59% of Small Businesses Would Switch to Cheaper Payment Processors

Small to midsized businesses (SMBs) on Main Street, U.S.A., view their payment processors favorably. With 85% of SMBs satisfied with their processor, those seeking to expand their client base must go above and beyond table stakes features and functionality to capture business from incumbents.

In “Main Street Health Q3 2023: Leading Payment Processors’ Satisfy SMBs, but Less Popular Providers Are Vulnerable,” a PYMNTS Intelligence and Enigma collaboration, we surveyed 509 Main Street SMBs to understand their relationship with their payment processor partners. This study examines the features and functionality SMBs value in payment processors and the additional services that interest them.

Other key findings from the report include:

Main Street SMBs are highly satisfied with their chosen payment processors.

These businesses are generally unlikely to switch to another provider — but more popular processors can lure Main Street SMBs away. Just 15% of Main Street SMBs will likely switch payment processors in the next three years. Less popular payment processors may face greater churn. One-quarter or more of Main Street SMBs that use these processors are considering switching in the next three years.

Even for those highly satisfied with current processors, more than half would switch if offered lower transaction fees.

Fifty-nine percent of Main Street SMBs say lower transaction fees would motivate them to switch payment processors. Forty-two percent say that ease of use would motivate them. The draw of lower transaction fees varies by industry, and processors must remain competitive or risk losing market share.

Main Street hospitality and consumer services businesses are the most likely to switch their payment processors.

Main Street hospitality and consumer services SMBs exhibit the lowest satisfaction levels and report the highest chances of switching to a new processor in the next three years. Payment processors serving these market segments must deliver the features these segments rate as important, such as fraud prevention and customer support, to remain competitive.

Nearly all Main Street SMBs use a payment processor, meaning the path to processor growth involves luring Main Street SMBs away from current processors. Sharp and nuanced marketing approaches demonstrating processors’ understanding of Main Street SMB needs can position them for success.

Download the report to learn how SMBs regard their payment processors and what they wish to get out of those relationships.