Page 25 - Banking Finance December 2022

ARTICLE

Then, the aggregator raises the invoice to merchant on income will be significant. Pricing for small and medium
monthly basis. merchants may be somewhat premium than the large
merchants, as in this aggregator business, volume is the
Customer Pays: 1000, Merchant Gets = 1000 and
most important factor for getting more income.
Aggregator will invoice amount = 11.80
2. Deliver the value (performance, operation support)
Opportunities & Possibilities for long run engagement- Operational efficiency
broadly refers to the ability of an organization to deliver
The market of aggregator business is very competitive.
quality services with fewer resources. Making services
Pricing is one of the deciding factors for the merchants to
better will result in satisfied customers. For long run
choose the right aggregator. Payment Aggregators also
engagement with customers, the value of the services
adopt different strategies for competitive pricing. Charges
provided is very important.
levied by all Payment Aggregators are almost equivalent.
Performance- PAsare required to deploy robust
So, apart from levied charges, other factors are also
system and zero tolerance for downtime. Network
important for gaining the trust of the merchants and
and data security should also be strengthened to
grabbing the market share.
safeguard the interest of merchants as well as their
1. Differential pricing strategy for small, medium, and
customers.
large merchants - Differential pricing or price
Operational support- In this payment aggregator
discrimination is the practice of setting a different price
business, the failure rate of the transactions is 10
for the same product in different segments to the
to 15%. So, the merchant will need regular support
market. Price discrimination may improve consumer
from the aggregator to settle these failed
surplus. PAs need to ensure that they are aware of
transactions. Non-resolution of these failed
several factors of the business before proceeding with
transactions will result in dissatisfaction and
the strategy of price discrimination. They should have
increased chargebacks complaints.
control over the changes they make regarding the price
of their product by which they can gain profitability. The 3. Choosing which battle, PAs want to fight
price can be decreased or increased at any point of time Fight It Out- Clearly there are times when PAs must
depending on the fluctuation of the rates. engage in a pre-emptive strike and start a price
war or respond to a competitor's discount with a
In this payment aggregator industry, there is need to
matching or deeper price cut of their own. For
segregate merchants in different segments according
instance, when a competitor threatens the core
to their size and the volume of business they are
business, a retaliatory price cut can be used to
handling. Offering more competitive price to large
signify intention to fight long and hard. Similarly,
merchants may be beneficial as they may get less
when they can identify a large and growing
commission per transaction but for overall volume, the
segment of price-sensitive customers, when they
have a cost advantage, or when their pockets are
deeper than competitors' pockets, then engaging
in price competition may be smart.
Retreat- On rare occasions, discretion is the better
part of courage. Subsequently, some businesses
choose not to fight price wars; in its place, they will
give up some market share rather than extend a
costly battle.
4. Better engagements with other stakeholders to avail
privileged rates - The merchant has to bear the charges
levied by other entities i.e., card company, customer's
bank, merchant's bank etc. Either the merchant bears
these charges or pass it on to the customer. There is
need to have better engagement with these

BANKING FINANCE | DECEMBER | 2022 | 25