Payment Processors Adapt Strategies to Win Over Main Street SMBs

Small-to-mid-sized businesses (SMBs) lining the bustling main streets of the United States heavily depend on payment processors to streamline their daily transactions. In this fast-evolving landscape, dominant players like PayPal and Square have long held sway. However, a recent survey conducted by PYMNTS Intelligence and Enigma in Q3 2023, titled «Main Street Health,» unveiled an intriguing revelation – a remarkable 85% of Main Street SMBs expressed high satisfaction levels with their current payment processors. Nevertheless, this leaves a competitive battleground as the remaining 15% of Main Street SMBs remain up for grabs.

To establish a stronger foothold in this market, payment processors must pivot their strategies towards addressing the distinct requirements and priorities that matter most to Main Street SMBs. The survey’s findings illuminate the varying preferences across different industry segments, including construction, professional services, hospitality, and retail.

Unsurprisingly, lower transaction fees emerged as the leading factor that could sway Main Street SMBs towards switching payment processors, with a resounding 59% of SMBs acknowledging this as a significant motivator. Additionally, 42% of SMBs indicated that ease of use ranked high on their list of factors for considering a switch. Remarkably, within this subset, SMBs spanning retail trade, professional services, consumer services/hospitality, and construction all expressed keen interest in switching if presented with lower transaction fees.

In the fiercely competitive arena, payment processors that successfully deliver competitive transaction fees, ease of use, reliability, and versatile payment options are poised to establish and maintain a robust customer base among small businesses. Renowned processors such as PayPal, Square, and QuickBooks have already cultivated a loyal following by consistently focusing on these pivotal factors.

Notably, the survey pinpointed hospitality and consumer services SMBs as the most likely candidates to consider switching payment processors, effectively positioning them as the next battlefield for processors to vie for customer loyalty. These SMBs revealed the lowest levels of satisfaction with their current payment processors. For instance, hospitality SMBs prioritize robust fraud prevention measures and top-notch customer support, while their counterparts in consumer services seek out processors that offer a diverse array of payment options.

Beyond the basics, payment processors can further differentiate themselves by extending a bouquet of value-added services, including banking, credit, marketing, reporting, and data analytics. The report highlighted that construction SMBs and younger SMBs expressed heightened interest in services such as fraud detection and prevention, banking and credit facilities, as well as marketing support.

The onus lies on payment processors to intimately grasp the specific needs and preferences of Main Street SMBs to entice and retain their valuable business. By aligning their offerings with competitive pricing, user-friendly interfaces, unwavering reliability, and a suite of supplementary services, payment processors can position themselves for success in this dynamic and vital market segment.