:

As one can imagine, it requires tremendous strategy, planning and execution from the processor part in order to collaborate with partners to deploy new products and solutions.  In addition to the acquiring banks, issuers, ISOs/ISAs and technology providers,  mobile solutions may require collaboration with new ecosystem players such as mobile operators, wallet providers (Google/ISIS/Paypal, etc.)

One of the best ways to deliver services is to offer well-crafted APIs. While I will talk about an API strategy for processors for offering new services in a new post, I would like to say for now that my client loved the thought process I ignited in their organization (one of the top processors) on this topic.

Original author: phanee