# Same, but different: how payments became commoditized – and what payment providers can do about it
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-01-30
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Why Customer Service is Crucial in Payment Processing
Meta Description: Discover why exceptional customer service is crucial for payment providers to stay ahead in a commoditized market. Learn how to differentiate and adapt.
URL: https://financedigest.com/same-but-different-how-payments-became-commoditized-and-what-payment-providers-can-do-about-ithtml

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_By Peter Caparso, President North America, [Checkout.com](http://Checkout.com)_

![Peter Caparso, President North America, Checkout.com](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/peter-caparso-1736843037137-compressed.jpg)

Peter Caparso, President North America, Checkout.com

The thing about technology is that it’s not really just about the technology. Product is crucial, but there are many factors influencing how and why a product takes off, including market fit, timing and how the product is brought to market.

Payment processing is essentially a utility – and merchants neither need nor want radicalism from utility providers. They just want greater efficiencies and better performance at the right price.

Customer service can therefore make a real difference. When it’s egregiously bad or exceptionally good, it’s noticed, but too many businesses – across all industries – are content with letting theirs sit within the baseline-to-average range.

In a heavily commoditized [market like payments](https://www.financedigest.com/contactless-payments-spirit-willing-but-is-the-market.html "Contactless Payments: Spirit Willing but is the Market?"), this is a dangerous attitude, and one that will leave merchants susceptible to change.

**Commoditization and complacency**

Commodities are in high [demand because of the valuable function](https://www.financedigest.com/functional-extracts-market-potential-growth-share-demand-and-analysis-of-key-players-forecasts-to-2029.html "Functional Extracts Market Potential Growth, Share, Demand and Analysis of Key Players – Forecasts to 2029") they serve; but the problem is that by definition, they don’t leave much room for differentiation. And in many instances, the tech [boom of the last few decades](https://www.financedigest.com/analysis-consumer-boom-nearly-over-as-central-europe-heads-into-decade-of-peril.html "Analysis-Consumer boom nearly over as Central Europe heads into “decade of peril”") has led to oversaturation.  Most markets are experiencing this to one degree or another: if a customer becomes unhappy, they’re very comfortable switching to a provider that can do better. Indeed, some 54% are being driven to the competition because of poor service, according to Racounteur’s [Future Customer](https://www.financedigest.com/cracking-the-code-of-customers-future-value-in-retail.html "Cracking the code of customers’ future value in retail") Report 2017.

[Payment providers are no exception to this trend](https://www.financedigest.com/top-5-payment-trends-for-2016.html "TOP 5 PAYMENT TRENDS FOR 2016"). In the age of eCommerce, merchants can’t function without them, but they have no special need for any particular provider. They want to [keep up with the market](https://www.financedigest.com/uk-housing-market-keeps-momentum-but-slowdown-ahead-halifax.html "UK housing market keeps momentum but slowdown ahead: Halifax"), adjust to important trends, attract customers, retain them, and make a profit. Providers have to supply essentials such as mobile and desktop functionality, and they need to have clear strategies for the implementation of voice-activation and other emerging tools.

But without a clear focus on service, they’re still going to [fall behind](https://www.financedigest.com/behind-ftxs-fall-battling-billionaires-and-a-failed-bid-to-save-crypto.html "Behind FTX’s fall, battling billionaires and a failed bid to save crypto"). Amazon succeeds because its [innovation strategy](https://www.financedigest.com/poly-p-phenylene-2-6-benzobisoxazole-pbo-market-future-innovation-strategies-growth-profit-analysis-forecast-by-2029.html "Poly-p-phenylene-2, 6-benzobisoxazole (PBO) Market: Future Innovation Strategies, Growth & Profit Analysis, Forecast By 2029") is closely aligned to customer desires: when next-day delivery became too slow, it introduced same-day delivery; when that became standard, it introduced Prime Now. In myriad smaller ways, it tinkers and adjusts to meet the needs of its [target audience](https://www.financedigest.com/automotive-ecu-market-size-analysis-top-players-target-audience-and-forecast-to-2026.html "Automotive ECU Market Size, Analysis, Top Players, Target Audience and Forecast to 2026"). Equally, look at the example of Netflix: for all the talk of it revolutionising streaming, it ultimately succeeds because it lets people watch the things they want to watch, and on the devices they like using. But as well as introducing a better way of doing things, Amazon and Netflix invest significantly in educating the [market on why these innovations are important](https://www.financedigest.com/plaque-disclosing-aids-market-important-changes-in-industry-dynamics-during-2022-2028.html "Plaque Disclosing Aids Market Important Changes in Industry Dynamics during 2022-2028") and how they can use them to improve their lives.

Payments is similar. Many merchants think that the ‘old ways’ of doing things are non-negotiable. However, with the advent of new technology-first [payment companies](https://www.financedigest.com/why-are-companies-implementing-crypto-payments.html "Why are companies implementing crypto payments?"), the merchant is being taught how to get more out of their payment solutions and are learning to expect a level of service they didn’t get before.

We are seeing payments shift and become a strategic lever and expect this realization to continue to expand in 2018 as more companies look to payments as a critical customer experience factor, a source of [business intelligence](https://www.financedigest.com/social-business-intelligence-market-to-reach-a-valuation-of-us29-bn.html "Social Business Intelligence Market to reach a valuation of US Bn") and an opportunity to increase operating efficiency.

Exceptional [service and experience](https://www.financedigest.com/personalizing-the-workforce-experience-in-financial-services.html "Personalizing the Workforce Experience in Financial Services") isn’t just a good way to stand out: in a commoditized payments space, it’s the only way to stand out.

But how can you do it?

**Striking a balance**

Technological concerns [must be balanced against the need to provide customers with exceptional service](https://www.financedigest.com/as-saas-grows-financial-services-must-rethink-their-security-approach.html "As SaaS grows, financial services must rethink their security approach"). This is difficult to accomplish, but absolutely necessary.

Despite increasing automation, technology always leaves [gaps that only service](https://www.financedigest.com/tackling-the-cloud-skills-gap-in-financial-services.html "Tackling the cloud skills gap in financial services") can fill. [Payment providers should look for ways](https://www.financedigest.com/three-ways-blockchain-is-transforming-payments.html "Three ways blockchain is transforming payments") to actively collaborate with customers: look at their problems and build a relationship based on solving them. The intention should never be to sell them a product: it should be to forge a [strong bond via a shared](https://www.financedigest.com/global-shares-slide-dollar-gains-as-rates-rise-on-strong-data.html "Global shares slide, dollar gains as rates rise on strong data") understanding of the merchant’s needs.

Otherwise, the provider’s technology has to be perfect 100% of the time – addressing all [current needs and any needs that may emerge in future](https://www.financedigest.com/egg-incubator-market-extensive-analysis-of-key-segments-of-the-industry-and-emerging-growth-factors-with-current-trends-and-future-estimations.html "Egg Incubator Market: Extensive Analysis Of Key Segments Of The Industry And Emerging Growth Factors With Current Trends And Future Estimations"). This is something that’s obviously worth striving towards, but in practical terms it’s completely unrealistic. [Customer satisfaction requires human](https://www.financedigest.com/customized-innovation-to-drive-the-human-microbiome-market.html "Customized innovation to drive the Human Microbiome Market") intervention.

**Changing payments**

The aim should be to [move away](https://www.financedigest.com/exclusive-eu-to-move-away-from-emergency-phase-of-covid-pandemic-document.html "Exclusive-EU to move away from emergency phase of COVID pandemic – document") from the idea of payment provision – and towards a more agile style that incorporates dedicated account management. Banks are already moving in this direction (albeit slowly), and it’s not hard to see why. Raconteur’s Future Customer Report 2017 estimates that US financial services institutions are losing around $3 trillion a [year due](https://www.financedigest.com/mechanical-and-electronic-fuzes-market-one-the-most-booming-industry-in-upcoming-years-due-to-global-demand-in-industry-by-2027.html "Mechanical And Electronic Fuzes Market| One the Most Booming Industry in Upcoming Years Due to Global Demand in Industry by 2027") to their lack of agility.

But [reforming](https://www.financedigest.com/explainer-how-britain-is-exploiting-brexit-to-reform-finance.html "Explainer-How Britain is exploiting Brexit to reform finance?") a centuries-old financial institution means reckoning with the internal regulations and bureaucracy inherent to centuries-old organizations. In their pursuit of agility, banks are taking shortcuts and acquiring additional [tech services:](https://www.financedigest.com/financial-services-tech-tools-to-foster-innovation.html "Financial Services: tech tools to foster innovation") a recent example would be JPMorgan’s acquisition of WePay in October 2017.

Will it be effective? At this early stage, it’s hard to say. But the culture of a start-up – especially in a commoditized space – is hard to reconcile with the culture of a 200-year-old bank with a completely different philosophy. It’s easier to provide exceptional service when every customer matters: it’s harder when every customer is one data point in an inconceivably huge international network. Put simply: if consumers wanted impersonal [bank service](https://www.financedigest.com/the-future-of-financial-services-how-apis-are-fuelling-the-rapid-rise-of-open-banking.html "The future of financial services – how APIs are fuelling the rapid rise of Open Banking"), they already had that option. The human touch is all-important and will drive behaviour.

However, payment providers proceed, they must look to maintain an unrelenting focus on the customer. Their interests and their [demands must be accounted](https://www.financedigest.com/demand-from-retail-food-and-beverages-sector-to-account-for-over-70-of-refrigerated-display-cases-sales-study.html "Demand from Retail Food and Beverages Sector to Account for over 70% of Refrigerated Display Cases Sales: Study") for and anticipated. Competition is high and only intensifying: to compete, they must stay on [top of industry trends](https://www.financedigest.com/mycology-immunoassays-testing-market-growth-share-industry-dynamics-top-trends-and-regional-analysis-forecast-to-2027.html "Mycology Immunoassays Testing Market Growth Share, Industry Dynamics, Top Trends and Regional Analysis Forecast to 2027"), adjust their offering to suit customer needs, and work to supply the best possible experience for merchants. [Technology is part](https://www.financedigest.com/automotive-exterior-trim-parts-market-size-industry-report-analysis-growth-future-trends-top-manufacturers-and-technology-toyota-boshoku-corporation-plastic-omnium-cie-automotive.html "Automotive Exterior Trim Parts Market Size, Industry Report Analysis, Growth, Future Trends, Top Manufacturers And Technology| TOYOTA BOSHOKU CORPORATION, Plastic Omnium, CIE Automotive") of that, but it’s not the only part. Agility, service, and responsiveness are already all-important; in 2018, they’ll become absolutely paramount.


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