For payment processors, merchant attrition runs 25 percent or more annually, driven by small, incremental pricing pressures. Additionally, interchange caps and growing regulatory compliance burdens weigh heavily on the P&L sheet.
To protect market share and income, they must introduce service and value that cannot be easily replicated by competitors, and seek new revenue fueled by their rich supply of payment transaction data.
Longer-term technological disruption threatens to disintermediate payment processors, displacing their role in the payments value chain. These new applications ride existing payment rails or ACH, but incorporate new interfaces that supersede relationships with customers. Payment processors have decades of data that can be used to better understand, service, and forecast merchant and issuing bank behavior – an asset that FinTech does not have.