There can be little doubt that flavour of the month in the M&A space is in the payment processing sector. Vantiv’s acquisition of WorldPay, PayPal’s reported interest in Square – who recently posted their best ever results – and PAYTM publicly announcing their ambition to take on WhatsApp head on: this is what is peaking investors interests.
It wasn’t too long ago that the payment processing was the domain of the banks: HSBC and Global Payments, RBS and WorldPay. Elavon has its roots in Bank of Ireland. TD is the only bank in Canada still running its own POS network.
With the WorldPay acquisition worth a reported £7.7b, one wonders if the banks are rueing their decision to outsource merchant services.
The real complexity though comes from the focus of social networks to embed payment processing directly in to their proposition. Converged services that enable individual payment through Facebook groups will offer the ubiquitous “instant gratification” that our society now demands.
This explains why investors keeping a close eye on the merchant services space. But every story has a twist; where do the frailties lie?
In 2016, ETSY merchants reported serious payment processing issues to WorldPay. Etsy customers suffered nearly a month of frustration when WorldPay admitted causing duplicate charges for ETSY customers in their attempt to rectify the issues. NAB had a problem just last month when users reported missing transactions from their statement. It escalated throughout the day and took to social media to vent their irritation.
Merchant POS vendors like Global Payments use Sentra Transaction Monitoring for Payments, ATM, POS and EMS alert monitoring. The transaction monitoring module provides payment card industry compliant, real-time monitoring and archiving of the transaction flow information created by payment and transaction applications. Sentra provides online, accurate metrics about the status of the transactional payment, ATM and POS networks and HP NonStop systems and so prevent sustained costly lowering of interchange / switch activity.
The coming months will no doubt see more changes in the merchant services sector: more acquisitions, mergers, and disruption from social networks. We look forward to the challenges that this evolving market has to offer.