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Discussion
Extinction, or revolution: has the time come for banks to move away from dedicated apps?
Ketharaman Swaminathan

Ketharaman Swaminathan

  Good post. CX is key but banks don't seem to accept it. A recent experience: My credit card issuer - a Top 5 UK bank - recently launched chat. I wanted to inquire when I'd get the PIN for my new credit card. The CSR told me not to enter the credit card # in the chatbox. I asked why. He said, I should share sensitive info only on a secure channel like PhoneBanking. I posted on Twitter saying this bank seems to be emasculating chat channel to protect jobs of call center employees. It replied back saying phonebanking is secure. I said any channel can be made secure. If it implies that chat is not secure, then I can't believe its claim that its phone channel is secure. Long story short, its chat was useless, I had to keep calling phonebanking to get my PIN. All this while, my new credit card was as good as not-activated beause I wasn't able to use it without PIN, it was more than a month since I got the new credit card, the bank lost interchange revenues, nobody but me seemed to care. Around the same time, I read about Apple Card and how it can be activated in 3 minutes! Sigh, I wonder when will banks learn to remove friction and enhance CX!!
5 Considerations for Choosing a Payment Services Provider
Ketharaman Swaminathan

Ketharaman Swaminathan

  TY for your detailed response.  No, I'm not referring just to the US model. AFAIK, PayPal has been offering Merchant Aggregation model in EU / UK for +15 years; STRIPE began doing so in circa 2013. Eventually only an Acquirer can provide a Merchant Account. But the difference between plain vanilla PSP and STRIPE-like Merchant Aggregator model is who frontends / underwrites the Merchant Account. In the PSP model, Merchant must get Merchant Account directly from Acquirer, which is quite a PITA. In the Merchant Aggregator model, Merchant Aggregator gets a Master Merchant Account from the Acquirer in its own name, which it then "rents" out to individual Merchants, who need not approach the Acquirer at all. So, there's a big difference in the scope of work - and value proposition thereof - between PSP and Merchant Aggregator, at least for Merchants who don't get a Merchant Account directly from an Acquirer.  
5 Considerations for Choosing a Payment Services Provider
Paul Marcantonio

Paul Marcantonio

  Based on your examples, it would appear that you’re mostly referring to the US model. Would that be the correct assumption to make? I must admit that for the basis of this article, I used my (EU-based) company. Consequently, we’re talking about a context in which both PSPs and Acquirers would be responsible for opening Merchant Accounts on behalf of their clients. If I’m not mistaken, Stripe also follows this model.  Another thing that I should’ve specified in my article is that it really comes down to what the merchant is trying to achieve. As per my points, there are services beyond simply processing payments that could make working with a PSP or an Acquirer (as opposed to, say, a payments facilitator) worthwhile. Please feel free to contact me on email at paul@ecommpay.com to discuss further!
5 Considerations for Choosing a Payment Services Provider
Ketharaman Swaminathan

Ketharaman Swaminathan

  I agree it's heavily dependent on the business model. That said, I think Merchant Aggregators do carry out some amount of KYC before onboarding Sub Merchants - or whatever the end Merchants are called. I don't get your line "Acquirers aren't particularly keen on taking on that risk": Isn't it the the raison d'être of Acquirer to sign up Merchants? Whatever risk that entails must go with the territory! In any case, in the Merchant Aggregator model, the end Merchant's sales proceeds come into the Merchant Aggregator's account from where the Merchant Aggregator must approve movement of the funds to the end Merchant's bank account. In case of fraud or whatever, the Merchant Aggregator can always freeze the funds, as PayPal keeps doing ostensibly to mitigate its risk. Maybe Square and Stripe do the same for the same reason. My implicit point was that the PSP business has been commoditized for a long time. With due respect to your five areas of value add, it's still quite difficult to differentiate oneself on plain vanilla payment processing features alone. OTOH, many merchants still have a lot of pain in getting a Merchant Account directly from a Bank, so if PSP offers sub Merchant Account, that'd be a winner. Put differently, why should a business go to a PSP and be left to its own devices to get a Merchant Account from a Bank, when it can totally bypass PSPs by going to a Merchant Aggregator like Stripe and avoid that challenge, and get payment processing anyway included with that?
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