Building a high-performing merchant services program: Tips for financial institutions

Merchant services represent one of the biggest untapped growth opportunities for financial institutions — and yet, many banks and credit unions either underutilize their merchant services programs or struggle to scale them effectively. The key to success lies in creating a referral culture, aligning incentives and leveraging the right partnerships to make merchant services a core part of the bank’s business strategy. 

Referral, agent, hybrid: Choosing the right merchant program structure

Most financial institutions operate under one of three merchant program structures. The right model depends on your staffing, appetite for ownership of the merchant experience and how quickly you want to scale.

Referral model

How it works: The bank identifies the opportunity and refers the prospect to the processor/partner, who handles onboarding, underwriting, implementation, and ongoing servicing.

Ideal for: Community banks and credit unions looking to offer merchant services without the need for a dedicated in-house team.

Key benefits:

• Low operational burden
• Steady revenue share
• Ability to leverage expert partners

Agent model

How it works: The bank is customer-facing — handling much of the sales process (needs analysis, demos, pricing conversations, applications) and often acting as first-line support — while the processor provides underwriting, risk, settlement, and back-office operations.

Ideal for: Larger institutions with dedicated sales teams and a focus on high-touch service.

Key benefits:

• Greater control over merchant relationships
• Higher revenue potential
• Customizable pricing and service models

Hybrid model

How it works: This is a combined approach where the bank runs both motions at once, often using an agent-led path for complex/commercial opportunities and a referral path to scale coverage across branches and smaller-business segments.

Ideal for: Banks needing a practical way to scale their merchant program without overbuilding a dedicated merchant team.

Key benefits:

• Helps nurture high-value merchant relationships
• Better revenue potential
• Streamlined referral path

The role of referral culture in growth

One of the biggest mistakes financial institutions make is treating merchant services as a passive offering rather than an actively promoted solution. Building a referral-driven sales culture can help dramatically increase adoption and revenue.

Best practices for cultivating a referral-driven culture

• Educate frontline staff. Train tellers, commercial bankers and branch managers to help them identify merchant service opportunities and make warm introductions to products and services they might not be aware of.
• Create referral incentives. Offer bonuses or recognition programs to encourage internal teams to refer merchant leads.
• Position merchant services as a relationship-enhancing tool. Convey to your staff how providing payments solutions can deepen business relationships and increase client retention.

Executive buy-in: Critical for success

One of the most overlooked factors in merchant services' success is securing executive leadership support. Without it, merchant services can remain an afterthought, losing out to lending or treasury priorities.

Steps to gain leadership alignment

• Show the revenue impact. Present data on how merchant services help contribute to non-interest income.
• Connect to the broader bank strategy. Align merchant services goals with deposit growth and digital banking initiatives.
• Incentivize participation across departments. Ensure that commercial lenders, treasury managers and branch leaders see the benefits of promoting merchant services.

The power of internal education and marketing

To embed merchant services into your institution’s DNA, ongoing education and internal marketing are key.

Actionable steps for ongoing engagement

• Conduct training across key markets to introduce teams to merchant solutions.
• Provide industry-specific messaging so bankers can tailor conversations to different verticals.
• Integrate merchant services into relationship reviews to ensure existing customers are utilizing the service.

Making merchant services a core offering

For financial institutions looking to expand revenue and deepen customer relationships, merchant services should be more than just an add-on; it should be a strategic pillar of the business. By building a referral-driven culture, aligning incentives and choosing the right partnership model, banks can create a sustainable and high-performing merchant services program.