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Integrated Bank Payment Platform Creates Opportunities for ISOs

Avidia Bank has been operating a new integrated platform for a few weeks that brings together third-party processor compliance, risk management, ACH and card payment acceptance, and remote deposit capture on one platform.

That's good news for acquirers and independent sales organizations who normally deal with separate systems to accomplish all of that when bringing merchant clients to the bank for payment and financial services. The bank, of course, benefits as well.

Prior to Avidia working with linked2pay to deploy Bank Centric Payments, many of those services were handled manually with tons of paperwork, said Bart Murphy, executive vice president of commercial banking at Hudson, Mass.-based Avidia.

"Communication was far more choppy and, though we tried to make it as effective as possible, service wasn't as efficient," Murphy said. "Working off one platform, everyone can see what is going on, whether it is the payment processor, a merchant or the bank itself.”

Establishing card payments, ACH transactions and remote deposit capture in the same registration and management process helps an ISO "keep in tune with what is happening with that merchant client," said Richard McShirley, chief marketing officer for Oxnard, Calif.-based linked2pay.

Avidia's use of Bank Centric Payments mirrors the growing trend of integrated payments that acquirers and ISOs are seeing at the point of sale.

Examples of deeper payment integration abound, with the likes of Vantiv buying Mercury Payments in mid 2014 and Global Payments announcing last month it would acquire Heartland Payment Systems with the intention of boosting integrated payments capabilities worldwide.

But because banks remain central to any payment system, it is important for them to integrate payments on their end as well, and for ISOs to find the right partners, McShirley said.

"Avidia Bank has a history of leading in technology, a place where the bank recognizes it wants to innovate in payments," he added. "ISOs can turn on this service without reinventing the wheel, and Bank Centric Payments has the potential to grow rapidly."

Bank Centric Payments delivers reports specific to bank and ISO partners, as well as to a merchant, which can decide what type of report to receive.

"Many banks are looking for a more integrated and better solution," said industry analyst Russ Schoper of Atlanta, Ga.-based Business Development International Inc. "When you sign up a merchant, no two merchants are ever the same, they have different needs in the way they handle their funds, so you want to provide as much as you can."

Some merchants want check cashing services, while some want direct deposit and ACH, Schoper said. "All of those services have been disjointed up to now, and each ISO has a different service and set of processes."

Bringing all of those services into one platform is "a huge step forward" for banks and their ISO partners, Schoper said. Integrating all of the services and the authorization process on a single platform, along with risk management tools, represents a trend "that everyone is going to want to do, sooner or later," Schoper added.

The cloud-based Bank Centric Payments system provides banks with needed updates as their payment processes change, most notably embracing faster payment methods in the future. It will also allow a bank to classify merchants by risk as they register online, while assuring third-party processor files are compliant to industry standards.

The FDIC caught the attention of the banking industry in mid 2014 when reiterating that banks needed to have proper systems in place to confirm compliance of third-party processors and the merchants they were bringing to the banks as clients.

"The safeguards are there and easy to change on the fly," Avidia's Murphy said. "The great thing about this is that it is streamlined for merchant boarding, then we run it through some due diligence and Big Data support to verify what is there, so as to catch anything that might not comply."

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