Big banks get high marks in merchant satisfaction

Marketing research company J.D. Power completed a first-ever study of small business satisfaction with merchant services providers. It found that merchant satisfaction runs high, but that customers of the largest banks are the most satisfied overall.

The J.D. Power 2019 Merchant Services Satisfaction Study evaluates small business satisfaction with 19 of the largest merchant services providers in the United States, including large banks, banks working in partnership with First Data Corp., large nonbank acquirers (scale processors), and financial technology companies (like Intuit, PayPal and Square). More than 3,500 small business customers of merchant services providers were surveyed, and satisfaction was assessed using four factors: cost, service interactions, payment processing, and equipment and technology.

Report highlights

These are key findings revealed by the study:

• Banks outperform both fintechs and scale providers of merchant services. On a peer group basis, merchant services offerings from bank acquirers have an overall satisfaction rating of 863 out of a possible 1,000 points. Bank/First Data joint ventures scored 847, and scale processors as a group scored 806.

• Small businesses that receive merchant services from their banks tend to have deeper relationships than do those using nonbanks. The proportios of small businesses that use other financial and business services from their MSPs is 97 percent among bank customers, compared to 75 percent for fintechs and 52 percent for scale providers.

• Technology engagement drives higher satisfaction rates. Satisfaction is higher among merchants using newer technologies (like cloud-based POS systems and mobile card readers) than it is for those with more established technologies, like countertop terminals and payment gateways. What’s more, merchant satisfaction with equipment and technology increases the more these are used beyond simple payment acceptance. It’s particularly high among businesses using tools associated with inventory, sales tax management and payroll.

• Ecommerce merchants are among the most satisfied customers, with the largest ecommerce merchants (sales exceeding $500,000 a year) reporting the most satisfaction. The overall satisfaction rate for small businesses that primarily sell online is 849 out of a possible 1,000 points. Among brick and mortar stores the overall satisfaction score was 809.

• Lower satisfaction with cost of service hurts scale processors. This may be because scale providers have less direct control over pricing and servicing due to ISO relationships, J.D. Power noted.

“Whether they are selling goods online, through retail locations or in business-to-business markets, small businesses in America are being required to accept a range of card and digital payments options, and merchant services providers are a vital partner in that process,” observed Paul McAdam, senior director of banking intelligence at J.D. Power. “While overall satisfaction with merchant services providers is strong, there is room for improvement in the areas of helping businesses understand the pricing of merchant services and in providing consistent technology training and support.”

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