By Tom Byrnes, SVP, Marketing, PayiQ
It’s no great secret that much of the current payment processing infrastructure in place could use updating. Much of the technology that traditional processors were built on is clunky and inefficient.
The result: Every business that integrates (ISV) or resells (ISO) the payment services of classic processors must face a time-consuming mess of non-standard architecture. Incompatibilities abound in this architecture, giving rise to a host of challenges.
The Biggest Problems in Processing Right Now
ISOs and ISVs often deal with a long, drawn-out onboarding process. This is because there are no clear standards for merchant onboarding. This lack of standardization brings with it a whole domino-chain of inefficiencies.
The first is the fact that merchant applications rarely capture all the data needed to easily onboard. These applications are meant to service a wide variety of merchants. This spectrum of merchant complexity is difficult to capture in a single application—there are often follow-up calls with merchants after applications are submitted to retrieve additional information.
Once the application is complete, underwriting is initiated. Most payment resellers have relationships with multiple processors just so they can handle a broader spectrum of risk profiles. That means slogging through the slightly different requirements of each processor—some even require sending another application to your prospective merchant.
After that, risk must be assessed. Many businesses use broad rules to choose which merchants they will disqualify such as avoiding any business with a bad chargeback record. But sometimes these broad rules leave money on the table when merchants have a more complicated risk profile.
Once the merchant is finally boarded, the ISO or ISV is grateful that their new client didn’t grow weary of the arduous onboarding process. Everything is good now, right? Not exactly.
Businesses need to be able to monitor merchants, but all they get from their processor is a batch of pre-determined data once or twice a month. This is not exactly the kind of real-time data that ISOs and ISVs are after. And it represents another way in which the current processing landscape is too inefficient for modern businesses.
How the Cloud Solves These Problems
The first and most crucial way that the cloud solves modern processing inefficiencies is by building a processing system on unified architecture.
This unified architecture enables a host of new functionalities in addition to cost-benefits, added security, and competitive advantages commonly associated with the cloud. The first of these is eliminating incompatibility.
Second, it creates automated management tools that streamline onboarding. This includes standardization of all processes including applications, underwriting, and risk assessment. This standardization opens the door for these processes to be entirely automated.
Finally, the cloud grants resellers direct access to real-time data. This allows ISOs and ISVs to monitor transactions in real-time so they can get a better snapshot of their profits. They don’t have to wait for reports to monitor merchants. And, because onboarding is automated, merchants don’t have to wait to get processing services up and running.
Everybody wins on the cloud. That’s why it will likely be the most disruptive technology to enter the payments space in over a decade.