Solution integration and data as the new oxygen: Merchants need assistance
Solution integration and data as the new oxygen: Merchants need assistance
The level of innovation in software tools over the last two decades has led to a data- rich landscape for businesses. Data is beyond being the ‘new oil’; it is the new oxygen. Merchants have more data and technology than ever before. The opportunity for banks and acquirers is to help them connect it, understand it and act on it.
The value of data and the challenge of integration
Data provides merchants with an unprecedented level of insights that have the potential to fuel their growth. The challenge is that this information is often held in different systems and formats, making it difficult for them to build a complete picture of their operations. Point-of-sale solutions can yield transaction data, ecommerce platforms provide analytics into drop-off rates, and marketing analytics as a whole give merchants a valuable opportunity to optimise their offerings – if they know how to use them and can integrate this data in a meaningful way.
Data from RFI Global’s UK Merchant Acceptance Council clearly shows that merchants expect acquirers to improve their integration with other services they use, both with other payment services like accounting and banking, and with other internal solutions like CRM, booking and inventory management. The proportion expecting improved integration has grown consistently over the last 3 years. This coincides, to a degree, with the rise of AI, but there is a more pressing need: The need for clear, simple, and implementable data analytics solutions for merchants’ operations. Merchants know there is a litany of data available to them, but access to this in a format they can understand is a clear area for improvement among acquirers. In short – 1 in 3 merchants state improving data analytics capabilities should be a key focus for improving acquiring solutions.
For example, a small coffee shop might have software to place and track orders, another for inventory, a POS solution, a card terminal, customer loyalty programmes, marketing tracking software for their social media accounts, and then an accounting solution, payroll needs and so on. This is not a multi-million-pound enterprise, yet the diversity of software is incredible.
The implicit need for integration among UK merchants
Our data shows that while there are already many integration possibilities with a merchant’s acquirer, there is still a clear demand for significant proportions of the market to increase this level of integration. Even at the lowest end of the scale, over half of merchants with booking or scheduling software have this integrated with their payments, while at the high end, such as for POS or invoicing solutions, 2 out of 3 merchants have integration.
So, although levels of integration exist, there is still a clear need for acquirers to increase integration across the board. Depending on the ‘value-added service’ a merchant uses, between 22% and 32% want a greater degree of integration between this solution and their main acquirer. This is undoubtedly a difficult task; there are thousands of tools available to merchants, but acquirers must account for this complexity in order to keep pace with the ongoing technological advancements and meet the needs of their customers. These examples of ‘value-added services’ should be considered as fundamental components of a merchant’s operations rather than a ‘nice-to-have’. Between 76% and 95% of merchants either have a solution integrated or want a solution integrated in more depth.
This shows that integration is at the forefront of merchants’ minds. However, this integration brings a vast potential opportunity for merchants to utilise the data they provide.
Merchants benefit immensely from data – if they understand it
Regarding the types of data merchants most value or benefit from – transaction data (34%) comes out top. This type of data is immensely valuable to a merchant; it can show them how their business performs at certain times of day or location, or even if there is a particular group of employees working together. Analysing the data, however, to yield this insight requires time and knowledge, and merchants are time-poor.
Merchants are also looking for a more complex form of data – benchmarking compared to the wider industry or other similar merchants (33%). While it may be assumed that this is because they want to get ahead of their competitors, there is another perspective. Merchants want this data because it enables them to see how and where they can improve to become better.
The implications for financial institutions
Integrating solutions to provide a holistic overview of a merchant’s operations is the overarching theme for improvement across the landscape. This integration then gives merchants access to an abundance of data on their operations, but even successful integration brings a challenge in the actionability and implementation of the insight this data provides. Acquirers, banks and payment services providers will create mutually beneficial relationships with merchants if they help to utilise existing data flows and implement successful initiatives in merchants’ operations. It will drive retention and expansion of product uptake as financial services providers become more than that – to become active partners in growth.
For more information on how RFI Global insights can help your business drive effective payment strategies, get in touch for further insights from the study.
Joseph Sharangparni
Senior Insights Manager, EMEA & North America
Joseph Sharangparni is a Senior Insights Manager at RFI Global, delivering research across EMEA and North America.
View full profileFrequently Asked Questions
Q: Why is integration important for banks and merchant service providers?
Integration is important because merchants increasingly rely on multiple systems, including payments, point-of-sale, accounting, CRM, booking and inventory management. RFI Global’s UK Merchant Acceptance Council data shows that merchants expect acquirers to improve integration with these services. Between 76% and 95% of merchants either have a solution integrated with their main acquirer or want deeper integration, creating an opportunity for banks and acquirers to become more embedded in merchants’ day-to-day operations.
Q: What do merchants want from payment providers beyond payment processing?
Merchants want payment providers to offer greater integration with the other technology and services they use, as well as clearer and more actionable data analytics. RFI Global data shows that 1 in 3 merchants believe improving data analytics capabilities should be a key focus for improving acquiring solutions. This creates an opportunity for banks and acquirers to move beyond payment processing and provide practical support that helps merchants improve their operations.
Q: What types of data do merchants value most?
Transaction data is the type of data merchants value most, cited by 34% of merchants, followed closely by benchmarking against the wider industry or similar merchants at 33%. Transaction data can help merchants understand how their business performs across factors such as time, location and staff, while benchmarking can help them identify where they can improve. The opportunity for banks and acquirers is to help merchants turn this data into useful, actionable insight.
Q: How can banks use merchant data to create more value for customers?
Banks and acquirers can create more value by helping merchants connect their operational systems and use the resulting data to make better business decisions. Rather than simply providing access to data, financial institutions can help merchants understand what the data means and how to act on it. This can strengthen relationships, support retention and create opportunities for greater product uptake.
Q: What is the opportunity for banks in merchant data and integration?
The opportunity is to become more than a payment provider by helping merchants connect their technology, understand their data and improve their operations. As merchants increasingly expect deeper integration between payments and other business services, banks and acquirers that can provide practical, actionable support have an opportunity to become active partners in merchant growth.
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