For Financial Institutions, Every Merchant-Services Conversation Is a Relationship Opportunity

For years, banks and credit unions viewed merchant services primarily as a source of non-interest income. It generated fee revenue, provided a useful service to business clients, and helped round out the institution's commercial banking offering. It was a helpful offering, but by no means the star of the show.

Today, however, the stakes are much higher.

With payments being an increasingly critical part of their business client's growth, it is now even more important for financial institutions to leverage merchant services for their commercial growth and success. While many financial institutions still view merchant services as a product, competitors increasingly view it as a relationship acquisition strategy. And in many cases, they're the ones who are winning.

Commercial Relationships Are More Vulnerable Than They Appear

Most business owners don't wake up looking to switch banks, but they do wake up looking to solve problems. That’s because modern businesses have to level up in many ways to succeed. Typically, they need to:

• Get paid faster
• Simplify operations
• Improve cash flow
• Reduce administrative burden
• Modernize customer experiences
• Integrate technology systems

Because if they don’t, they’ll struggle to maintain profitability and market relevance. They simply can’t compete and thrive without all of these forms of optimization.

That’s why payments have become the key pivot point. Today’s payments industry is no longer just about payment processing. Instead, it’s about providing businesses with systems that help them accomplish the above-mentioned goals.

To meet all their needs, today’s business owners are more likely to look to providers offering proprietary point-of-sale platforms, ecommerce solutions, integrated-payments offerings, or ways to integrate with ERP and software systems.

Merchant Services Often Creates the Deepest Day-to-Day Touchpoint

Think about how frequently merchants interact with their payments ecosystem. Every day they:

• Accept payments
• Review transactions
• Manage disputes
• Reconcile deposits
• Run reports
• Evaluate performance

Merchant services sits at the center of those activities. And for many businesses, their payments provider may interact with them more frequently than their financial institution does.

That creates another important reality: The organization closest to the merchant's daily operations often gains the greatest visibility into future opportunities. When a provider helps solve operational challenges, improve efficiency, or support growth initiatives, trust grows. And trust frequently leads to deeper conversations and engagement.

The Cost of Merchant-Services Leakage

Many financial institutions unknowingly experience merchant-services leakage. A business client may maintain a checking account with the institution but use another provider for payments.

At first glance, this may seem insignificant. The deposit account remains in place. The client relationship appears intact. But merchant-services leakage often creates a visibility gap. The financial institution loses insight into:

• Transaction activity
• Business growth trends
• Operational needs
• Technology priorities
• Expansion opportunities

Meanwhile, another provider is gaining and taking advantage of all those insights. Over time, that provider may become the business owner's primary advisor on payments, technology, and operational strategy. Once that happens, the financial institution is no longer the only trusted partner in the relationship.

Merchant Services Strengthens Relationship Stickiness

This is why leading financial institutions increasingly view merchant services differently. Rather than treating it solely as a revenue source, they view it as a relationship-retention tool.

When merchant services is integrated into the broader commercial banking relationship, several things happen:

• Business clients interact more frequently with institution-supported solutions.
• Relationship managers gain greater visibility into merchant needs.
• Cross-functional conversations become easier.
• Competitive displacement becomes more difficult.

In other words, merchant services helps create relationship stickiness. The more integrated the relationship becomes, the less likely a client is to look elsewhere.

The Strongest Institutions Make Merchant Services Part of the Relationship Strategy

The most successful financial institutions don't wait for a merchant-services conversation to happen elsewhere. They proactively position merchant services as part of their commercial-banking strategy.

They equip bankers to identify opportunities. They create visibility into merchant-services adoption. They track referrals and participation. They view merchant services as relationship infrastructure rather than simply a product line. Most importantly, they recognize that merchant services helps protect something far more valuable than processing revenue: The broader commercial relationship.

Strategic Questions Every Institution Should Ask

What percentage of your business clients currently use your merchant-services program? And what percentage are processing payments through someone else?

These percentages are a window into revenue optimization. According to an Accenture study commissioned by Fiserv, business customers that use their financial institution's merchant-services program generate 2.6 times more revenue than business customers who do not. The same study found that merchant account holders use nearly twice as many banking products as other business account holders.

Perhaps even more important, your answers may reveal where your institution is most vulnerable to competition. The institution that owns the payments conversation often gains the advantage in owning the broader banking relationship.

Speak to a Merchant-Services Expert

If you are with a bank or credit union that hasn’t yet made merchant services a core component of your commercial business strategy, now is the time to take a closer look at how payments drive client engagement and help keep competition at bay. Payroc is a leading payments platform that offers all the modern solutions your clients need. We partner with financial institutions to strengthen your commercial program and provide you with the resources and tools to keep merchant services in-house.

To find out how your current merchant-services program is performing, try out our live scorecard tool.