Waterstone Management Group Paper Highlights Major Changes in Payment Industry Trends

CHICAGO - Nov. 10, 2014 - PRLog -- The payments industry has undergone dramatic changes in recent years. The continued acceleration of traditional online commerce and the increasing relevance of mobile are driving a new set of “omnichannel” consumer expectations. Big Data/Analytics, Internet of Things, the Cloud, and “as-a-Service” business models are creating new revenue generation and operating model opportunities, and changing the nature of competition and scale economics. Waterstone Management Group, in its most recent "Point of View" paper entitled "Payment Processors Under Pressure: Leveraging Software’s Customer Success Lessons to Survive and Thrive," outlines the challenges facing payments processors and recommends that they look to the Software industry for strategies to succeed.

"Payments processors are facing a multitude of challenges, including increased pricing pressure, demand for omnichannel capabilities, and expectations for greater support and value-added services," said Scott Haug, Partner at Waterstone Management Group and co-author of the report.

Waterstone’s point of view underscores the fact that payment processors are under intense pressure to re-evaluate business models as the industry continues to evolve towards “as a Service,” integrated payments solutions and services. The paper also highlights optimizing customer experience and leveraging post-sales services and support as an exceptional and underleveraged opportunity to enhance profitability and improve retention.  The software industry, having faced similar competitive pressures and technological advancements, is a useful case study in creating value through driving customer success.

"Through our work with software companies around their Cloud-enabled transformations to Software-as-a-Service models, we have seen an increased focus on improved customer experience and a strengthened role and contribution of services and support,” said Haug.  “These initiatives have successfully grown EBITDA, reduced attrition and enhanced customer lifetime value.”

Waterstone's whitepaper offers four key imperatives drawn from the Software industry that have direct relevance to the merchant payment processor space and that are essential to survival in this increasingly competitive business. Monetizing additional offerings and re-defining the offering portfolio to include more incremental services, premium offerings and expanded features will be necessary to drive additional revenue streams to replace the up-front fees that have been lost in the “as-a-Service” revolution. Further, providers must embrace new delivery channels, including mobile and social; and they must be able to more efficiently manage customer success and retention over a longer period of time. Lastly, re-thinking the value-add process will allow providers to become a more important part of the customer's business model beyond initial setup and training, instead focusing on a portfolio that offers support and services throughout the entire lifecycle.

"The payments industry is undergoing rapid changes in both capabilities and customer expectations," added Haug. "We see tremendous opportunity for those merchant acquirers/processors who embrace this opportunity to drive growth and create value through focused improvement in customer success."

About Waterstone Management Group

Waterstone Management Group was founded in 2003 with the mission to transform technology and service businesses.  To serve business leaders and private equity investors who share our view of the technology industry, we formed a specialized, expert-led firm which combines strategic advisory services and executive-level operating experience.  We work collaboratively with senior management, corporate boards, and investors to address issues related to driving growth, margin improvement, and assessing incremental business expansion/investment opportunities.  For more information about Waterstone, please visit waterstonegroup.com and follow the firm on Twitter (@WaterstoneMG).