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April 9 2018 • Issue 18:04:01

Cracking the merchant retention nut

An analysis conducted by ePay Consulting Services in
cooperation with The Strawhecker Group puts this into
a dollars and cents perspective. The analysis suggests it
takes as many as three new merchant accounts to over-
come the diminished value of a single lost account.

"Attrition is the single biggest threat to the credit card pro-
cessing industry, eroding prices and gutting margins to
the tune of billions [of dollars] annually, and it's only get-
ting worse," said. Cory Capoccia, President of Womply. A
software-as-a-service company specializing in solutions
for small businesses, Womply partners with acquirers,
ISOs and merchant level salespeople (MLSs) to support
merchant retention through advanced data analytics that
can help spot dissatisfied merchants and keep them from
bailing.

Merchant attrition has been an issue since the payments
By Patti Murphy industry's earliest days. "It's always been a problem," said
industry consultant Paul Martaus. "It's worsened over the
erchant acquirers and their sales partners years though with the proliferation of new competitors
have long been focused on the need to retain and technologies."
good clients. After all, it's commonly accept-
M ed that it costs more to court and land new High-touch and high-tech
clients than to keep current clients content and generating Some attrition is unavoidable, as it is tied to factors such as
transactions. Despite their best efforts, however, good economic downturns, changing consumer spending hab-
merchant retention has been an elusive goal for many. its and poor business management. TSG's research sug-
gests that upward of 22 percent of merchants terminate
An analysis by Adil Consulting LLC revealed that about acquiring contracts because they've gone out of business.
one in five (21 percent) merchants switched ISOs or ac- But most attrition is avoidable. Experts agree that preven-
quirers in 2014. Adil Moussa, the firm's Principal said in
a recent interview that data has remained fairly constant
in the years since and that retention trends are fairly con-
stant across vertical markets. Contributed articles inside by:

Smaller ISOs – those processing less than $1 billion a year
– have the lowest attrition rates (an average 13 percent a Steven Feldshuh ...................................................................................32
year). Many of the largest portfolios – those ranging be- Adam Atlas ..............................................................................................34
tween $10 billion and $30 billion – have the highest rates of Jeff Fortney .............................................................................................38
attrition, on average 22 percent, although those with port- Barry Davis ..............................................................................................40
folios larger than $30 billion enjoy lower attrition rates (18
percent), Moussa said. TOC on page 3

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