M&A Red Flags: Is Your Payment Processor Still the Same?

Going into a payments partnership with your eyes open requires researching the company’s platform architecture and capabilities, your partner’s innovation roadmap, and its reputation. However, in the current payment industry climate, there’s one more factor you need to consider before you formalize a partnership: how mergers and acquisitions (M&A) could affect your business.

With new business leadership, goals, and objectives, a newly organized payments company may view SaaS company partnerships differently. Strategic partnerships are a balance that strives to achieve mutual benefits, mutual respect, and business growth for both parties. Unfortunately, a payment organization that results from a merger or acquisition may see SaaS companies as little more than a revenue line item rather than strategic partners.

Red flags that indicate it’s time to rethink your payment partnership include:

Poor customer service

Before your payment partnership was disrupted by M&A, you knew what to expect from your partner. Now that new entities are involved, you need to understand their commitment to customer service and how it might change your relationship. Research the company that merged with your partner to understand its track record and service levels. Look for customer reviews online, Net Promoter Scores, and other ratings that help you understand the quality of customer service you can expect. Also, insist that your payments partner provide quarterly business reviews (QBRs) that show how they’re supporting customers, the progress they’ve made in the past few months, and forward-looking statements that will show what they do to enhance customer service in the near future.

Poor sales enablement

Payment companies should provide all the information, documentation, and tools to successfully provide solutions and services, not let you fend for yourself.

Unwillingness to share business intelligence

Your partner should share insights about your customers and the direction the payment industry is taking, consumer payment trends, and innovations on the horizon. Those insights will help you offer relevant solutions today and anticipate how the industry is evolving so you can stay on the leading edge.

No comarketing opportunities

A key benefit of a payment partnership is expanding marketing reach and getting your brand and solutions in front of your partner’s audience. Your payment partner should be open to comarketing opportunities, including trade show participation and co-branded marketing. Your partner should be willing to help you sell more software and value-added services, not just sell another merchant account.

Complex merchant onboarding

Comprehensive merchant onboarding processes are essential to complying with regulations, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) laws, and mitigating risk for all parties involved in transactions. However, overly time-consuming and complex onboarding processes can lead to churn. Payment companies should streamline onboarding, leveraging technology and automation to provide the best customer experiences.

Solutions that hurt your competitiveness

You and your customers may have been accustomed to processor- and hardware-agnostic solutions, but you may have lost that flexibility after a merger or acquisition. Limiting your customers’ options can hurt your ability to bring competitive solutions to market. Your payment partnership should allow you to meet all of your customers’ needs. That includes everything from a robust omnichannel payments solution that allows them to enhance transactions wherever consumers engage to supporting surcharging or cash discounting/dual pricing that helps merchants offset payment processing fees.

Bare-bones PCI compliance support

Your partner must offer a PCI-approved solution. It’s non-negotiable, yet something that often adds friction with your customers. Your partner should go beyond checking that box to help you ensure you comply with all aspects of PCI compliance while focusing on removing PCI friction from your customers’ experience. It’s not only the technology to help reduce PCI scope with semi-integrated solutions, encryption, tokenization, or other compliant strategies that matters, but also the support and streamlining of the PCI customer process.

No investment in your success

M&A shouldn’t decrease the payments integration support, resources, or tools available to you. Rather, you should work with a partner that helps you successfully monetize payments so that they become a part of your growth strategy. You can even find payment companies that will literally invest in your company with capital infusions that you can use to cover development costs or new customer incentives that fuel your growth.

Understand Your Payment Partner’s Culture and Values

Regardless of what captures your interest in a potential payment solution, make sure you know the team, not just the technology or how easy payment integration will be. Although there’s no predicting what the future will hold, the best move is to look into a company’s history, including the average tenure of the team you’re working with.

The more you know about your payments partner’s company, its business model, corporate practices, and customer and partner support structure, the better you’ll position your company in the long run.

If you’re ready for a partnership designed for your success now and in the future, contact us.