A New Study Shows How Acquirers Can Help Merchants Recover From Covid-19’s Heavy Toll

Fully 25% of U.S. merchants that accept payment cards experienced a drop of 56% or more in card volume in April compared with February, finds a new study from The Strawhecker Group.

After analyzing billions of transactions from more than 1 million card-accepting merchants across the United States, the Omaha, Neb.-based research firm said the drop is staggering. The median decrease is 19%, meaning half were below and half were above this number in credit and debit card volume. The median decreases varied by state, with New York at a 64% decrease, but Georgia at a 38% decrease. The analysis, included in “Covid-19 Snapback Report,” released Wednesday, also attempts to provide information that might indicate which states could more quickly resume usual economic activity.

The variations mean acquirers and payments providers will have to tailor their recovery efforts, says John Jakobe, market research analyst at Strawhecker.

“For acquirers and other stakeholders, the report provides a plethora of state-specific information on how each state is approaching reopening and how merchants in those states have been impacted,” Jakobe says in an email. “Though perhaps the biggest takeaway for acquirers should be that the states have not been impacted uniformly, meaning that many states have been harder hit than others and acquirers should look into tailoring their approach and support offerings to those areas more heavily impacted. The report provides not only a look at each state, but also various industries within each state, which again might require a custom approach depending on the impact to that industry.” The report analyzed the 10 largest states: California, Texas, Florida, New York, Pennsylvania, Illinois, Ohio, Georgia, North Carolina, and Michigan.

Steps to take may include providing information to merchants about what’s happening in their states. “With each state taking a different approach, there is confusion among business owners,” Jakobe says.

Other actions may involve some form of financial assistance, such as special merchant cash advances, fee freezes, or free access to online or delivery software. “Acquirers should also be prepared to support an increase in demand for contactless terminals and e-commerce offerings,” he says. “With the potential for a second wave of the virus, many more merchants may be looking to move business online and protect customers.”

As for the potential for economic recovery, Strawhecker’s data suggest Georgia may be positioned better than other states. This state has a relatively high number of card-accepting merchants that have a strong average-per-day sales total and experienced a relatively lower decline in sales, Jakobe says. “…From the acquiring perspective, merchants in the state rank favorably for acquiring profitability. This would indicate that payment providers with portfolios heavily weighted in the state of Georgia should be relatively less affected by the pandemic than others.” The state also ranked high for the potential of recovery in merchant acquiring.