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Monday, February 5, 2024

Small, midsize merchants downgrade PSP ratings

Merchant acquirer report cards showed more red than blue this year, according to a new study by J.D. Power. Published Feb. 1, 2024, the report found that small and midsize merchants, the demographic surveyed for this research, expressed increased dissatisfaction with service providers.

John Cabell, managing director of payments intelligence at J.D. Power, found higher satisfaction rates among innovators experimenting with alternative payments and lower satisfaction scores among traditionalists primarily processing credit and debit card payments.

"Younger, newer business owners are more apt to accept a wide variety of payment types and have higher overall satisfaction with their merchant services providers," he said in a statement. "However, we're also seeing some challenges across the board with debit and credit when it comes to delays in account funding, cost and fees and fraud management."

J.D. Power 2024 U.S. Merchant Services Satisfaction Study respondents were least satisfied with traditional credit and debit card processing, researchers noted, and gave higher rankings to emerging payment schemes such as buy now, pay later (BNPL), pay by bank and rewards programs.

Mixed reviews

In addition to requesting more guidance and support in navigating fraud and risk management, survey respondents highlighted the following concerns:

  • Improve credit and debit experience: Despite being the most processed forms of payment, with 82 percent of respondents accepting credit cards and 80 percent accepting debit cards, overall satisfaction scores were lowest across all aspects of the customer experience.

  • Provide innovative solutions: Satisfaction scores are highest among small businesses that process BNPLr, reaching a high score of 793 among the 4 percent of businesses that cite BNPL, digital wallets and emerging payment types.

  • Satisfy innovators and traditionalists: Different expectations stem from two distinct categories of small business owners: innovators represent 47 percent of the study population and are more likely to accept a wide variety of payment types; traditionalists represent 53 percent of the study population and prefer cash, checks and in-person purchases. Overall satisfaction was higher among innovators, researchers found.

  • Remove barriers to risk management and fraud prevention: Higher costs of acceptance and higher risk of fraud and theft were the top reasons why some small business owners said they were unwilling to accept credit and debit cards. Among those unwilling to accept BNPL transactions, digital wallet or pay-by-bank payments, the primary reasons were complexities or difficulties with processing these newer types of transactions.

Honor roll

The study, conducted between September and November 2023, surveyed 5,383 SMB merchants that processed with 19 primary payment processors. Shopify received the highest satisfaction ranking with a score of 728, followed by Paysafe (725) and Bank of America (713), for card-present and card-not-present transactions.

Noting that all merchant services providers compete heavily in the SMB space, researchers evaluated brands with the top market share, in some cases aggregating sub-brands and brand extensions operating under a single corporate entity.

Further information about the U.S. Merchant Services Satisfaction Study is available at  www.jdpower.com/business/merchant-services-satisfaction-study . end of article

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