The current economic environment has been challenging for both consumers and businesses. To cut costs, businesses are prioritizing reducing the number of service providers, including payments, suppliers, and staff.
In a recent GoCardless survey of European and U.S. businesses, 66% of businesses said they plan to consolidate the number of payment service providers they use. Consolidating payment service providers simplifies how merchants understand costs and forecast future costs. To make matters more urgent, a third of these businesses stated they plan to cut off these relationships within the next year. Businesses believe this will reduce their operational costs without significantly impacting their day-to-day operations.
Payment service providers can redeem themselves by increasing value to businesses, particularly with fraud prevention. Over a third (34%) of businesses indicated they would be willing to pay more for fraud prevention solutions. Consumers who experience card fraud typically go through their bank for reimbursement, but oftentimes, businesses end up taking the loss from fraud.
Businesses are also interested in improving their payment success rates with better authorization rates to reduce checkout friction. One in four businesses said they would be willing to pay more for tools to increase payment success rates.
About a third of businesses (31%) are interested in and willing to pay more to accept a broader range of payment methods, including account to account transfers. Additionally, 35% of these businesses indicated they want their payment service providers to offer bank debit payments, and 27% of businesses are interested in open banking.
To gain a competitive edge and better meet customer demand, 86% of payment service providers reported plans to add more payment options within the next 12 months. But are payment service providers focused on the wrong initiatives? Only 31% of businesses indicated interest in accepting a broader range of payments. From the survey results, it is clear to conclude payment service providers can remain competitive and relevant by keeping their costs low and current product offerings strong.
Overview by Sophia Gonzalez, Research Analyst, Debit Advisory Service at Javelin Strategy & Research.
