Selecting Your Provider as POS Merchants – The Underrated Revenue Accelerator

In the recent dynamic, the significance of payments often goes unrecognized despite being a key determinant of prosperity. The strategic importance of cultivating and nurturing payment partnerships, alongside the challenges involved in navigating them, highlights the critical role they play in shaping the success of merchant businesses. Furthermore, the process of evaluating and selecting the right payment provider demands careful consideration and strategic foresight. This discussion aims to shed light on the often underrated yet pivotal role of payment providers in driving merchant’s prosperity. By addressing the strategic importance, challenges, and considerations associated with these partnerships, businesses can gain valuable insights into optimizing their payment ecosystems and unlocking new avenues for growth and customer satisfaction.

The Strategic Importance of Payment Providers

The seamless integration between Independent Software Vendors (ISVs), Electronic Cash Register (ECR) providers, and Payment Service Providers (PSPs) is of paramount importance for retailers in today’s digital landscape. ISVs develop software solutions that cater to specific business needs, such as inventory management, point of sale systems, and customer relationship management. On the other hand, ECR providers offer the hardware and infrastructure necessary to run these software solutions at the POS. The collaboration between ISVs, ECR providers, and PSPs allows merchants to access a wide range of integrated and tailored technological solutions that can enhance operational efficiency, streamline transactions, and provide valuable data insights. PSPs play a crucial role in this ecosystem by offering secure and seamless payment processing solutions across various channels, ensuring that merchants can accept diverse payment methods and providing robust fraud prevention measures. This empowers merchants with advanced business tools and ensures seamless compatibility between software, hardware, banks and payment processing, ultimately leading to a more seamless and productive business environment.

As a leading consulting firm, 22nd has successfully collected an extensive database of over 8000 providers in the merchant payment and software ecosystem, focusing as well on ISV and ECR in Europe. This rich repository of providers’ data equips 22nd senior consultants and customers with the knowledge and opportunities to forge successful sourcing, partnerships, and M&A that drive growth and enhance customer satisfaction.

Here’s how ISVs and ECRs are shaping the market:

  • Global Revenue and Market Shifts: Global Payments Market was valued at USD 2.64 trillion in 2023 and is anticipated to grow at a compound annual growth rate (CAGR) of 10.5% through 2029, reaching USD 4.78 trillion by that time. This growth is attributed to the widespread shift from cash to digital payments, with contactless payments emerging as the preferred mode of payment in many nations. This transition underscores the increasing role of fintechs and software providers, who are not only targeting high-margin client segments but are also innovating with data-rich, real-time payments infrastructure.

  • Technological Advancements and Efficiency: ISVs develop advanced technological solutions to fulfil the needs of the merchants. These include automated invoicing, reconciliation, and payment tracking, which significantly simplifies the payment process, reducing errors and delays. That’s where the integration depth and the partnership between the ISV and the payment providers are highly important. Moreover, retail management tools provided by these ISVs offer real-time tracking, customizable payment processing, and automated reminders, optimizing cash flow and enhancing operational efficiency.

    Example of innovative payment technology: Palm-based payment solutions utilize advanced biometric technology to enable secure and convenient transactions. This innovative method involves the authentication of individuals’ identities through the unique vein patterns in their palms. By using specialized palm recognition technology, users can link their payment information to their palm prints, allowing for touchless and secure transactions at supported payment terminals.

  • Security, Global Reach, and Customer Experience: On the side of the payment provider, they integration solution with enhanced security protocols, support for multi-currency transactions, and global payment networks facilitating secure and efficient cross-border transactions. These are crucial services for the retail industry’s global operations. Additionally, the payment providers contribute to improved customer experiences by offering personalized solutions and fostering deeper business relationships, which in turn opens doors to new markets and drives growth.

    Example of innovative security technology:
    “Tokenization” security measure replaces sensitive credit card information with a code or token, denying hackers access to the actual credit card number. Tokenization ensures privacy, allows customers to make secure payments, and mitigates the risk of data breaches. This technology represents a significant advancement in securing payment transactions and protecting sensitive customer information, ultimately contributing to a safer and more secure payment ecosystem.

These strategic partnerships with ISVs, ECRs but also PSPs not only enable companies to navigate the complexities of the retail payments landscape but also position them to capitalize on emerging opportunities, ensuring long-term success and competitiveness.

Navigating the Challenges of Payment Providers

Navigating the challenges of payment provider selection requires understanding the multifaceted obstacles and strategizing effectively.

1. Market Fragmentation and Competition:

    • Common issues associated with market fragmentation in payment providers include:

      • Diverse Standards and Technologies: Different payment providers may adhere to varying technical standards and utilize diverse technologies for payment processing, leading to compatibility issues and hindering seamless integration between different systems.

      • Lack of Interoperability: The absence of standardization and interoperability among payment providers can create barriers to seamless transaction processing, making it difficult for merchants to accept a wide range of payment methods and for consumers to make payments across different platforms.

      • Complex Integration Processes: With a fragmented market, merchants may face challenges in integrating multiple payment solutions into their systems, leading to increased costs, technical complexities, and potential operational inefficiencies.

      • Regulatory and Compliance Challenges: Market fragmentation can result in a lack of uniform regulatory frameworks and compliance standards across different payment providers, leading to additional complexities in adhering to various regulations.

    • Increased competition and technological advancements have compressed fee margins, urging incumbents to adopt a challenger mindset and develop next-generation technology.

    • The 22nd’s database boasts a robust collection of over 8000 companies, spanning across 13 distinct verticals and thoughtfully selected market leaders mostly in the EU. This extensive pool of providers offers a diverse range of business and payment solutions opportunities for collaboration. This is enabling businesses to effectively address their specific needs and capitalize on the expertise of established industry leaders.

2. Operational Challenges

    • A significant challenge for businesses lies in the seamless integration between ECRs, terminals, and omnichannel solutions. This challenge arises from the need to harmonize diverse technologies and platforms to ensure a cohesive and streamlined payment ecosystem. The integration process requires addressing compatibility issues, standardizing communication protocols, and creating seamless interoperability between these components.

    • The issue of payment reconciliation is a significant concern for businesses. Ensuring that payments from various sources, such as in-store, online, and mobile, are accurately and efficiently reconciled can be a complex and time-consuming process. It is crucial for businesses to streamline this reconciliation process to minimize discrepancies, optimize financial transparency, and gain valuable insights into their sales data.Therefore, consulting firms play a pivotal role in helping businesses enhance payment reconciliations by leveraging their expertise, best practices, and technology solutions. Through process optimization, industry alignment, technology integration, and data analysis, consulting firms empower businesses to achieve accurate, efficient, and insightful payment reconciliations.

    • Extending coverage for Alternative Payment Methods (APMs) and enhancing eWallet acceptance is a pressing issue in the payment industry. The diverse landscape of APMs and eWallets demands comprehensive acceptance strategies to cater to varying customer preferences and regional payment methods. Improving APM coverage and eWallet acceptance at POS terminals requires collaboration between payment service providers, financial institutions, and merchants to integrate a wide array of payment options seamlessly.

By addressing these challenges with strategic approaches and leveraging technology, businesses can navigate the complexities of payment provider partnerships, ensuring a competitive edge in the retail industry.

Evaluating and Selecting the Right Payment Provider

When evaluating and selecting the right payment provider, consider the following strategic steps to ensure alignment with your business goals and operational requirements:

  • Secure and Reliable Payment Processing System

    When evaluating a payment provider for POS operations, ensuring the security and reliability of the payment processing system is paramount. The provider should adhere to industry-standard security protocols to safeguard sensitive transaction data. Additionally, the system should be capable of handling large retail transactions efficiently, without compromising on speed or security.

  • Seamless Integration with POS Systems

    A crucial factor in selecting the right payment provider is its ability to seamlessly integrate with existing POS systems. This integration ensures that transactions at the point of sale are smooth, quick, and error-free. Seamless integration with the retail business’s current technology infrastructure is essential to minimize disruptions and streamline operations.

  • Competitive Pricing and Transparent Fee Structures

    An ideal payment provider should offer competitive pricing and transparent fee structures. This transparency allows the retail business to accurately forecast and manage its costs. Understanding all associated fees, including transaction fees, interchange fees, and any additional charges, is essential in making an informed decision.

  • Support for Multiple Payment Methods

    The chosen payment provider should support a wide range of payment methods to cater to diverse customer preferences. This includes the acceptance of credit/debit cards, ACH transfers, and emerging technologies such as digital wallets. By offering flexibility in payment options, the retail business can enhance customer satisfaction and expand its market reach.

  • Data Analytics, Sponsoring, Marketing & Cobranding

    Often not known by merchants are the possibility to partner with PSPs and do benefit of:
    • Sponsoring from PSPs to get better conditions on certain schemes (Visa, Mastercard, …) seasonally,
    • Co-brand partnership that are designed to strengthen the bond with your customers. It can increase loyalty, attract new customers, lower your acquisition costs and help keep your business top-of-mind,
    • Getting payment data from your PSPs allows the crafting of data-driven, intelligent campaigns that are specifically designed to segment and target a certain group of customers.

  • Excellent Customer Support

    Customer support on-site is a vital service that payment providers should offer to ensure seamless and efficient payment operations for businesses. On-site customer support can encompass a range of services, including troubleshooting technical issues POS terminals, providing guidance on payment processing, and offering immediate assistance in the event of system malfunctions or disruptions.

    Example: Imagine a scenario where a luxury boutique nestled in the serene mountains encounters an unexpected issue with its payment terminal during a busy holiday weekend. The terminal’s connectivity is disrupted, causing delays in processing transactions and inconveniencing high-end clientele. In this situation, the importance of good customer support from the payment provider becomes evident:

      1. Timely Troubleshooting: A responsive and efficient customer support team from the payment provider can swiftly troubleshoot the terminal issue, minimizing downtime and ensuring that the boutique can continue to serve its customers seamlessly.

      2. Personalized Assistance: Given the boutique’s remote location and specialized clientele, personalized assistance from the payment provider’s support team can address the unique needs and concerns of the boutique, demonstrating an understanding of the boutique’s distinct operational requirements.

      3. Maintaining Brand Image: Effective customer support helps the boutique uphold its reputation for exceptional service, even in challenging circumstances. By swiftly resolving the issue, the payment provider contributes to preserving the boutique’s brand image and customer satisfaction.

      4. Operational Continuity: A reliable support system ensures that the boutique can maintain operational continuity, preventing potential revenue loss and customer dissatisfaction during peak business periods.

      5. Future Readiness: Through proactive communication and support, the payment provider can guide the merchant in implementing measures to prevent similar issues in the future, thereby enhancing resilience and readiness.

These steps facilitate a methodical approach to selecting a payment provider that aligns with your strategic goals, ensuring a mutually beneficial relationship that supports long-term success in the payments landscape.

Outstanding results from our last project 

22nd successfully undertook a project focused on enhancing the omnichannel payment experience for B2C customers within the SME e-commerce backers’ chain in Switzerland. With over 10 subsidiaries and 65 employees, the company aimed to bolster their omnichannel payment infrastructure to cater to the evolving demands of the digital commerce landscape. Notably, approximately 25% of their revenue was attributed to delivery services in the B2B sector, underscoring the significance of their expansion efforts.

The project encompassed a comprehensive exploration and enhancement of various vital aspects, including omnichannel payments, local and alternative payment methods, data analysis and reporting, and reconciliation. By delving into the realm of omnichannel payments, the project aimed to create a cohesive and seamless payment ecosystem that resonates with the diverse needs of modern consumers. This involved embracing a variety of digital payment methods such as internet banking, mobile wallets, digital payment apps, and more, while also optimizing the in-store payment experience. 

Furthermore, the project emphasized the significance of local and alternative payment methods, acknowledging the importance of catering to regional preferences and expanding consumer accessibility. Additionally, a strong focus on data analysis and reporting was maintained to derive actionable insights and drive informed decision-making. The reconciliation process was also a key area of improvement, aiming to streamline payment reconciliation, reduce operational costs, and enhance overall financial transparency. This holistic approach aimed to not only meet the evolving demands of the market but also to drive customer satisfaction, operational efficiency, and sustainable growth.

The outstanding results by the project completion were:

  • AR Recovery Process: – 19%
    This enhancement in AR recovery reflects the effectiveness of the project’s initiatives in optimizing the collection process and minimizing outstanding balances, ultimately contributing to improved financial health and cash flow.
  • Total Costs: – 12%
    This reduction in costs signifies the enhanced operational efficiency and streamlined workflows, leading to more cost-effective collections procedures.
  • Fraud: – 3% in fraudulent activities related to payment collections.
    This outcome highlights the project’s success in implementing measures to mitigate fraudulent activities, thereby fortifying the security and integrity of the accounts receivable processes.
  • Turnover Impact: +11%
    This increase in turnover impact underscores the project’s effectiveness in bolstering the overall financial performance and cash flow through improved collections strategies and enhanced customer payment behaviours.

These outcomes underscore the effectiveness of their initiatives in fortifying their payment infrastructure and optimizing their operational efficiency, ultimately driving positive financial impact.


In this exploration, we have delved into the crucial role that payment providers play in strengthening the retail industry, highlighting their vital significance in guaranteeing smooth transactions and maximizing business operations. We’ve seen how aligning with the right payment provider can significantly enhance operational efficiencies, advance technological integration, and elevate customer experiences, all while navigating the complex landscape of global payments with agility and security. These strategic collaborations not only foster a competitive edge but also drive substantial growth, revealing the indispensable value of choosing the right payment processing ally.

As the company is growing, it’s imperative for retail owners to consider payment partnerships that support both e-commerce and POS, to not only stay relevant but thrive in this rapidly evolving market. Actively seeking partnerships that align with your business objectives will pave the way for enhanced performance and profitability and also can improve your marketing toolbox by providing data insights or co-marketing. In doing so, companies not only set the groundwork for long-term success but also position themselves at the forefront of innovation and market leadership in the retail industry.