Merchant services and payment processing for small businesses
Banks can capitalize on rising demand among SMEs for digital payment solutions but they will have to overcome substantial competition.
SMEs are following the lead of big businesses by capitalizing on the power of digital services to improve their performance and drive growth. And the uptake of digital offerings opens huge opportunities for banks eager to provide SMEs with payment processing services.
There are close to 10 million SME merchants in Europe, alone, and demand for payment processing services continues to climb. Consumers increasingly expect quick, convenient and mobile payment options.
However, competition to serve SMEs with payment processing services is fierce. The stronghold banks once held on the payment business has been broken an army of innovative and agile competitors that have disrupted and fragmented the market. Fintechs, payment platforms, software providers and Big Tech companies are all jostling to provide SMEs with digital payment processing capabilities. Often, they have their eyes not just on payment fees but also on revenue from a host of other managed services.
To compete and secure a rich slice of the SME payment business, banks need to move quickly or risk losing further influence in a market they once dominated. But how should they respond?
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