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Thursday, February 10, 2022

Big banks gain in merchant satisfaction

From J.D. Power, the company that brought us customer satisfaction ratings for various consumer goods, comes this: payment processors have stepped up their games during the past year, with big banks leading the way with huge gains in small business satisfaction.

What's more, small businesses that work with sales agents to secure payment processing services reported significantly higher satisfaction than those using self-service channels, like Square or PayPal. The 2022 U.S. Merchant Services Satisfaction Survey found a 36-point satisfaction gain over 2021 ratings among small businesses interacting with agents, compared to an 18-point gain among those relying on self-service interactions.

"The past couple of years have been very challenging for most small businesses, but industrywide efforts to simplify payment processing fee structures, ramp up customer support and speed up payments have had positive effects on merchant services satisfaction," said Paul McAdam, senior director of banking and payments intelligence at J.D. Power.

"The largest year-over-year satisfaction gains have been driven by big banks, which have historically trailed fintech payment providers in delivering low-cost, user-friendly merchant services solutions," he added. "Now the big banks are matching or exceeding fintechs in small business satisfaction with merchant services."

And the winner is

McAdam and his team surveyed just over 4,400 small businesses on their satisfaction with 20 top U.S. acquirers, based on market share estimates from The Strawhecker Group. The top vote-getter and recipient of J.D. Power's Payment Processor of the Year Award was Bank of America, which scored 894 on a 1,000-point scale used to index customer satisfaction.

BofA's ranking beat out the next four contenders by at least 15 points. BofA's 2022 score was up 45 points from 2021. Chase Merchant Services, which came in second with a score of 879, registered a 35-point jump over its 2021 score. Two fintechs Square (with a score of 878) and PayPal (877) followed, securing the third and fourth places in J.D. Powers rankings. The overall industry average satisfaction ranking was 859, up 23 points from 2021, J.D. Power reported.

Simplified fee structures and improved customer service were key drivers of satisfaction gains. "Small businesses say they're receiving a lot more communications about cost structures," McAdam said. "We also saw a big increase in businesses saying they've received special benefits, including fee waivers."

That counts for a lot, as cost of service was the highest weighted factor in provider scores. Bank providers, as a group, scored 28 points higher than fintechs on the cost of services satisfaction index.

Processor responses to the COVID-19 pandemic had a big impact on cost of services satisfaction, McAdam said. Seventy-three percent of small businesses surveyed said they were aware of at least one proactive step taken by their processor regarding the pandemic, compared to just 58 percent in 2021.

Some of the most notable actions taken were discounted products and services, updated payment fraud controls or procedures, faster funding, and access to new customer credit or installment payment plans.

McAdam added that small businesses participating in the survey are more aware of and taking advantage of faster funding options than in the past, even if it comes at a cost. This is more evident with card-present merchants than for ecommerce and other card-not-present merchants.

Awareness of and satisfaction with faster funding options was also high among restaurant and other food-oriented businesses, professional services companies, and businesses in the construction and trade industries, survey results indicate.

Top 16 processors ranked

Here are payment processing companies in J.D. Power's 2022 rankings of overall customer satisfaction.

  1. BofA
  2. Chase
  3. Square
  4. PayPal
  5. Wells Fargo Merchant Services
  6. Stripe
  7. Elavon
  8. Global Payments
  9. North American Bancard
  10. Shopify
  11. Fiserv
  12. EVO Payments
  13. PNC Merchant Services
  14. Intuit Quickbooks
  15. FIS
  16. Paysafe

Overall satisfaction results for NAB, Global, Fiserv and FIS reflect corporate-wide results, J.D. Power said. In other words, satisfaction with sub-brands (for example, Clover for Fiserv and WorldPay for FIS) were factored into the parent corporation's overall score. Additionally, two of the brands ranked, PNC and Wells Fargo, partner with Fiserv to deliver merchant services. end of article

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