The traditional dominance of banks in merchant communities is being eroded by disruptors, ranging from Klarna to PayPal and Shopify. What fintechs and digital-first challengers recognise, along with traditional acquirers, is the opportunity to achieve customer primacy in a vast market, which accounts for 99.9% of all businesses in the US.
To achieve this, these challengers are expanding the range of services they offer SMBs to create a single hub that serves all of a merchant’s needs, which includes extending beyond payment products into core banking services, such as profitable lending streams.
While this creates a unified, seamless experience for SMBs, where all their requirements are met in a single place, it also threatens to disintermediate banks from their merchant heartlands and take some of their most important sources of revenue.
A new guide from Pollinate outlines the key challenges this presents to senior bank executives and identifies the cornerstones of an effective strategic response, in which merchant acquiring plays a critical role.
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But why is merchant acquiring the key to developing unbreakable relationships with SMBs?
It is because acquiring does much more than generate fees from processing payments for merchants; it provides a foundation from which banks can deepen engagement with SMBs and transform their understanding of merchant needs, through insights from payments data. As a result, banks can become better lenders and deploy the right products at the right time to offer focused, relevant, and timely support for small businesses.
Being able to effectively respond to merchants’ evolving needs opens a multi-billion-dollar opportunity to deliver additional services, in areas such as business performance and commerce enablement. This transforms the nature – and profitability – of the acquiring relationship, while also equipping banks with the insights they need to provide the experiences merchants expect.
Banks have all the assets to profitably serve SMBs, but they need to adapt to create market-leading experiences for merchants, maintain ownership of critical data insights, and own the merchant relationship.
This new guide from Pollinate provides the first step for banks as they progress towards a more profitable future in acquiring.