As Sellers’ Fees Rise, Satisfaction With Merchant Service Providers Declines, J.D. Power Finds

Merchant satisfaction with payment processors has dwindled in the past year, as sellers cope with the impact of inflation on their processing costs as well as on their business in general, according to J.D. Power’s 2023 U.S. Merchant Services Satisfaction Study.

The merchant satisfaction score for merchant-services providers totaled 853, down from 859 a year ago. According to J.D. Power, which surveyed 4,825 small-business customers of merchant-services providers from September through November 2022. The firm uses a 1,000-point scale to determine its scores.

Other factors that impacted this year’s score include a preponderance of declined cards; issues with payments initiated via tap-and-pay, card dipping, or swiping the card through the terminal; and frozen POS terminal screens. Indeed, just 43% of transactions are completed without assistance when consumers use their credit or debit cards to pay, and just 47% of e-commerce transactions are completed without assistance, the Power study found.

“A lot of the dissatisfaction … has to do with the impact inflation is having on [merchants’] business and changes in the way people are paying the past year, which is in-person,” says John Cabell, managing director of payments intelligence at J.D. Power. “When you factor in the other issues merchants are encountering, it leads to an increase in merchant frustration.”  

Restaurants and small businesses with annual revenues less than $1 million posted the biggest drop in satisfaction of any merchant category surveyed, a year-over-year 18-point decline. “These merchants don’t generate enough revenue to always have an account manager assigned by the payment provider, which leaves them on their own,” Cabell says.

Restaurant and other food-industry businesses also say they receive less support from their merchant-services providers when it comes to understanding payment processing and fee structure, according to Cabell. Plus, they display lower satisfaction with the cost of service for in-person payment methods than they do with takeout/delivery e-commerce platforms.

When it comes to costs, 66% of small-business owners say inflation is having a severe or major impact on their businesses this year, and many say they are still fighting supply-chain issues and challenges related to the pandemic, Cabell adds.

To offset inflationary pressures and issues arising at the point-of-sale, merchant-services providers should demonstrate value through service and support and provide high-quality technology that works every time, Cabell says.

One bright spot in the survey results is that the satisfaction score among businesses that contact merchant-services providers via mobile apps, video conferencing, and the MSPs’ Web sites—rather than email, phone calls to account representatives, or interactive voice response—is 21 points higher than last year. “These merchants report faster resolution [of service issues],” says Cabell.

When it comes to individual rankings of merchant-service providers, Bank of America Merchant Services topped the list with a score of 886, followed by Square at 873, and PaySafe Ltd. at 867.

PayPal Holdings Inc. and Chase Merchant Services round out the top five with scores of 863 and 861, respectively. The remaining merchant-services providers filling out the Top 10 posted scores between 858 and 853.