By Martina Jeronski
Selling payment services to smaller merchants used to be pretty simple. Card payment terminal options were limited in number and performed the same basic tasks with little differentiation. The biggest difficulties lay in explaining complicated fee arrangements.
Today, it's an almost completely inverse situation. Payment fee schedules are simpler, while choices among payment solutions are increasing. For the acquiring community, particularly the ISO and merchant level salesperson, the challenge is how to move from selling what is essentially a one application (payment) device, to a true business solution that incorporates payment with vital customer-facing and back-office business functions.
The good news for the acquiring community is that small businesses generally are happy with their payment providers. The not so good news is that they're ready to make a switch in a heartbeat if they can get a better deal. In a survey of retail merchants conducted by PYMNTS in collaboration with AEVI, more than half of those with revenue up to $250,000 a year are willing to change providers, with price followed by ease of use being the primary considerations for an alternative.
It is a serious challenge. As we've seen in other industries undergoing digital transformation, those who disrupt old ways of doing things win out over those that don't. Consider the examples of taxi companies versus Uber, Blockbuster video versus Netflix, or brick-and-mortar bookstores versus Amazon. Familiar foes of yesterday may be replaced with new competitors who are free to pick and choose where, when and how they will pick off legacy providers.
The digital world is speeding up, and we all need to keep up or risk relegation to stagnant, low-growth market segments, or worse. Investors are eager to put their bets on disrupters – in the first half of 2018, according to KPMG, U.S.-based fintech companies attracted more than $5 billion in venture capital investment.
As the ground shifts, those who provide traditional merchant payment solutions must compete to create an advantage in the traditional task of finding and holding on to merchant accounts. That requires the ability to understand the capabilities of new solutions, learn how to sell them and train merchants on how to use them. Market research reveals that retail small and midsize businesses (SMBs) currently do not see acquirers as their leading source of information on innovative solutions.
Only 14 percent of retail merchants are using the new category of multi-app smart POS solutions, but more than 90 percent have expressed some degree of interest in these. However, only a small fraction – 4 percent – said that acquirers are their primary source of information on this category of merchant payment solutions. More than half of those with annual revenue of $500,000 or less said they have heard of smart POS systems from other business owners. Among larger businesses, the most likely sources of information are POS vendors.
Merchant payment solution providers should have an edge in targeting and reaching the 72 percent who aren't already using smart POS systems and may be potential sales. But if the acquiring community doesn't take steps to educate SMBs on these solutions, it will create openings for fintech up-and-comers who can leverage the Internet for low-cost sales and support.
Selling traditional payment terminals and PIN pads will not be sufficient in the digital age. The world has shifted from a hardware focus to software and services. Retail merchants need to be able to keep up with the fast-changing patterns of consumers, who are accustomed to online price-checking and ordering, mobile payments, and seamless transactions such as hailing an Uber, providing an address, and paying, all in one app.
Merchants, too, want to be able to grow their businesses, perhaps through online ordering, ecommerce websites, and integration with delivery services. And they must be better equipped to manage their business, with ready access to inventory, supplies, staff management and payments reports.
Merchant payment solutions providers won't be able to guide small merchants into the digital era unless they themselves turn the corner and learn how to sell bundled apps-and-services solutions.
That requires staff training. Vendors should be pressed to train the trainers at large acquirers and ISOs, which in turn must be able to train the sales teams at affiliate organizations closer to the small merchant.
As the payments industry evolves away from single-function payment devices to platforms that accommodate third-party software apps and services, merchants will need to understand that they are buying not just a payment device, but also are investing in a flexible tool that will grow with them as business expands.
Those who work directly with merchants must be able to tailor particular suites of apps and services that meet merchant needs. Few merchants have the time or desire to test drive dozens of apps – they need guidance in what they can get the most benefit from.
Although smart POS solutions should be ready to go out of the box, it is up to the local merchant payment solution service provider to educate merchants on how to get up to speed quickly and use a new smart POS system most productively. This will require a new, more consultative approach than we've been accustomed to in the small merchant payments market.
There's an old adage that your customer is your best salesperson. Providers should start educating their sales force on how to cultivate customers who will become advocates for future sales. In this way, sales teams will be able to build up their own selling skills, gain a greater understanding of how smart POS systems can most benefit each individual merchant, and more quickly turn one merchant win into many.
Martina Jeronski is the creative force behind AEVI's marketing efforts with a personal mission to bring a fresh marketing wave into the global digital finance industry. As vice president, Global Marketing & Communications, she leads the marketing, brand and communication initiatives, and ensures corporate image and messages represent AEVI's propositions and the benefits it brings to the market. Contact her at firstname.lastname@example.org.
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