Bank of America Bets on Value-Added Services for Merchant Growth

With the emergence of cloud computing, 5G and advanced technologies, merchants can take advantage of enterprise-grade solutions designed to run their operations more efficiently. The lines between providers of those solutions are blurring.

“You’re seeing software vendors becoming payment processors,” and vice versa, as Bank of America Merchant Solutions Head Wally Mlynarski told PYMNTS as part of the “What’s Next in Payments” series on the changing service economy. “The combination of the two solutions is changing the buying decision for these customers,” he said. “And they’re asking for more. They want more from their payments providers to be able to meet their needs.”

The merchants themselves are expanding their own business models, which typically involve selling direct to consumers. In doing so, they are leveraging the power of their brand for digital direct-to-consumer experiences, which require the use of payment facilitation or marketplace models. While these models reduce storefront overhead, they drive a new need in helping contend regulatory changes, security concerns and meeting the demands of burgeoning populations of end customers.

Value-added services enable those merchants to garner repeat business, to collect data as consumers buy goods and services online — and merchants can offer loyalty and rewards as well as individualized engagement with consumers.

What SMBs Want

Bank of America, for its own part, has conducted its own surveys of small- to medium-sized businesses (SMBs), to ask what merchant services meant to those clients. The customers said they wanted offerings from service providers that help them run every aspect of their business. “They’re looking to these merchant processors and acquirers to provide more than just a transaction service,” Mlynarski said.

These growing companies want automated employee time tracking, data management to optimize inventory and streamlined B2B payments — along with marketing tools to enhance their presence across digital and mobile channels.

For Bank of America, Mlynarski said, “We don’t stop at integrating into the merchant’s business — we want to integrate into the financial lives of the merchants well. We try to bring the bank to our customers and operate in their territory,” integrating, for example, lending services so that capital is available as needed, with payments tied to back-office functions so that merchants can pay their suppliers efficiently with virtual cards.

Bank of America, Mlynarski said, has used a partnership approach to deliver those value-added service to merchant clients in the retail, restaurant and healthcare verticals, among others.

“Building those partnerships fill any gaps we might have,” he said, and underpin long-term sustainable growth. In some cases, he said, client firms are seeking data and analytics functions from those clients, with integrations into enterprise resource planning (ERP) systems. Healthcare is a key example here, where back-office money movement needs to break free from paper-based communications and paper checks. Bank of America, he said, has been working to digitize those operations.

Looking ahead, no matter whether they are consumer-facing or emanating from the back office, payments themselves should be intuitive and experiential, said Mlynarski, adding that transactions “should be in the background and automatic,” and they soon will be with artificial intelligence (AI) and biometrics.

“You shouldn’t be asked ‘How was your payment experience?’” he said, “Because it should just happen.

“We’re listening to our customers and meeting them where they are in their payments experiences,” Mlynarski said, “and the landscape is vast and ever-changing. We’re there to meet the mark with our customers.”