Acquirers should become experts on point of sale equipment and software that helps merchants operate more efficiently, an upcoming report says.

That knowledge is becoming critical because the POS market is growing about three times as quickly as the payments terminal market, according to a report on the sales agent channel that Double Diamond Payments Research plans to issue in the next few weeks.

“The storyline is the pending collision between the agent channel and the (value-added reseller) channel,” says Rick Oglesby, Double Diamond senior analyst. “A lot of players who aren’t preparing…need to start thinking about it.”

The report, compiled from interviews in April with 21 industry executives, offers advice on how sales agents can learn to promote POS and software, Oglesby says.

“Selling a terminal and payment processing is different than selling an entire POS system and, therefore, the agent channel needs to transform,” he says. “They’re becoming much more software-centric and product-centric than payments-centric.”

That transition can represent a “big leap” for ISOs and agent, Oglesby says.

The change includes using software to make businesses more efficient, which can assign payments to the status of just element of many, the report shows. The cloud is feeding the trend, it notes.

The report also addresses the agent channel’s key trends, calculates the size of the agent channel, assesses how fast it’s growing and observations on participants’ “nightmares and dreams,” Oglesby notes.

It’s the first report from Double Diamond Payments Research, the research practice recently established by Centennial, Colo.-based Double Diamond Group., a consulting firm.

The research practice will concentrate on payments acceptance, which includes acquiring, according to Todd Ablowitz, Double Diamond Group president. Plans call for a narrower focus on acceptance than competing research firms provide, he says.

“While others might be doing market-sizing of acquiring, we’re doing market-sizing of the agent channel,” Oglesby says. Its reports will typically run 30 to 50 pages, Oglesby notes.

Customers for the reports include anyone “deeply interested in the acceptance market, including the card brands, acquiring banks, processors, super ISOs, ISOs, investors, integrated POS companies, payments facilitators, gateways and other acceptance technology companies,” Ablowitz says.

“If your business relies on the inner workings of acceptance, then it’s reseach you should pay attention to,” he maintains. 

Reports will come in three varieties, Ablowitz says. In some cases, as with the first report, the company will conduct the research, create the report and sell it. On other occasions, a single company may commission the research practice to create a private report. For a third type of report, the practice could sign agreements with several clients, thus creating a report that’s similar to custom research but not as costly.

The practice is talking to potential clients for a study of the third type, which will focus on the value-added reseller market, Ablowitz says.

“With recent acquisition activity, the entire payments ecosystem is looking at the impact of integrated payments strategies,” he maintains, citing Vantiv’s recent purchase of Mercury Payments.

Such strategies could include creating software to integrate with merchants or working with software vendors that are working with merchants, Ablowitz says.

“Every major payments company is looking at that strategy,” he says. “Our study is going to be the most comprehensive study of that market ever performed.”

While the new research practice is producing reports, Double Diamond will continue to offer consulting services. The two pursuits can seem similar, but Ablowitz offers an explanation of the difference.

“The key to research is getting new data directly from the horse’s mouth,” he says. “Consulting, many times, is taking data that exists and creating insight, recommendations, strategy and actions.”

A dearth of payments acceptance research prompted Ablowitz and Oglesby to add the practice to Double Diamond Group, the two executives say.

“We didn’t see the research we needed, so we decided to build it ourselves,” Ablowitz says.

 

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