Payment Processing Landscape

by Raymond Pucci 0

The trials and tribulations of new and existing retail business owners seeking to start or upgrade a payments processing system is aptly described in commentary below. The experience is daunting for both customers and merchants alike and will likely become more, not less, complex.

As both a customer and business owner, I’m excited about the potential that mobile payments present.

Mobile payments can speed up the checkout process, make it not necessary to bring my credit card everywhere, and allows me to make purchases or lend money to my friends with just the tap of a button.

Despite the possibilities, the payment industry has yet to catch-up. For example, it’s great that I can use my phone to make an ecash purchase, but if I still have to carry my dang wallet because I need my ID or license, it’s not really all that life changing.

On top of that, there are also a lot of questions that haven’t been answered. How much am I being charged to accept or receive funds from someone in another country? When will I have access to these funds? How secure are these payments?

Let’s say that you just opened up a coffee shop. You have multiple ways to accept credit cards, like getting the typical POS terminal or a gadget like Square. But, do you know how much that terminal or payment gateway is actually costing you?

This is one of the most confusing, and infuriating, things about payments. There’s no consistency when it comes to quotes for processing fees, pricing models, and transaction fees.

The payments ecosystem has greatly expanded in recent years to include companies that were not even around 10 years ago. Many payments industry players now reside in a multi-layer intermediary netherworld, including gateways, independent software vendors (ISVs) and value added resellers (VARs). These firms typically have expertise in a specific vertical market or application. Merchants searching for answers should find other retail owners or trade associations that have first-hand knowledge and experience identifying and assessing the best choices for payments vendors.

Overview by Raymond Pucci, Associate Director, Research Service at Mercator Advisory Group

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