5 Ways To Compete With the Biggest Payment Platforms

Payment processing has always been a competitive industry, but the nature of the competition is changing. Today, small providers like independent sales organizations (ISOs) and software as a service (SaaS) providers are no longer each other’s biggest rivals. Instead, merchant-facing banks and mega-platforms are gobbling up the market.

The bad news is that those huge platforms also have huge budgets and they’re extremely good at serving two main groups: other enormous enterprise companies and brand new, inexperienced merchants looking for the fastest, easiest access to payments possible. 

The good news is their services often leave a lot to be desired, leaving you with a critical opening in the middle: the small and medium-sized merchants who are experienced enough to find the rigid, impersonal service of a bank or big platform either impractical or unappealing.

In this article, we’ll look at five strategies you can use to outcompete banks and big payment platforms, including:

• Offering high-touch, “white glove” payments services
• Opening up more processing options than the big players can offer
• Leaning into branding to gain mindshare
• Providing a better, more flexible menu of products
• Focusing on problems over price

One of the big platforms’ biggest weaknesses is the sheer volume of merchants they serve. Even with big budgets, resources are finite, so, aside from the largest enterprise accounts, the quality of service and support naturally suffers. That means going from zero to transacting is extremely easy, right up until something goes wrong. Then getting help can be a nightmare. This is often the case with banks as well, who are tied up with more than just merchant services.

That’s when many merchants start looking for a payments partner who can offer them something better.

As a smaller provider, your biggest advantage is the ability to connect with your merchants on a personal level. You can get to know their businesses, their processing patterns and the quirks of their selling, allowing you to deliver far more personalized payment solutions. When they need support, having a smaller team means merchants will see familiar faces instead of engaging with a huge, impersonal machine that treats them like just another ticket number.

At the end of the day, merchants don’t want to think about payments. That’s why they go with a big platform or bank to begin with — because they can sign up in minutes and be done with it. But once they’ve hit a snag, they quickly realize that not having to think about payments actually means having a true partner in their corner. That’s what your white-glove merchant services can offer that the big dogs can’t.

Most big platforms are completely self-contained experiences. To be fair, they have recently started opening up, but they’re still designed to keep merchants within their ecosystem by having them use only their products and, most importantly, only their payment processing. 

The problem with that model is that merchants with even slightly unique needs often find that banks and bigger platforms’ inflexible processing services aren’t suitable. At best, that can mean missing features and unnecessarily high fees. At worst, it can mean abrupt account freezes and closures.

You, on the other hand, have the ability to partner with potentially dozens of different payment processors and tie it all together with a processor-agnostic omnichannel gateway. That means you can offer exceptional, consistent service to the merchants whose needs don’t fit a cookie-cutter model. And, when a niche or high-risk merchant runs into difficulties with processing, your ability to save the day by seamlessly transitioning them to a new solution makes you even more valuable as a partner.

One reason banks and bigger platforms are so successful is that their brands have become household names. When a brand new merchant needs payments, they naturally gravitate to one of the big names they’ve already heard of. That’s because, in the absence of more information, brand familiarity stands in for trust.

To be clear, no small provider will ever come close to a national bank or large platform when it comes to brand recognition. But that doesn’t mean your brand doesn’t matter. A great brand reduces the cognitive load on your customers and makes their decision-making processes easier. So, while your brand might not earn you that fresh new merchant the way a massive platform will, it can help you retain the merchants you already work with by creating stickier relationships. It can also help generate important word-of-mouth referrals and make you easier to remember when recommended.

But, without the big budgets of a mega-platform, how do you get your brand out there? The answer is white labeling. 

White label everything you can. If your merchants log into a portal to manage their accounts, they should see your brand. If you’re providing them with a gateway or third-party extensions, they should feature your branding. Documentation, terminal screens and third-party billing are all opportunities to gain brand impressions and sink deeper into your merchants’ minds so that when they think, “payments”, they think of you.

If there’s one thing banks and big platforms don’t do well, it’s flexibility. Part of their business model is locking merchants into a single, monolithic, generalized service environment that’s designed to serve the widest possible range of merchants. That’s fine for some sellers, but for others, it means they can’t get the services they need or they end up paying for services they don’t use.

To do it better, you should focus on offering the widest set of products and services possible, but in a modular, à la carte fashion that lets your merchants pick and choose exactly what they need and what they don’t. That ensures you can serve the widest possible range of merchants, while also allowing them to build out their ideal payments solutions. Flexibility means your merchants can enjoy services that match their needs and budgets and that scale alongside them as they grow. That, in return, will make you a partner they can stick with for the long run.

Big platforms are expensive. They use flat-fee pricing models and often charge transaction fees approaching 3% for even the lowest-risk merchants. Banks are similar; merchants often get sucked into applying for payment services while they’re opening a bank account. It seems more straightforward on the surface, but in reality, banks could potentially charge higher fees that merchants wouldn’t have to deal with if they went with a different provider.

Traditional processing is much more affordable, especially with tiered or interchange-plus pricing. That’s a significant factor working in your favor, but it’s important not to get drawn into using that price advantage as your only differentiator.

Being cheaper should never be your main value proposition because it’s the most difficult one to defend and results in a race to the bottom. Instead, focus on your role as a partner and problem solver. Remember that what merchants ultimately want is to take card payments and have the funds land in their bank account with no friction, no drama and no delays. Pricing doesn’t do that. Problem-solving does.

The best way to become a problem solver and a great partner to your merchants is by having a great partner backing you, and that’s where NMI comes in.

NMI offers a complete payments platform that gives you one-stop access to everything your merchants need, including processing, a leading gateway and a full menu of hardware and value-added extensions. It’s completely processor-agnostic, fully modular, and white-labelable. And, when questions or problems arise, you’ll have fast, dedicated support channels that make our team part of yours.

To find out more about how NMI can help you compete with the big platforms, reach out to a member of our team today.