The Peril of Bank-Owned Gateways

Most of us are familiar with the expression, “Don’t bite the hand that feeds you.” For those who aren’t, it basically means don’t do anything that might hurt those that you rely on. The same meaning applies every time we say something along the lines of, “well, they sign the paychecks, so we’ve got to keep them happy.” Sound familiar? Of course it does. To some extent, nearly all of us have made concessions to keep our bosses, investors, or partners happy. With this in mind, it should come as no surprise to us that businesses do the same thing.

Businesses cater to whatever group or organization “signs their paychecks.” This is why we continually remind current and potential customers that Shift4 is proudly (and completely) independent and that we receive revenue only from our merchant customers. That means we only answer to them and not to any other entity.

Unfortunately, we cannot say the same for many of our fellow payments-industry players. In fact, many in the payments industry actually succeed when you fail. For example, merchant banks and processors typically make higher profits on processing by charging more money in the form of downgrades of the contractual discount rate. These downgrades come as “penalties” for not processing a payment in the way prescribed by their confusing contracts.

Historically, payment gateways stood between banks and processors and their merchants. As an intermediary, gateways were able to be merchant-focused and to help keep their customers from paying too much. Unfortunately, in this age of start-ups, mergers, and acquisitions, these “independent organizations” usually don’t last long.

Seeing their capability to control revenues by buying out gateways, many banks and processors have gone gateway shopping. As these businesses have partnered with, bought out, taken over, or invested into payment gateways, they've created conflicts of interest that never end in the merchant’s favor.

It only makes sense: when their most effective way to create revenue is to fine and downgrade their customers, actually helping their customers becomes detrimental to business. If merchants understand perfectly what they need to do, they make fewer mistakes, so giving clear advice likewise becomes bad for their bottom line.

Once you’re tied to one of these bank-owned gateways, you become a captive source of revenue. Rate creep begins, then the gateway works to push you towards a certain bank or processor – not the one that is best for you, but the one that makes them the most money. Then comes the additional services (security, fraud, auditing, etc.) that they pitch to you as a “must have.” When you sign up, they get a commission, and you end up footing the bill for a service that should have been included at no cost to begin with.

In case it’s not obvious from the tone of this article, we are not big fans of this method of doing business. We find it deceitful and we like nothing more than helping merchants flee those banks and processors and the gateways that partner with them.

With Shift4, the difference is obvious. Shift4 is the world’s largest independent gateway provider. We do not answer to, profit from, nor are we owned by any bank, processor, MPS/ISO, or investment body. We are a self-funded, family-owned business with an executive team that has been together for more than 30 years. We help merchants avoid the pitfalls and perils of the payments industry by providing the information that other gateways or providers don’t care to share. Our technology is developed and owned solely by us, which gives us the power to provide the best payment gateway, DOLLARS ON THE NET®, and secure processing for just pennies per transaction.

Shift4 will always have our merchant customers’ backs and will never leave them wondering where our interests lie. As merchant advocates, our focus is on them and their success.


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