Before the verticalization of payment processing by software companies like point of sale (POS) providers, gateways were heavily used to give merchants flexibility to the payment processor they used.
As with most things, there were – and are – pros and cons when using a gateway.
Pros
- Avoid vendor lock-in
- If the merchant was savvy enough, they’d catch their processor screwing them and could easily move to a new processor their gateway supported
- Elimination of card data from PCI scope (which is a total ruse, but whatever)
Cons
- Increased costs, often material for large, small check merchants. For example, the payment processor’s rate is $0.01 per transaction but the gateway is $0.03 per transaction
- Dealing with multiple providers for support, often with each vendor pointing their finger in a different direction when things went wrong
Oracle (well, really it was MICROS at the time) had a payments interface that today is called OPI, Oracle Payments Interface. Since MICROS wasn’t a processor, and didn’t have a preferred processing relationship like NCR had with Worldpay, a number of gateways leveraged their payments interface to support processing for MICROS merchants.
The most used of those gateways was Merchant Link.
In 2019, Shift4 acquired Merchant Link so it could push its processing to MICROS merchants. This generally occurred as Square, Clover, and Toast verticalized payments in their own software, and as Heartland rolled up numerous restaurant POS vendors to run the same playbook as Shift4.
When a potential partner has a track record of doing terrible things to their customers, which have also been your customers, as demonstrated here, here, here, here (and there are undoubtedly many more examples that further support the pattern of behavior), we imagine you’d pass.
Oracle took it a step further, and built an offer from the ground up, to give customers an out.
In 2020 they began building a payfac with what is (nearly) inarguably the best payments technology on the planet: Adyen.
Adyen offers Oracle global availability, card present and card not present technology, and direct processing on card scheme rails, enabling higher authorizations, lower fraud, and better data capture to do all sorts of creative things.
Now Oracle is launching a payments offering that will extend customer freedom to the payments landscape.
“We’re purposefully addressing areas of the restaurant operations business where we can give customers a better choice, “said Chris Adams, VP strategy for Oracle Food and Beverage. “As an example, our acquisition of GloriaFood gives independent brands a platform to compete with online ordering aggregators (that they can afford) and now we’re moving swiftly into the payments space to give customers new options.”
Going forward, in addition to partners, Oracle is offering a payment solution that will be beyond competitive on economics, come with the support enterprise merchants have come to expect of Oracle, and unlock payments data companies like Aben leverage to generate more sales for our customers.
Chris Adams, VP Strategy @ Oracle Food and Beverage
Let’s unbundle this.
Oracle is not a payments bro. In fact, they don’t care if they make money on payments.
Let’s say that again:
Oracle doesn’t care if they make money on payments.
Instead, Oracle views payments processing (rightfully) as a cost of doing business. And they don’t need to tack on excessive fees, or hold their customers’ data hostage as a means to drive their growth.
Oracle already has a well funded R&D budget and outrageous payment rates aren’t needed to fund this. Drawing parallels, because Amazon has AWS, its profit powerhouse, it can afford to be super competitive on its other business lines.
We see Oracle operating the exact same way and payment bros should be shitting their pants.
Moreover, Oracle is unlocking payments data that legacy processors either can’t make available, or charge an arm and a leg to tap into.
When leveraged intelligently and combined with Aben’s card network data, Oracle’s payments data can help merchants understand how they’re performing, target the right customers (based on spend patterns inside and outside of their four walls), and measure true incrementality and retention against the market.
This is our whole point:
payments are commoditized and the only value is the underlying data.
So great to see companies the size of Oracle recognizing the opportunity.
It’s a great time to be an Oracle merchant.
And a horrible time to be a payments bro.