More Payments Friction Coming for Customers

The recent credit card surcharge agreement brings into focus the impact regulations could have on businesses. Spreedly Vice President of Product Joe Meuse explains what the changes could mean for businesses and their customers in the new PYMNTS eBook, “The Implications of Uncertainty.”

As we near the end of the first quarter of 2024, business leaders find themselves facing a host of uncertainties that could impact their bottom line.

The recent agreement between Visa, Mastercard and U.S. merchants underscores the significant impact that regulatory changes can have on businesses, particularly those reliant on credit card transactions. With costs continuing to rise, merchants may be forced to re-evaluate their pricing strategy and consider whether a surcharge program, passing additional costs onto consumers, will be right for their business.

This shift in payment dynamics has the potential to reshape consumer behavior and preferences further, posing both challenges and opportunities for businesses across industries.

Consider the scenario where every restaurant or gas station begins to impose a surcharge of 2 percent to 2 1/2 percent on credit card transactions. Such a change will prompt consumers to reassess the convenience and affordability of using their cards. This leads to shifts in spending habits and patronage. For merchants, adapting to these changes may require strategic adjustments and leveraging technology to remain competitive in the marketplace.

While this shift is one recent example, organizations are increasingly evaluating their payments stack in an effort to lower cost and improve sales and the customer experience (retention). Uncertainty continues as markets shift, customer needs evolve and all players in payments continue to change the game.

Our vision of an open and secure payments ecosystem offers merchants the flexibility of choice and adaptation as they adjust to uncertainties. Orchestration offers merchants the flexibility to optimize transaction routes, adopt the right mix of PSPs and tools and rapidly adapt to changing customer preferences. Payments orchestration also provides merchants critical insights to customer behavior and preferences. By harnessing the power of data-driven insights, businesses can identify emerging trends, detect anomalies and optimize payment strategies to maximize revenue and mitigate risks effectively.

In conclusion, as we approach the end of the first quarter of 2024, businesses are facing a multitude of uncertainties, particularly in the realm of payments. The recent Visa and Mastercard fee settlement serves as a stark reminder of the impact that regulatory changes can have on businesses and consumers alike.

By embracing payments orchestration, businesses can navigate uncertainties and capitalize on emerging opportunities.