If payment providers compete, do merchants win?
For years, William Shatner plugged Priceline, an online portal to take costs out of travel by pitting hotels and airlines against their rivals. A similar idea is taking shape in the market for payment providers.
As processors, card networks and acquirers diversify their offerings to become full-featured technology providers, the assortment of products and services can greatly complicate the process of picking the right provider — especially when the merchant needs to work with multiple providers to cover all of its needs and markets.
Apexx has just launched in London with a platform that enables merchants to view and compare costs between payment brands, and receive advice on the best option for that merchant, claiming it can shave about 20% from processing costs for cards or other payment methods. The startup is led by Peter Keenan, a former HSBC executive who was also CEO of Vocalink, which was acquired by Mastercard on May 2.
"We're making the process simple, like the price comparison sites in retail banking," said Keenan, CEO of Apexx. "This will bring competition in the market."
Calling the current acquiring market a "maze" and a "headache" to navigate, Keenan expects the marketplace comparison site plus advisory services will provide merchants an easier hookup with payment companies, and will give those providers a new venue to locate potential merchant clients.
"Merchants may have two or three acquirers, but have them for a specific reason, such as an acquirer for South America, or one that specializes in a certain vertical," Keenan said. "Managing all of that is a challenge."
Apexx is entering a market in which international transactions and disparate payment options borne from digital innovation are stressing merchants that are accustomed to managing basic point of sale terminals at their store locations, and maybe an e-commerce site.
Since no form of payment has totally gone away, every additional payment method makes a merchant's job more complex, according to Thad Peterson, a senior analyst at Aite Group.
"Add to that the migration from single-market domestic commerce to [global commerce], and the complexity of managing the payments is a very big deal," Peterson said. "I'm not sure that an intermediary or marketplace for payment providers will be a perfect answer for a lot of merchants, but merchants facing complex or costly payment alternatives may find it valuable."
Apexx, which said it will announce initial merchant clients "soon," examines payment acceptance costs for a client and compares those costs to its own data on the market. If it deems a merchant is overpaying, Apexx will renegotiate with the merchant's payment provider. It also reports competing rates for other payment gateways.
"In many cases we will work with the existing acquirers, but we will also introduce new acquirers as well," Keenan said.
Apexx collects a gateway fee, plus a percentage of the savings it provides. In addition to Keenan, Apexx's founders are Rob Atkin, the company's CIO and designer, who was previously founder and CEO of XCORDIS, a fintech development agency. Another founder, Rodney Bain, Apexx' deputy CEO, was previously vice president of partnerships at EVO Payments International. Apexx has also added other talent over the past few days. At launch Apexx has partnered with Alipay, iZettle, Mastercard, NTT DATA, Visa iPay88, Payvision, Credorax, SIX payment services, Paysafe Group, Processing.Com, Transact Europe, CardStream and JetPay.
Building such a market could be complicated, according to Tim Sloane, vice president of payments innovation at Mercator.
"The concept is good but execution will prove very challenging because it is unknown when standards will evolve for the hardware, software and security terminal architecture needed to establish a competitive market," Sloane said, adding Mercator expects the mobile operating systems from Apple and Google will eventually become the standards for point of sale terminals.