The Importance of Stability in a Payment Partner: An Often Overlooked Quality

When you find yourself evaluating payment processing partners, the focus often falls on ease of integration, technology or customer pricing. While those factors are undoubtedly important, there is another quality you should search for in your payment partner – stability.

The Value of Consistency in a Rapidly Changing Industry

In today’s fast-paced world, it’s easy to be payment processors promising revolutionary solutions or fintech behemoths that pride themselves on quick onboarding. However, our decades of experience have taught us that consistency and reliability are also paramount when it comes to payment processing. This is why stability in payments is not just a preference, but a necessity.

What exactly do we mean when we say stability?

Mergers and acquisitions (M&A) are beginning to accelerate again causing a significant lack of stability in the payments industry. This has led to many integrated payment solutions now operated by giant conglomerates with a corporate mentality and a razor blade approach to accounting that increases profit margins.

Integrated payment processors that focus on stability do not take part in M&A. They have a proven track record of consistent ownership, typically have high customer retention rates and are transparent in their pricing and policies.

Threats to Stability in Payments

Mergers and acquisitions, private equity investments and initial public offerings (IPO) all have the ability to threaten a payment partner’s stability. Typically, M&A lead to consolidation which creates larger, more powerful players in the industry. This ultimately means that there are fewer options for payment services, potentially leading to higher fees and less tailored payment solutions.

Often, publicly traded or private equity invested companies have short term objectives focusing on shareholder value or return on investment. In many instances, these short-term goals are realized through price increases and cost-cutting measures that can impact the customer experience.

On the other hand, a privately held processor is typically not as focused on short-term growth, but rather long-term sustainable growth. They also may use their resources to invest in research and development and prioritize customer satisfaction. It is important to think about these differences before choosing your integrated payments partner.

Some potential risks for integrated payment partners who frequently experience M&A include:

1. Changes in Support Structure: Your familiar support contacts may be replaced, leading to a loss of personalized service and an unfamiliar service structure.
2. Contract Changes: Terms of service, pricing, and other contractual elements may be altered, potentially to your disadvantage.
3. Rate Increases: You may see rate increases after your payment processor experienced a merger or acquisition due to cost recovery and margin expansion efforts.

Evaluating Your Integrated Payment Partner

Your payment partner should take the time to learn your business, create a genuine relationship and ensure your business has the tools it needs to succeed. And while it is easy to get swept up in the allure of the newest features or the lowest prices, it is important to remember why stability in a payment partner is more important than you think. When evaluating potential integrated payments partners, consider the following to ensure stability in payments.

• A foundation built on trust. A stable payment partner provides a solid foundation. You and your customers need to know that your payments will be processed reliably and securely, every time.
• A valued, long-term partnership. A stable payment partner is invested in your long-term success. They’re not just looking for a quick transaction; they’re committed to building a lasting relationship based on mutual trust and shared goals. This translates into personalized and proactive support and a deep understanding of your unique business needs.
• Adaptability in times of change. The payments industry is constantly evolving, with new technologies, regulations, and market trends emerging at a rapid pace. A stable partner has the experience and resilience to navigate these changes and keep you informed. They possess the foresight to anticipate potential challenges and to adapt to shifting landscapes, ensuring continuity and minimizing risk.
• Ownership stability. The payments industry is volatile. With frequent mergers and acquisitions amongst payment companies, it is important to find a partner who is not for sale. When a company is not for sale, it is not subject to public market pressures which often provides more stability and reassurance that what you sign up for is what you are getting long term.
• High customer retention rates are a strong indicator of reliability. High retention rates indicate satisfied partners and reliable service. Knowing that a payment processor has a high retention rate, it tends to speak volumes about the type of partnership they will bring to the table.

Related Content: What Ownership Reveals about Your Integrated Payments Partner

By choosing a partner that is committed to a long-term partnership, you can ensure that your payment processing remains reliable, secure, and aligned with your business goals for years to come, providing the stability your business needs to thrive.