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April 9th, 2014

Big Data: Payment Processors Hold the Key

The payment processing landscape has changed and the old ways of doing business are rapidly becoming obsolete. For merchants accepting most forms of payment is a necessity, but card processing carries a cost.

In today’s competitive economy, even small costs loom large for merchants – so there is constant pressure to reduce the cost.  Every time a contract renewal comes up, merchants are constantly looking at ways to reduce their price. The continued commodization of payments coupled with disruptive new entrants like Square, are forcing companies to rethink their business models.

Merchant attrition has become one of the biggest concerns for merchant acquirers and independent sales organizations (ISOs) because it can take as many as three new accounts to overcome the diminished value of a single, lost merchant account.  In today’s competitive market, payment processors must find new ways to differentiate their offering and proactively communicate their value add with the merchants.

The good news is that payment processors have an untapped gold mine with the loads of data that they continuously collect, which can provide a unique advantage. Most do not realize it, but payment processing is the only industry that carries a longitudinal view of the customer.  Research shows that one of the largest grocery retailers in the country is able to capture 96 percent of their customers’ transactions on a loyalty card. In other words, they already know exactly who their shoppers are and how they shop at their store; however, they know very little about their customer’s behavior outside of their store.  Guess who carries that information? Payment processors!

The challenge here is how to access the data and get value from it.

Big Data distilled to an actionable form can enable the users to understand and better connect with their respective base.  It doesn’t matter if it’s an ISO connecting to their merchant base or a merchant trying to connect with their customer base, both are looking to create an end-user centric opportunity.  To a retailer, it could be a targeted offer to improve brand loyalty, which ultimately increases sales.  To an ISO it could be targeted pricing, proactive retention and cross selling to make better decisions and maintain the current customer base.

In an effort to help businesses put all of the data they collect to relevant use, DMI recently launched PriceGuide™, a complete strategic pricing solution that uses advanced analytics to reduce attrition, increase margins and prevent over-discounting.

Check out the following links to learn more about the PriceGuide solution:

  • PriceGuide press release
  • PriceGuide video
Tags: big data insights

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