Outsourcing is very much a watchword of the Nineties. At a time when many organizations, banks in particular, are adopting a strategy of focusing on their core businesses, it only makes sense to examine carefully whether a given operating function adds value to that core business -- or serves merely to divert time and resources from activities more deserving of management's attention. Increasingly, bankcard acquirers are asking this question of the processing function. Bank consolidations, rapid advancements in processing technology, changing merchant demands, and service expectations are driving many acquirer banks to re-examine whether their merchants' interests and their own bottom lines wouldn't be better served by outsourcing the processing function.
Of course, the decision to out-source processing involves a number of threshold considerations. These considerations are particularly critical when applied to the processing function because the function interfaces directly with the bank's merchant customers, who, in many cases, have other relationships with the bank.