The Financial Brand Insights - Fall 2022

of all-in-one services they’re looking for. It can also be a tool to engage prospective customers. For example, many payments providers now offer a broad range of services beyond traditional payment processing, including: • Inventory management • Sophisticated payroll management • Loyalty programs • Integrated marketing According to the Paysafe study, 53% of participants rank reliability as the top priority for U.S. small and medium-sized businesses when selecting a payment provider. Followed by: • Cost (47%)

Direct model Based on the bank’s needs, the direct model can vary. This model can include only processing, joint ventures, integrated service vendor, payment facilitator or a combination. With the direct model, the bank manages and runs its merchant services program, handling relationships, pricing and regulatory and operational compliance. Direct models are not typically employed within community banks. When exploring potential merchant services providers, banks and credit unions should consider the following as guideposts for determining the viability of a payments provider: • Financial considerations • Cash flow and currency • Vertical support • Operational efficiency • Risk management and compliance • Support structure No matter the model, a strong partner gives small business owners ways to increase revenue, process orders, and manage inventory while meeting customer expectations securely and risk-free. If your financial institution is exploring how to expand your offerings through payment process and merchant services, we encourage you to read more in our whitepaper on selecting a payments provider. ▪ About Elan Advisory Services Elan Advisory Services partners with financial institutions to grow their business through our outsourced credit card program, mortgage solutions, and our all-in-one merchant processing business solution platform. Our dedication to our partners, growth philosophy, and investment in evolving technology has made us a leader in the industry since 1968.

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• Fraud management (29%) • Ease of integration (28%) Types of Models and Evaluation Criteria

A community bank’s success in becoming an all-in-one financial solution for its customers is directly tied to the performance of its merchant provider. The strengths and limitations of a potential partnership will positively, or negatively, impact the relationship between the bank and its small business customers. Merchant providers work with financial institutions in a range of models. Each offering varying degrees of ownership, flexibility and associated economics. Here are three primary models: Agent model In this arrangement, the bank determines the level of support it needs from the payments provider and how the payments provider interacts with its customers. The bank is offered revenue share from the payments provider. Referral model The referral model offers the lowest risk level to the bank, allowing the bank to contract a payments provider and receive revenue share based on percentages. Customers are referred directly to the payments provider for services.

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