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Table of Contents

Lead Story

Mission: ETA


Industry Update

Make a mark, take a stand

Mobile commerce popular, NFC lagging

Accepting payments, iPhone style

Antisocial online networking: ID theft

Aite busts merchant retention myths


Miles Mulcare

Growth in payment risk can be mitigated

Eston Fain
AQ2 Technologies

Selling Prepaid

Prepaid in brief

Virtual gift cards given a twist

GPR cards and reload networks: A complex relationship

Continental Prison Systems Inc.
The 'get out of jail' card


Regulation, deregulation, self-regulation

Patti Murphy
The Takoma Group


Street SmartsSM:
Go ahead, work some magic

Jason Felts
Advanced Merchant Services Inc.

Work/life balance, an employers' issue

Curt Hensley
CSH Consulting

Think outside the converter box

Dale S. Laszig
DSL Direct LLC

How to win back e-mail jilters

Nancy Drexler
SignaPay Ltd.

Get what you want from your staff

Vicki M. Daughdrill
Small Business Resources LLC

Get what you want from your staff

Vicki M. Daughdrill
Small Business Resources LLC

Steer clear of buyout pitfalls

Adam Atlas
Attorney at Law

Company Profile

Velocity Merchant Services

Metro Merchant Services

New Products

The 21st century signature

Company: ElectraCash Inc.

Taking a cue from teens

Smart Transaction Systems Inc.


Just say no to bootstrapping



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

March 23, 2009  •  Issue 09:03:02

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Aite busts merchant retention myths

Research and advisory firm Aite Group LLC conducted a survey of merchants between May and August of 2008 to determine what made them stay with their ISOs or acquirers. The report, Merchant Retention: Five Assumptions Put to the Test, examines five factors typically associated with merchant retention.

Aite asked merchants to rate each factor's importance in deciding whether to keep or discontinue relationships with their service providers. The factors are listed in merchants' order of importance:

  1. Pricing: 80 percent
  2. Switching is too big of a hassle: 72 percent
  3. Products: 57 percent
  4. Complexity of conversion: 51 percent
  5. Local bank: 50 percent

Forty merchants each were surveyed from the brick-and-mortar, restaurant, health care and e-commerce verticals. Most of the e-commerce merchants surveyed were newer businesses compared to the other three verticals; 65 percent of respondents in the e-commerce sector had never switched processors.

The report also noted that 40 percent of restaurant operators and health care professionals have never switched processors since they started accepting card payments compared to 45 percent among the brick-and-mortar merchants.

Assumptions questioned

The assumptions Adil Moussa, Aite Analyst and author of the report, explored include:

The first assumption is false, according to the report. The Green Sheet asked Ken Musante, Vice President and Chief Sales Officer of Moneris Solutions Inc. and frequent contributor to The Green Sheet, for his reaction to this news.

"If every month [the merchants] are getting a large bill for payment processing, they best be getting a significant benefit," Musante said. "Just cross-selling isn't sufficient. Sales professionals need to cross-sell services that make switching providers more of a 'hassle' - Aite's word, not mine. PIN debit, for example, requires merchants to swap PIN pads. ... That is difficult."

Insights emerge

Moussa was most surprised to learn the majority of attrition happens within three years after a merchant account is established. He said this is significant because boarding a merchant costs around $1,000, and acquirers only make $500 to $600 per year on the average account. So, acquirers don't even make money on a merchant account until the third year in many cases, he added.

Moussa takes the most frequently cited reason for merchant retention, pricing, with a grain of salt. He said that after careful analysis, it seemed pricing may have only been the spark that caused merchants to leave or stay. He believes overall satisfaction is what makes merchants stay with processors.

"ISOs and acquirers need to work on enhancing their image in order to increase merchants' overall satisfaction," he said. "This image makeover should start in the customer service area."

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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