Merchants Demand Value at Every Touchpoint From Their Payments Processors

Competition is reshaping payments, and transactions are no longer the main event. They’re just the opening act.

As commoditization drives down margins and disruptors reset expectations, payment processors are pivoting from pure infrastructure providers to strategic enablers. The new frontier? Customer-centric value-added services (VAS).

“When we think of optimization, we think of it in four pillars, starting with the consumer optimization,” John Winstel, vice president of product management at Worldpay, told PYMNTS during a discussion for April’s “What’s Next in Payments: The Changing Service Economy.” “…Then cost optimization and conversion optimization. … And the last one’s risk optimization.”

Far from optional bells and whistles, these services are becoming the linchpin of long-term differentiation. This approach is reflective of a broader industry trend. As merchants demand more value from their payments partners, processors are responding with advanced analytics, fraud tools and seamless user experiences.

“Some of these types of solutions were offered by the card schemes in the past,” Winstel said. “But we also see ourselves as being a distribution partner for some of those products.”

Offerings such as account updater tools and network payment tokens are now being provided directly by Worldpay in a turnkey manner for clients, among other VAS that Worldpay is investing in, he said.

Ultimately, as processors integrate these network-born capabilities into their own stacks, they begin to redefine their relationships not only with merchants but also with the networks themselves.

Shift Toward Experience-Led Payments

The surge in digital payment adoption during the pandemic was only the beginning. What followed was a radical realignment in user expectations. Consumers and merchants now expect seamless, intuitive and contextually aware payment experiences. In this environment, VAS serve as the connective tissue between a transaction and a holistic financial interaction.

Another important theme is the strategic balance between collaboration and competition, especially as Worldpay works with a range of third-party orchestration layers, software platforms and aggregators, Winstel said.

Worldpay’s flexible approach has enabled it to operate across a variety of configurations — from direct integrations with large enterprise clients to back-end support for software vendors serving small businesses. In many cases, those software vendors become distribution partners, offering Worldpay’s VAS as part of their own bundles.

For Winstel, it’s as much about enabling a digital gift card program for a small-town café as it is about refining the global checkout flow for a multinational brand.

“Whether it’s one of our portals, our reporting systems … how do we make that a better experience?” he said, adding that customer experience isn’t just about sleek interfaces. It’s about security, seamless payments and trust.

“It really does fall back into those four key pillars,” Winstel said. “Cost, conversion, risk … and all of those tie back to the fourth one, the consumer.”

Future-Proofing the Value Chain

While Worldpay works with many of the world’s largest enterprises, supporting small- to medium-sized businesses (SMBs) — many of which lack dedicated fraud teams or technical infrastructure — is important, Winstel said.

“I have yet to meet an SMB customer that has told me the whole reason they went into business was because they were good at fraud management and responding to chargebacks,” he said. “Fraud does not discriminate.”

That’s where Worldpay’s managed services model comes in, enabling merchants of all sizes to tap into enterprise-grade fraud protection, analytics and reporting tools.

One area where Worldpay is doubling down is fraud mitigation. Having begun his Worldpay tenure as a product manager for fraud and dispute solutions, Winstel said he views fraud not merely as a compliance or security concern, but as a key business driver.

“There’s a direct correlation between fraud rate and overall authorization approval rate,” he said. “So, the higher your fraud rate goes, the lower your issuer approval rate goes.”

To strengthen this capability, Worldpay acquired Ravelin, an artificial intelligence fraud detection company in the United Kingdom.

“These guys have created something really special,” Winstel said, highlighting Ravelin’s unified platform that spans login protection, 3-D Secure, dispute management and transaction monitoring.

With Ravelin, Worldpay aims to offer a “single pane of glass” for merchants to manage risk — something Winstel said he believes will cement the company’s leadership in the space.

In a sector defined by innovation and razor-thin margins, payment processors like Worldpay are betting that service, not just scale, will define the next era of growth. For Winstel and his team, success in the future may look like the platformization of payments.

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