Voice of the Industry

A merchant's guide to choosing the right payments partners

Friday 18 August 2023 08:51 CET | Editor: Irina Ionescu | Voice of the industry

Martha Southall, Senior Manager of Global Market Insights at CMSPI, discusses the journey of choosing the right selection of vendors or payment partners to drive business growth, boost capabilities, and provide what end-users are mostly eager for – flexibility and exceptional customer service.

In a recent survey by advisory firm Aite-Novarica Group, almost half of banks reported that fintechs had already taken at least 10% of their transaction volume. In turn, 94% planned to invest in technology to improve payments. Behind this trend sits a de-commoditisation of the relationship between a business and its payments partners; as payments have transformed from a cost to a strategic enabler for growth, innovation has overtaken as the market’s driving force. 

But the age-old question of vendor selection remains. In an environment dominated by asymmetric information, barriers to switching, and varied levels of competition, we asked CMSPI’s consultants the top three priorities of the world’s largest merchants when choosing a payments partner today.


1 – Capabilities

Payments contracts can last five years or more. In fact, in a recent study from the UK’s Payment Systems Regulator into competition in the card acquiring market, 43% of merchants surveyed reported that they never search for a new provider at all. In an industry where regulatory requirements, customer preferences, and technology can change overnight, the largest merchants are therefore looking for market-leading solutions above all else. 

But ‘market-leading’ looks different to everyone. For a digital merchant in the US, for example, the priority may be securing a ‘PINless’ solution that allows them to route card-not-present debit transactions via domestic networks – an opportunity spurred by the Federal Reserve’s recent clarification. For others, like multinational merchants, it may be validating that a provider has an acquiring license in certain markets to support their global expansion plans.

Know your make-or-break criteria and have it signed off before you engage with the market,’ says Hattie Henry, Payments Consultant at CMSPI. ‘Especially if you’re bringing on a new partner, you need to find out as much as you can about other merchants’ experiences of the same solution. Lots of providers will say they have a presence in a market, for example, but how long have they been there? How many merchants do they work with there today? Do they have plans to leave the market? Not knowing the right areas to dig deeper on can catch merchants off guard.

Meeting solution requirements goes far beyond acquiring, too. If a single provider cannot do everything a merchant needs – or if a business has strategic reasons for diversifying its supply chain – then understanding the capabilities, integration requirements, and performance of a host of third parties can rapidly expand the scope of work.


2 – Performance and cost

Once capabilities and integration environments have narrowed down a merchant’s options, performance is top of their minds – especially when it comes to things like outage risk. Providers are often able to commit to delivering on certain metrics at the contracting phase, so the first step is ensuring that you know the industry standard for service-level agreements (SLAs). That will determine what you can ask for in areas such as account support, incident response time, speed of transaction processing, data file management, and more.

But contracting is just the beginning. In fact, it can be meaningless without the data to prove that requirements are met. The challenge for businesses today is that many are still reliant on their suppliers’ limited data sets for performance analysis and benchmarking, which can make it impossible to hold them to account, or for new entrants to prove additional value. 

This logic applies to another key merchant priority too – cost. CMSPI often observes significant variation in the invoices of merchants who share the same contracted processing cost, either due to differences in the application of ‘pass-through’ fees or billing errors, which we find in 1 in 2 invoices on average. It’s critical that merchants understand which fees sit outside of their contracts, interrogate the services sitting behind seemingly non-negotiable charges, and monitor costs at a transaction level over time. 


3 – Partnership 

Even in today’s retail environment, we still find that a merchant’s working relationship with their provider can be what retains or loses business. The most productive partnerships are mutually value-generating, with merchants guiding their partners in product development, and in turn generating the trust necessary to pitch new products or regions. Dozens of factors can influence the nature of this collaboration; a merchant’s size, for example, relative to its provider, may determine its influence in product roadmaps, or local language capabilities could improve communication with domestic payments teams. 

Understanding a provider’s partnerships with the broader industry is also a crucial element of determining the long-term value available to both parties. Issuer-processors, for example, may be able to generate higher approval rates or leverage ‘on-us’ transaction fees on own-issued cards, whereas acquirer-owning networks could seek opportunities to route transactions via their brand. Understanding ownership structures and monitoring M&A activity can generate new opportunities for collaboration – or help merchants identify where a conflict of interest could affect the incentives of their provider.

Knowing where to start 

Although payments acceptance can be a merchant’s second largest cost after labour, it is often a tiny portion of the tasks a finance, ops, or other team manages day-to-day. Even for merchants with dedicated payments teams, data limitations and conflicts of interest can affect their ability to respond to rapid market shifts. 

Amidst all the chaos, a successful supply chain strategy starts in-house. Providers will do everything they can to win a merchant’s business, so merchants need a way to ensure that they deliver – from cost, to service, to innovation. That starts with ensuring that their own teams have the in-market expertise and benchmarks to hold supplier partners to account, and with creating a set of strategic priorities – be that to build redundancy, localise payment methods, or reduce checkout friction – that ensure they aren’t distracted from their long-term goal.


This article was first published in ‘The Global Overview of Payments Providers 2023’, the most recent market overview and analysis of key payment providers in the B2B and B2C commerce payment ecosystem.


About Martha Southall

As the Senior Manager of Global Market Insights at CMSPI, Martha works with the world’s largest merchants to optimise their payments strategies, specialising in topics such as multi-acquiring, alternative payment methods, and payments regulation.




As the leading global payments consultancy, CMSPI has an unrivaled track record of saving global merchants millions by optimizing their payments supply chain.

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Keywords: payment processing, payments , online payments, merchant, merchants, payment methods, local payment method, checkout optimisation , supply chain finance
Categories: Payments & Commerce
Companies: CMSPI
Countries: World
This article is part of category

Payments & Commerce


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