In a challenging economic climate, more merchants are turning to their payments providers for guidance on how to be more efficient with their payment operations. Many are also exploring ways to lower costs by encouraging customers to use cash or debit cards instead of credit.
Nearly half of the merchants surveyed by Wind River report that their processing rates have increased over the past year. As a result, nearly 70% say they have adjusted how they accept or manage customer payments.
Today, 69% of merchants process payments through their software provider—an indication that many are relying on independent software vendors (ISVs) to help turn payments from a cost center into a revenue opportunity. Vendors are responding: nearly all ISVs working in payments either offer integrated solutions already or plan to introduce new monetization strategies this year.
Seeking Cash, Raising Prices
To counter higher processing fees, merchants are increasingly steering consumers toward lower-cost payment methods such as debit and ACH. Some are offering cash discounts, while others have added surcharges for credit card transactions.
These decisions inevitably affect the end consumer. Nearly half of merchants say they’ve raised prices to offset increased costs, while two-fifths have chosen to absorb the impact themselves.
Headwinds in Fighting Fraud
Fraud is another area where merchants are turning to their payments providers for support. Nearly two-thirds of respondents said they experienced fraud in the past year, and a large share indicated they’re willing to pay more for stronger prevention methods. Key areas where merchants want help include setting custom rules for transaction amounts, stopping fraudulent attempts before funds are moved, and accessing chargeback guarantees for high-risk industries.
Chargebacks—where customers dispute legitimate transactions—continue to be a top concern. More than a quarter of merchants reported experiencing fraudulent chargebacks.
This challenge has been exacerbated by decisions made by Visa and Mastercard, which held merchants responsible for chargeback costs unless they updated their point-of-sale systems to include chip readers. The two payment giants were recently ordered to pay merchants nearly $200 million in class-action lawsuit over these chargeback policies.
