Merchants More Satisfied with Acquiring Banks Over Fintech’s

Apr 08, 2019

Merchant customers are more satisfied when they work with acquiring banks, then they do with fintechs or non-bank processors, according to the J.D. Power 2019 U.S. Merchant Services Satisfaction Study.

About the Study

J.D. Power, the research firm that is known for its studies of consumer satisfaction with customers, did an online study looking at 3,500 small businesses nationwide in October and November 2018 that used the services of 19 banks and processors in the acquiring space. Small businesses were those that had between $50,000 and $20 million in annual sales.

They worked with bank acquirers BB&T, Capital One, and Chase; had bank joint ventures with First Data Corp., which includes Bank of America, Citibank, PNC, and Wells Fargo; worked with fintechs, Intuit, PayPal, Square, and Visa through its CyberSource and Authorize.Net units; and scale processors, Elavon, First American Payment Systems, First Data, Fidelity National Information Services [FIS], Global Payments/Heartland, North American Bancard, Total System Services [TSYS], and WorldPay/Vantiv.

How They Were Ranked

Using a zero to 1,000-point scale ranking system, the bank acquirers scored 863 in overall satisfaction followed by 847 for the bank/First Data joint ventures, fintechs at 843, and scale processors at 806.

The study found that banks edged out the others in terms of satisfaction because they were able to build more solid relationships with consumers. Banks can assign account managers to customers, which leads to more proactive interactions.

Other Price Impacts Satisfaction

The study also found that merchant acquirers’ were not successful when they tried to steer conversations away from price. According to the study, prices of service was the single most important factor that influenced customer choice, loyalty, and satisfaction. Other influences, in order of importance, included: equipment and technology, processing services, and service interactions.

Online Retailers vs. Bricks-and-Mortar Stores

Additionally, the study found that online merchants were much more satisfied than those stores with physical locations. The score was 849 with online retailers but just 809 with point-of-sale merchants.

Some experts believe these scores have to do with service costs. Many only businesses better manage pricing because they understand it. They use more efficient technology and understand how certain things impact pricing. On the other side, many smaller physical business owners only use basic card readers. They do not get the full experience of technology and now how many factors can impact the cost.

Fintechs Moving Forward in a Positive Light

Additionally, the study suggests that fintechs are gaining on banks in terms of merchant satisfaction. Not only do they have relatively low rates of customer issues, many of the merchants appreciate the technology that comes with the processing services, mainly the speed of merchant funding.

Within a year, J.D. Power plans to do a similar study that issues rankings by provider.

In Conclusion

This study exemplifies what many already know. Acquiring banks, which often are bigger, more established businesses, are doing a better job of keeping merchants happy. As more merchants embrace and evolve with new technologies, like machine learning, they will be presented with opportunities to provide greater customer user experiences. When they can see fruits of that, they likely will become more satisfied with the fintech that can provide it.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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