Digital Transactions Authoritative, insightful and timely information for payments professionals
Why ‘Going Beyond Payments’ Is Nothing New
The mantra these days, heard at all trade shows, read in all trade articles, quoted seemingly ad nauseum, is that “payments aren’t enough.” People offer this observation on the insufficiency of payments as a prelude to the idea that processors, acquirers, and hardware/software vendors must do more, must “go beyond” payments. They must also help merchants with a wide range of business challenges ranging from inventory control to marketing.
The idea rests on the fact that electronic payments is a commodity service that yields ever-narrowing margins. Merchants, able to buy the service from just about anyone with little differentiation in product, will naturally opt for the low-cost provider. Faced with slimming profits and few avenues to stand apart, providers can survive only by launching a widening array of non-payments services not easily replicated by rivals.
For an illustration of this idea in action, see this month’s cover story on Square Inc. Only five years old, this much-storied mobile point-of-sale startup has recently introduced services to reach merchants that need help with investment capital, order and pick-up handling, and sales tracking. If going beyond payments also means products for consumers, Square is trying to do that, as well, albeit so far with mixed success.
What’s remarkable about this idea, though, isn’t the headlong pursuit of it by certain well-financed Silicon Valley startups. What’s remarkable is that it should be regarded as if it were some sort of fresh insight. In one way or another, point-of-sale providers have long recognized the need to go beyond payments. Merchants depend on their independent sales organization agent and their value-added reseller for advice on POS matters that touch on but don’t necessarily intimately involve payments.
That’s why, over the years, ISOs like Harbortouch, Heartland Payment Systems, Merchant Warehouse, Mercury Payment Systems, and North American Bancard have grown as fast as they have and, as in the case of Mercury, commanded rich multiples.
What the idea really boils down to is information—how to gather it, how to interpret it, and how to deploy it so the merchant makes more money. Maybe that means “going beyond payments,” but one thing is sure: Acquirers that invest in the data business will thrive.
In this vein, we welcome payments-industry veteran George Warfel as a columnist for Digital Transactions. A director with consultancy Edgar, Dunn & Co., George will be conducting our new Payments 3.0 column, the first example of which you’ll find in this issue. We think you’ll find George’s insights on emerging-payments issues timely and useful. Look for the column again in November, and then monthly starting in January.
John Stewart, Editor | john@digitaltransactions.net
