With inflation affecting nearly every aspect of a small business’s operation, good news on the fintech front in JD Power‘s annual merchant services survey can’t help but suggest a bright future for payments technology.
The overall merchant satisfaction score in the JD Power 2023 U.S. Merchant Services Satisfaction Study, released in early February, declined year-over-year following three straight years of growth.
However, small-business customers using mobile payment methods reported receiving funding more quickly than those with more traditional ones. They rated their providers more highly in several factors.
Fewer complications with E-commerce transactions
“What we’re seeing here is that the funding or payment processing time is faster, particularly with mobile panel usage, with merchant services, and that tends to drive buyer satisfaction,” said John Cabell, managing director of payments intelligence at JD Power.
“That seems to be a phenomenon that there also is maybe a little less retail customer complication with the E-commerce types of transactions, but it’s largely a difference around funding speed.”
One could argue 2022’s satisfaction with mobile payments — and the corresponding dip in overall satisfaction with more-traditional payment methods — comes from the return of in-person shopping and spending experiences as people emerged from pandemic-induced hibernation when E-commerce was practically the norm in many places.
“We’re certainly seeing that with the restaurant industry in particular … there was a shift away from takeout delivery toward in-person dining and transactions that was also correlated with the satisfaction among small businesses,” Cabell said.
Key takeaways from the study
Significant findings from this year’s study include the following:
- Small business satisfaction with merchant services providers declined by six points year over year to 853 on a 1,000-point scale used by JD Power. The study points to costs of service, which account for 30 percent of the overall score, as the leading factor in the decline of satisfaction.
- Technical problems affected more than half of retail customers’ transactions. According to small businesses surveyed, 57 percent of credit or debit card transactions required customer assistance. In E-commerce, 53 percent of transactions without a physical card needed customer assistance. Problems most frequently cited include declined cards, tapping and swiping issues, and frozen screens.
- In this year’s study, businesses with annual revenues below $1 million and restaurants reported the most significant satisfaction declines. Restaurants say they need more support from their merchant services providers when understanding payment processing and fees. They also have less satisfaction with the cost of service for in-person payment methods than with E-commerce platforms.
- Small businesses report higher satisfaction levels and faster resolutions to problems when they use mobile apps, video conferencing, and merchant services’ websites instead of accessing services by phone or email.
- Bank of America scored highest in merchant services satisfaction for the second year in a row, scoring 886. Square ranks second with 873, and PaySafe third with 867.