Modernizing Your Merchant-Services Program: How to Make the Right Next Move

For many community and regional banks and credit unions, merchant services have long existed in the background as an add-on offering managed by a third-party vendor, often with limited visibility or engagement from internal teams.

In some cases, bankers don’t even know who their institution’s merchant-services provider is, let alone how the program performs or contributes to broader commercial growth.

This model made sense at one time. Merchant services were viewed as a necessary but secondary function, something to “check the box” for business clients. But that reality has changed.

Today, merchant services sit at the center of the business banking relationship. Payment's data drives insights. Payment acceptance drives deposits. And the ability to deliver seamless, integrated experiences increasingly determines whether a financial institution can win—and keep—commercial clients.

While the largest financial institutions are investing in fully integrated or embedded payment platforms, most smaller and midsized institutions are not there yet. The good news is: you don’t need to be at least not immediately. The real opportunity lies in taking the right next step: modernizing merchant services with the right partner and building a foundation for growth now and into the future.

The Problem: Legacy Programs Limit Growth

For banks and credit unions with underperforming merchant-services programs, the challenges are often consistent.

It tends to start with a hands-off vendor. Many merchant-services vendors operate completely independently, with little alignment to your commercial retention and growth strategy. And among those disconnected vendors, few are actively engaged at all. Sure, they may follow up on a referral, but they’re not working closely with you to co-market, generate interest, or provide training and incentives to your bankers. These types of programs are little better than no program at all.

Other weaknesses often include limited reporting, with little insight into merchant portfolios, performance or revenue, and missed cross-sell opportunities because merchant services aren’t integrated into commercial conversations. When merchant services remain disconnected from the broader banking relationship, lost revenue, weaker client retention, and missed growth opportunities are the result.

The Shift: Merchant Services as a Strategic Growth Driver

Forward-thinking banks and credit unions are rethinking this approach. Instead of treating merchant services as a passive offering, they are wisely positioning it as a strategic partner to lever for commercial growth.

Why? Because merchant services:

• Anchor the primary operating account (DDA)
• Provide daily transaction visibility into business performance
• Increase client stickiness and reduce attrition
• Open the door to deeper relationships (lending, treasury, advisory)

In other words, merchant services are no longer just about processing payments they are about owning the financial relationship.

Step 1: Reevaluate Your Merchant-Services Partner

Modernization starts with a simple but critical question:

Is your current partner helping you grow or just helping you process payments?

The right partner does a lot more than provide infrastructure. They should act as a strategic extension of your institution. If your current provider is largely invisible or operates independently of your team, it’s time to reassess.

The right partner should offer:

• Flexible technology that evolves with your needs
• Support for multiple payment environments (including emerging use cases)
• Operational expertise to reduce internal burden
• A clear roadmap toward integration and embedded experiences

This ensures that as your institution grows, your merchant-services program can grow with it without requiring a complete overhaul.

Step 2: Empower Your Bankers

Even the best merchant-services partner can’t drive growth if your frontline teams aren’t engaged.

To change this, your partner should help you train and engage your bankers. When your team understands that merchant services support client retention and growth and are part of a broader financial solution, they will begin to have strategic conversations with clients conversations that move the needle.

Your partner should also provide tools and messaging that make it easy for your bankers to introduce merchant services. When bankers are confident discussing payments, merchant services become a natural part of every commercial interaction—not an afterthought.

Step 3: Prioritize Visibility and Insight

One of the biggest gaps in legacy programs is the lack of transparency. Modern merchant services should provide clear reporting on portfolio performance, visibility into transaction activity and trends, insight into revenue contribution, and tools to identify cross-sell opportunities.

Without this visibility, it’s difficult to manage or grow a merchant portfolio effectively. With it, merchant services become a data-driven growth engine.

Step 4: Deliver a Better Merchant Experience

Today’s business clients expect more than basic payment acceptance. They want simple onboarding, reliable and modern payment technology, omnichannel capabilities (in-person, online, and mobile), and clear, accessible reporting.

If your merchant services program falls short in any of these areas, it creates friction—not just for payments, but for the entire banking relationship. Modernizing your offering ensures that your institution can compete—not just with other banks and credit unions, but with the large fintech providers and independent payment companies that are currently stealing away your business clients and capturing their deposits.

Step 5: Build Toward Integration

Choosing a strong merchant-services partner that will actively collaborate with you now in strengthening steps 2, 3, and 4 is how you build toward integrating merchant services more and more tightly into your commercial offerings. After all, that’s what your business clients want—a seamless, one-stop shop for all of their business’s financial needs.

Over time, the right partner will not only engage your bankers and improve retention, acquisition, and deposits, but they will also connect merchant services into digital banking, align payments data with treasury and lending, and create that unified client experience that your business-account holders expect.

Community and regional financial institutions that start working with a strategic merchant-services partner today will find themselves on the right technology path tomorrow. Soon you will be able to deliver payments as a native part of your banking platform, making you competitive with national banks and global fintechs.

The Opportunity Right Now

Merchant services represent a significant and often underutilized opportunity. By modernizing your approach, you will immediately begin strengthening commercial relationships, increasing deposits and account primacy, generating new, recurring revenue streams, and differentiating your institution in a competitive market.

You don’t need to become a fully integrated payments platform overnight. But you do need to take the next step.

To learn more about leveraging and enhancing your merchant-services partnership, connect with me by selecting “Get started” here.