Strategies seem to go in and out of fashion in the merchant-acquiring business, like any other business, and agent banking is one of those strategies that the pendulum of conventional wisdom has swung against in recent years.

Agent banking is the business of signing up (mostly) community banks to wholesale relationships and using them as distribution channels to sign up and serve merchants. Some acquirers look at the rate of consolidation among banks (the total number of which declined 29% from 1990 to 1998) and conclude that agent banking is a buggy whip business with little long-term play. Certainly mergers and acquisitions are in many respects occurring at a faster rate among community banks than regional banks, and many acquirers focused on agents have lost their share of customers due to acquisitions.

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