The Vantiv-WorldPay Merger Could Transformative for Payments IF They Do These Two Things

The news of the prospective $9.9 Billion dollar merger between acquirers Vantiv and WorldPay creates an enormous opportunity for a legendary pairing and a shift in the payments industry. But are Vantiv and WorldPay planning to really modernize and transform payments to meet the challenges of a frictionless economy? To do so would require a commitment to both integration and upgrading.
Integration and upgrade go hand-in-hand, because if the plan is to fully integrate these two processing systems, then it would be professional malpractice not to upgrade the functionality too. But we have seen payments processing engines acquired before, and there haven’t been any real changes made in terms of integration. It’s actually more common to see the transfer of merchants from one system to another after an event than it is for two companies to combine their systems to produce an entirely new and better one. Upgrading legacy systems is a thorn in the side of all financial services companies right now, and payments processors and acquirers are no exception. But just because it is difficult doesn’t mean it shouldn’t be done.
If Vantiv and WorldPay were to fully integrate their systems and add some new functionality, these two companies could provide the foundation for an upgraded payments processing experience fully equipped for the frictionless economy. This scenario would mean that the merger could advance the payments industry and benefit merchants by providing more opportunities and choices. If the new Vantiv/WorldPay entity were to fully integrate and upgrade there could be a shift in the payments industry landscape through the following:
- Advance Vantiv’s march toward industry end-to-end services. The major differentiators in the payments’ industry today are price (“what are you charging merchants?”) and connections to third-party services, (“do you integrate with my software, my bank, and my CRM?”)
Vantiv appears to have decided that acquiring the most desirable third party services is more beneficial than just building the connections to them, and they’ve been consistently gobbling up companies for about five years. Since their acquisition of Litle&Co’s recurring payments engine in 2012, Vantiv has been strategically acquiring companies that contribute technology and services to their platform (and the merchant accounts that go along with it.) The acquisition of Moneris in 2016 allowed Vantiv to gain merchant bank channels and an impressive analytics suite, and the 2017 acquisition of Paymetric gave Vantiv a powerful CRM to help their merchant base manage their own customers to a higher degree. By merging with WorldPay, Vantiv will have access to some solid technology, including the new WorldPay Total Gateway. If Vantiv were to integrate all of these pieces, Vantiv could ostensibly take the customer from sales and acquisition, through gateway and processing, to settlement and beyond — especially for those merchants offering subscription and/or continuity based products/services. Will it ever be done?
2. Enhance Vantiv’s Global reach. WorldPay brings Vantiv an obviously larger global footprint.
But with that footprint also comes the expansion of the currencies Vantiv will be able to settle for their merchants. In addition, the WorldPay functionality means Vantiv merchants will be able to accept a wider array of payment methods from their customers, ensuring a more seamless transaction flow. Merchants will find this combination of options appealing, since the current best solution for many merchants is often separate acquirers for the US and international transaction volumes. If through robust integration and upgrade merchants currently on the Vantiv system were to have access to the WorldPay’s global functionality, those merchants would benefit from these options by being able to sell goods and services more broadly. Is it in the works?
3. Increase Profitability for Vantiv and WorldPay Merchants. WorldPay’s clean APIs could be used to enhance the intricate functionality Vantiv acquired with Litle&Co. in 2012.
If Vantiv can successfully integrate things like the prepaid balance flags and mass affluence indicators they gained from the Litle&Co. technology, Vantiv could possess some valuable data points. That data could be leveraged to increase overall merchant profitability if the data are placed in the hands of the right analytics tool. When merchants are more profitable, the Vantiv/WorldPay entity would stand to rake in considerably more revenue. Is merchant profitability on their radar?
4. Attract Merchants by Providing More Options. WorldPay is currently negotiating a new fraud screening relationship with a major provider.
Assuming integration would mean that Vantiv’s current relationship with Threat Metrix will be offered in addition to this new WorldPay offering, merchants could two fraud screening options available to them. Providing the choice of multiple providers will only help to differentiate the Vantiv/WorldPay combination from the competition, catapulting the newly merged company to the top of the list for many merchants seeking an acquiring relationship. Will merchant focus grow under the new terms?
Now for the bad news: First, integrating legacy systems is a complex and expensive process, and while the benefits far outweigh the drawbacks, very few large companies are easily convinced that integration is worth the dedication of resources. (It’s far more common for them to claim they’ve integrated when something more like cross-pollination has really occurred.) Second, both Vantiv and WorldPay are formidable companies in their own right. But even if these two fully integrated their systems, they still wouldn’t have “the dream” modern updated payments processing system unless they were also committed to upgrading their payments processing to meet the needs of the frictionless economy, which would require one more critical piece of technology. That upgrade would apply business operational and other nontraditional data points to transform the new, fully-integrated Vantiv/WorldPay payments processing system into a modern, customizable exercise.
Truly legendary pairs don’t come along every day. In this case, whether fully integrated and updated or through some other scenario, the Vantiv/WorldPay merger could provide the opportunity for the new entity to emerge as a leaner, more modern, tech-focused company with end-to-end services for merchants. Payments industry insiders will be watching to see which way they choose to go with it.
About FinTech Payments Corp: FinTech Payments Corp (FPC) upgrades legacy payments processing systems for frictionless commerce via API with its patent-pending STARRS data analytics and machine learning software. STARRS software productizes the proven technology used by CNP-Solutions since 2011 that has increased the profitability of enterprise merchants by $1.7 Billion dollars and their processors’ revenue $106 Million dollars. Safe, Easy and Agile, STARRS slides beneath the processor’s existing system, has no regulatory impact, and does one very important thing: uses nontraditional business operational data to customize processing for every merchant to result in more completed transactions. By gaining more approvals, STARRS ensures continuity for recurring and re-occurring merchants whose offerings rely on a stored payment method: subscriptions, IoT, mobile, voice, hands-free, tap-to-pay, and others.
