Payment facilitators and payment facilitators to be: on your marks, get set, Go!

MasterCard on Monday (June 27) announced a plan to add 40 million micro and small merchants to its base in five years. Double Diamond Group president Todd Ablowitz said that spells huge opportunity for both existing payment facilitators and near-term startups.

“This is staggeringly important,” Ablowitz said. “The entire merchant acquiring business will benefit from that commitment. I predict that the bulk of these merchants will be served by payment facilitators.”

James Hicks, executive vice president of global acceptance and solutions at MasterCard, agreed with Ablowitz.

“Payment facilitators have played an important role in expanding the electronic payments ecosystem in recent years,” he said. “By delivering new, innovative solutions and enabling card acceptance at more businesses in more locations, payment facilitators help merchants get paid and grow sales. The work payment facilitators do, and our collaboration with them, is an important component of our commitment to connect 40 million micro and small merchants to our electronic payments network within five years.”

Financial inclusion has been mostly concerned with providing the underserved and the unbanked with tools and transaction accounts, but for true impact, there needs to be an equal focus on both access and usage.

According to a MasterCard press release, “a number of large scale programs have seen limited success during the initial phase, as a majority of micro and small merchants—where most of the underserved shop each day—do not accept electronic payments. Where this occurs, accounts go unused or, in the case of social disbursement programs, funds are immediately withdrawn at ATMs.”

Ablowitz said tech companies are the cavalry in this battle.

“Banks and acquirers cannot make enough money on small merchants to hit their ROI targets so they don’t invest in small merchants typically,” Ablowitz said. “The key is to bring the merchant on cheaply and quickly. You need an instant onboard and you need an Internet- or app-based merchant application. The whole point of the payment facilitator is getting technology companies to solve these problems.”