The fast-paced payments industry of today makes it hard for financial institutions to keep up with changing requirements; whether technology, regulatory, or consumer driven. For acquirers with merchants that range from large scale global giants to local newsagents, this environment can be even more complex.
To help acquiring banks adapt and prosper in this multi-channel world, merchant management solutions are a great option. But to what extent do merchant management systems benefit acquirers, and how do they find out which solution is the right one for their specific set of needs?
The ideal scenario
Through the use of a merchant management system, acquirers can enrol merchants, manage fees, track terminal inventory, assess risks and generate merchant statements quickly and easily. It seems strange, then, that acquirers aren’t jumping at the opportunity to put merchant management systems in place. However, put simply, a number of the systems on the market today aren’t sufficiently flexible enough to entice them.
Acquirers are either using legacy systems with very limited scope for customisation, or alternatively, using their own in-house developed systems with hardcoded rules, so when business starts to grow, it causes big issues in terms of maintenance. This is where they need to start looking at open development payment platforms in order to meet the true potential of merchant management functionality.
Specifically developed to help acquirers to successfully navigate the complexities of the marketplace and offer merchants comprehensive and effective solutions, the ideal merchant management solution is completely flexible, scalable and, most importantly, future-proof. With all the functionality required to manage merchants efficiently, the optimum solution will offer acquirers complete control over their payments value-chain.
Five key benefits of implementing an effective merchant management system
1. The capability to describe merchant and partner structures of unlimited complexity, defining business rules at any point in the hierarchy
The ideal system would provide a complex hierarchical organisational structure for merchants (e.g. country, territory, merchant corporations, stores, outlets, departments, sub-departments and terminals) and partners (ISOs, payment facilitators, etc.), with pricing and revenue sharing rules, settlement and payment options, reports and statements defined at any and every point within the hierarchy.
Merchant accounts should be easily managed by an operator using a simple user interface (UI), automatically via an application programming interface (API), or through a batch interface. When integrated with an external system, the system will be able to exchange and synchronise merchant data both online and offline.
2. The ability to extensively customise practically all aspects of every function available in the system
For the system to work efficiently with external systems such as CRMs, portals and scoring engines, it has to be able to be tailored for any and all eventualities. The ideal system will provide a near-linear level of scalability and adaptability, including customisable fraud management, transaction summaries and ongoing reporting.
3. Powerful tools to enable the implementation of complicated pricing models in a simple way
Taking the hassle out of complex pricing models is something that should be pursued by every acquirer. By grouping single fees and charges into a tariff plan which represents a pricing model for a product, the plans can then be organised in a hierarchy with the ability to inherit, change or override specific fees on each level. This makes it easy to manage a large set of pricing models.
The solution would also support tariff versioning, whereby an activation time can be set for a new version. Each fee can be configured to apply a new rate starting from specified date, or apply promotional values and calculation rules during a set period of time.
4. Extended in-built integration tools
For acquiring banks that want to reduce complexity, expand functionality and be a competitive market player, their merchant management solution should be easily integrated into the existing infrastructure to extend an acquirer’s functionality, or a comprehensive SDK and building blocks should be provided for the organisation to completely build their own bespoke solution.
5. The ability to manage application processing through customisable workflows
By putting a workflow designer in place, workflows, custom forms, data validation and processing rules can all be set and modified. Workflows are used for the customisation and automation of application processing, customer data entry and management, scoring, underwriting and any other complex business processes. This functionality enables the monitoring of operator activity and the effective balancing of load.
The importance of future-proofing
If we compare older systems with any aspect of open development platforms – not just for merchant management – there is a huge gulf between their respective potentials to respond to change and modernise. Older systems will never be able to adapt as much as needed, as it is impossible to infinitely modify legacy systems due to architecture-based limitations that will not allow certain expansions, or will restrict the ability to improve on what currently exists. A platform designed to be completely, limitlessly flexible unlike its legacy counterpart, offers a much more future-proof solution.
With acquirers continuously looking for ways to improve their processes, it looks likely that, sooner rather than later, they will have to take the plunge and invest into more flexible infrastructure to look after their merchant management. However, it remains to be seen if they will be reluctant to walk away from the legacy systems they have invested so heavily in.
By Sergey Putenikhin, Associate VP, Business Development Director and Sales Manager, Europe, Compass Plus