Better Communication And Fee Transparency Boost Big Banks on Merchant Satisfaction

After years of trailing fintechs such as Square Inc. when it comes to merchant satisfaction with payment processing, big banks find themselves atop the leader board, according to J.D. Power’s 2022 U.S. Merchant Services Satisfaction Study. 

Bank of America Merchant Services leads the way, posting a satisfaction score of 894 points out of a possible 1,000, up from 849 the prior year. Chase Merchant Services ranks second with a score of 879, up from 844 a year earlier. BofA and Chase ranked third and fourth, respectively, in the 2021 study. 

J.D. Power based its results on a survey of 4,406 small-business customers of 16 merchant-services processors in September and October of 2021.  

But it’s not just big banks that are posting higher scores with merchants. Fintechs are scoring higher, too. Square, which ranked first in the 2021 study, tallied a satisfaction score of 879, up 23 points from a year earlier. And PayPal Holdings Inc. posted a score of 877, a gain of 25 points. 

Despite these higher scores this year, Square and PayPal slipped to third and fourth place, respectively, in the latest study after finishing first and second in 2021. Overall, the average satisfaction score in the 2022 study was higher, totaling 859 points, up from 836 in 2021. 

The key factors in the general turnaround for merchant processors are improved communication about how merchants can reduce processing costs, greater fee transparency, and faster settlement. Overall satisfaction with the cost of service increased 33 points in 2022, and satisfaction with service interaction increased 32 points, according to the survey. 

“When it comes to processing technology, satisfaction scores have traditionally been good because the technology works like it is supposed to. It’s other areas of the business, such as cost of service and service interactions, that have not scored as well. But now small businesses say they are seeing improvement in those areas,” says Paul McAdam, senior director of banking and payments intelligence at J.D. Power. 

Increased speed for merchant payouts prompted 34% of respondents to say payment was faster than they expected. In addition, 65% of small businesses say they’ve received faster funding, so card payments are settled or posted same day or on non-business days, up 14 percentage points from 2021.

“Faster settlement times are a satisfaction booster for merchants, especially for restaurants, construction companies, and tradesmen,” McAdam says.

Processors’ responses to the pandemic also earned goodwill among small businesses, with 73% saying they are aware of at least one proactive measure their merchant-services provider has taken in response to challenges caused by Covid-19. This in turn has driven a 71-point increase in satisfaction with cost of service, the study says. Specific actions taken by providers include discounted products and services, updated fraud controls, and faster funding-turnaround times, according to JD Power.

Merchants also reported higher satisfaction with service via phone. This measure rose 32 points from the prior year. “We also saw a higher satisfaction level with the service representative,” McAdam says. “These are all good things to see.”