The Strawhecker Group (TSG) has announced the launch of its Embedded Pricing Tool, a value-added service for subscribers of its Acquiring Industry Metric (AIM) platform. With the tool, merchant acquirers are enabled to share go-to-market pricing benchmarks with their channel partners.

According to the information provided by TSG, merchant-acquiring channels often price their merchants below market rates, amounting to almost 40 basis points. Embedded pricing tools help in decreasing this issue, enabling merchants to be priced accurately at the time of boarding. The company’s officials have stated that money is often left on the table because merchant processing channel partners do not have the necessary data to accurately price their merchants befitting of their strategy.

AIM, which has been on the market for ten years, has worked towards minimising the issues on how payment companies manage their data while maximising profitability, with seven of the top ten US merchant acquirers subscribing to the platform. With the integration of Embedded Pricing, AIM users can provide embedded pricing to channel partners, including software companies, financial institutions, ISOs, and agents. The tool offers insight into specific pricing benchmarks based on industry, account size, vintage, and geography.

Through the AIM platform, payment providers can manage a business by enabling them to benchmark growth, attrition, and financial performance anonymously, against associates and the industry. Some of the key features of the platform include access to portfolio-specific and market benchmarks at a micro or macro level of detail, mirroring of the overall makeup of the US card acceptance market, and AIMvision, the user interface, that offers access to performance metrics, customised dashboards, and query building. AIM analyses the benchmark metric for the payment industry, therefore mostly used for go-to-market pricing, right pricing, vertical strategy, and comparing KPIs.

The Embedded Pricing Tool is only available to AIM subscribers, as users gain access to benchmarks through API, which can be incorporated into existing partners, or white-labelled portals. The solution can be also turned into a revenue generator by merchant acquirers. Merchant acquiring solutions According to McKinsey & Company’s report, merchant acquisition has evolved over the past decade, impacting the economics and business models, while favouring the value-added approach of new merchant-services players.

The COVID-19 pandemic influenced financial services, providing an overall shift toward ecommerce and digital payments while driving up merchants’ payment-acceptance costs, which are expected to rise by USD 8 billion to USD 15 billion as commerce moves to higher-cost channels.  As the share of digital sales of marketplaces and platforms is consolidated, there rises a need for lower costs of acceptance, which has a negative impact on acquirers’ margins. However, the digitization of commerce has also increased the willingness to pay for enhanced solutions, and acquirers started to introduce services that resemble marketplaces, including payments disbursement, financial and onboarding for SMEs, commerce marketplace know-your-customer, sub-merchant account creation and management, and SME-facing risk and identity solutions. .