No longer do banks need to be handcuffed to poor payment processing services. The future is here.

Most businesses have a fundamental problem when it comes to processing payments through their merchant service accounts. The problem is their bank is not a viable option for processing payments due to high fees and more competitive products in the marketplace such as Braintree.

Braintree's offices
APIs can help banks compete with alternatives such as Braintree, according to Ryan James of Surety Bank. Bloomberg News

The issue with those larger payment companies is a lag time of days, often, before funds are available in an owner’s account. Fortunately, some banks see a way around this, thanks to application programming interfaces (API) made available through cloud-based core systems.

Gartner defines a core banking system as a back-end system that processes daily banking transactions, and posts updates to accounts and other financial records. Core banking systems typically include deposit, loan and credit-processing capabilities, with interfaces to general ledger systems and reporting tools.

Current legacy systems handcuff banks to services such as merchant accounts, mobile banking, etc, sticking them with rates that are unreasonable to resell. It’s sad that up until now, banks can’t be relied upon for one of the most important pieces of running a business (merchant service).

Now, banks can once again be competitive providing merchant services, thanks to new cloud-based platforms such as NYMBUS. These new API systems are open-ended and can work with third-party software providers. These banking “apps” integrate seamlessly, not only giving the bank a wide range of providers, but also giving the opportunity to give the best rates on merchant accounts. This integration lessens the lag time it takes for a business to get paid from the merchant service.

So, in theory, businesses that want to run a payment service such as Stripe, can sign up directly at their bank, with a competitive rate that will seamlessly integrate with their business checking account, giving real-time updates. Partnering with banks opens a door to fintech payment companies that will likely hit a ceiling by going direct to consumers, providing a new way to increase revenue.