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Most SMBs Use Third-Party Processors for Merchant Services, Survey Shows
July 14, 2017

By Kevin Woodward

Good news for independent sales organizations and acquirers. A majority of U.S. merchants—76%—use a third-party card processor for their merchant services, finds a report from Mercator Advisory Group, a Maynard, Mass.-based payments consultancy.

In a report called “Payment Acceptance in a Complex Environment: Banks, Watch Out,” Mercator found that only 59% of merchants used a merchant bank for payment-processing services.

For both merchant banks and third-party providers, such as ISOs, the ability to offer services beyond credit and debit card processing is a differentiating advantage.

Small businesses have complex needs and take advantage of many of the same payment services required by larger merchants, such as mobile apps for coupons and providing receipts or mobile wallets for e-commerce, Mercator says.

“Many third-party providers offer smaller merchants ancillary services they need aside from core processing services,” says Mercator in a press release. “Respondents who claim their small businesses used merchant-acquiring banks are more likely than those who use third-party providers to consider the acquiring bank their primary bank. However, that could change if banks don’t keep abreast of small-business needs and concerns.”

Mercator says this is the first of three reports generated by it 2017 Small Business Payments and Banking Survey of more than 1,600 small-business owners. The other reports will focus on business-to-business payments and business-banking services.

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