Some financial institutions are seeking to reclaim acquiring revenue from independent sales organizations by providing merchant services bundled with financial products, according to a Mercator Advisory Group report. By offering merchant services and business-banking services together, financial institutions potentially can remove ISOs from their merchant relationships, according to the report "Merchant Acquiring in the United States 2008: Birth of the Perfect Storm?" Acquiring banks that processed bankcards typically saw an increase in deposits from their merchant clients into their demand-deposit accounts. However, some acquiring banks lost the deposits when ISOs, which entered the relationship to grow card acceptance, began allowing merchants to have demand-deposit accounts at financial institutions other than the acquiring bank, according to the report. "The threat from banks seeking to 'reclaim' their acquiring revenue streams by disintermediating their ISO competitors (and partners) and 're-intermediating' themselves seems to be imminent," states the report. ISOs can retain their relevance with merchants by providing increased expertise and value, says David Fish, senior analyst at Maynard, Mass-based Mercator Advisory Group Inc. and author of the report. "It's not really about price anymore. It's all about value," he says. The merchant-level salesperson is "someone that the merchant is contracting with to serve as an expert" in payment systems.
Authoritative analysis and perspective for every segment of the payments industry
Authoritative analysis and perspective for every segment of the industry
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