The Green Sheet Online Edition
February 2, 2025 • 25:02:01
GS interviews J.D. Power's John Cabell
In the following conversation with John Cabell, managing director of payments intelligence at J.D. Power, we explore key findings from the firm's 2025 U.S. Merchant Services Satisfaction Study. From the impact of surcharges on card usage to the decline in cryptocurrency acceptance and the growing adoption of digital wallets, Cabell offers valuable insights into the trends, challenges, and opportunities shaping the payments ecosystem.
1. The study highlights that 41 percent of credit card users have chosen not to use card payment methods due to surcharges. Is this behavior more pronounced in certain industries or regions? How are merchants striking a balance between offsetting costs and retaining customers who are sensitive to these fees?
Age and location matter. Consumers who choose not to use card payments because of a surcharge tend to be older, more affluent and concentrated in more densely populated areas like New York, Florida, California, and Illinois.Anecdotally, merchants are still figuring out the best way to handle this situation, as evidenced by the mix of pre-payment surcharge disclosure, nondisclosure and apologetic explanations at the point of sale.
2. The report mentions that flat-rate pricing structures correlate with a higher likelihood of merchants adding surcharges. Could you elaborate on how different pricing models (for example flat-rate versus interchange-plus) influence merchant behavior? What might be the long-term implications for merchant service providers?
Other pricing models do not show significant impact on merchants surcharging or not. Implications might be that processing providers might closely consider the impact to the end consumer of their pricing approaches, where flat-rate pricing seems to implicate more apparent end consumer fees.
3. While debit and credit cards remain dominant, acceptance of cryptocurrency has decreased from 20 percent to 15 percent. What factors might be driving this decline, and do you foresee cryptocurrency acceptance stabilizing or continuing to drop in the coming years? Are any particular trends influencing this shift?
According to our data, cryptocurrency shows significantly lower general payment type favorability ratings in 2025 data than in 2024. In addition, there is a significant increase in merchants saying the reason they are not using cryptocurrency is difficulty of use/complicated payment process. If it's going to be more work for the merchant, crypto will be at a disadvantage compared to other forms of payment.
4. Shopify has achieved the highest satisfaction rating for the second consecutive year, followed closely by Chase Payment Solutions and PayPal. What are the key factors that differentiate these top-performing providers from others in the study? In particular, what is Chase, a long-time provider, doing that other long-term providers are not doing as well?
Although individual brand performance may vary, banks tend to perform well in satisfaction with account management (that is, self-service), processing cost and providing advice/guidance. Specialists (like Square, Shopify, etc.) tend to perform best in satisfaction with quality of technology and efficiency of payment processing.
It's the flip side of what we see with crypto, where the race to making things easier for merchants leads to greater payment type acceptance and usage of a range of payment processing options.
5. The study indicates a notable decline in satisfaction regarding data security and guidance from merchant services providers. What specific kinds of support or improvements are small businesses asking for in these areas? How can providers improve their services to satisfy these concerns?
Merchants report the most desired data security support improvements are better fraud detection tools, better training and improved fraud alerts. There's a lot of room for improvement here for merchant services providers. Given the prevalence of fraud and security issues, it's important they get a handle on it.
6. Cash App Pay, Venmo and Apple Pay have seen significant growth in acceptance among small businesses. What strategies are these brands employing to increase merchant adoption. Are there particular types of businesses or demographics where these methods are gaining the most traction?
Retail and food businesses tend to accept digital wallets the most, whereas educational and nonprofit businesses do so the least. Further, and not surprisingly, businesses newer than five years and online business tend to offer digital wallet brands more as well.
That said, the strategy for these digital brands seems to be focusing on establishment with online merchants and high-volume retail purchases.
7. What merchant pain points remain that challengers could address? Do you see any such challengers emerging?
Merchant pain points include transaction processing costs, fraud and speed of funding. New real-time more direct bank payment methods (for example, FedNow) could evolve over time to address these gaps and reshape the payments landscape. Overall acceptance and usage from businesses and their customers could increase as a result.
8. Are there other findings in the report that you'd like to comment on? Please elaborate.
Keeping a focus on the basics, like speed, ease of use, problem resolution, and in many cases, security is essential. Making everything less of a hassle and figuring out how to help businesses when there are problems or they need guidance leads to better outcomes for businesses, their customers and merchant service providers.
How they do this will vary from business to business, but it's important for providers to keep this principle in mind.
Note: For further information about J.D. Power's 2025 Merchant Services Satisfaction Study, please visit www.jdpower.com/business/merchant-services-satisfaction-study.
Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.
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