Two-thirds of businesses plan to cut the number of payment providers they use

Although cost-cutting is a top priority, businesses will still pay a premium to protect hard-earned revenue and provide customers more payment choice

LONDON, 18 OCTOBER 2023 -- A challenging macroeconomic environment is prompting businesses worldwide to cut their supplier list, with payment service providers (PSPs) in the crosshairs. 

Two-thirds (66%) of businesses in a five-market survey across the UK, US, and Eurozone say they are looking to consolidate the number of PSPs they use -- and a third (34%) plan to end these relationships within the next 12 months. The top motivator for doing this, chosen by 31% of merchants, is to reduce operational costs.

However, it’s not all doom and gloom for PSPs. Despite a cost-cutting mindset, the research reveals that modern businesses are still willing to open their wallets if they see value in what a PSP can offer -- providing a clear way forward for those that want to remain off the chopping block. 

What businesses demand from their payments today

The insights, published by bank payments company GoCardless in its new report “Embedding a Competitive Edge”, indicate that merchants care most about protecting their hard-earned revenue and offering payment choice. 

The greatest proportion of businesses surveyed (34%) say they would be willing to pay more for fraud prevention solutions, and a quarter (25%) would do the same for tools that increase their payment success rates. Three in 10 (31%) say they would be willing to pay more for a wider range of payment methods, rising to 38% in the US. 

Account-to-account payment methods are especially popular. Over a third (35%) of merchants indicate they want their PSP to offer bank debit, while 27% call for open banking or other bank payment options.

Can PSPs keep up?

The report also contains insight from a survey of more than 200 PSPs in the same five markets. The top priority for this group over the next 12 months is increasing customer satisfaction and retention, chosen by 58% of respondents. In a similar vein, 44% also say they want to become more competitive. 

Many are focusing on what their customers have asked for: a wide range of payment options. Eight in 10 (86%) PSPs are looking to add one or more payment methods within the next 12 months. Of those, the most popular method to add is digital wallet, chosen by 58%, followed by credit or debit card (48%) and bank debit (47%). 

Globally, the proportion of PSPs that plan to add real-time bank payments, including open banking payments, is 35% -- but this increases to more than half (53%) of PSPs in the UK, perhaps reflecting the continued growth of open banking in the market.

 The challenge for PSPs, however, is managing the amount of time and effort required to improve their offering. When asked about the concerns they have in adding a new payment method, “taking a long time to deliver” took top billing, chosen by 45% of PSPs. 

This was closely followed by fears around complexity: 40% say they’re worried about the complications for their engineering team when integrating or building a new solution, and 37% are concerned about the complexity of managing the new payment method on an ongoing basis. 

Deepak Colluru, Director of Product Management for GoCardless Embed, said: “In today’s challenging environment, businesses are looking for every supplier to deliver value. PSPs are no exception. One simple way to demonstrate this is by focusing on the areas that merchants care about most, including anti-fraud solutions, features to boost payment success and a range of payment options.

“PSPs that want to add or enhance any of these must grapple with the classic ‘buy versus build’ dilemma. When we’ve spoken to PSPs that are interested in adding bank payments, for example, they are all too aware of the time and resources required to not only build but also maintain a new payment method in-house. If staying competitive is a priority, payment providers may find that the best -- and quickest -- way to satisfy customer demand is to enhance their offering through a third-party expert.”

Commenting on the research, Moshe Winegarten, Chief Revenue Officer at PSP Ecommpay, said: "The survey findings echo our own customers’ feedback as we’ve seen a rising demand for a broader payment mix, in particular bank payments. We expect that this demand will only continue to grow, due to the spread of Open Banking. It has already established itself as a great way to accept bank payments, due to its capacity to seamlessly integrate with multiple banks, along with the existing benefits of wider business expansion, optimisation, lack of card transaction fees, and the ongoing move towards Open Finance with the upcoming PSD3 directive".

Notes to Editors For more information, contact: Linda Yang, Global Head of PR, GoCardless press@gocardless.com

Figures cited in this release are based on a survey of 1,250 merchants and 200 payment service providers across the UK, US, France, Germany and Netherlands. The study was conducted online via Attest in June and July 2023.

GoCardless Embed is a new integration, which comes white-labelled as standard, that allows payment providers to integrate GoCardless’ global bank payment network straight into their platform through a single, simple API. The integration provides access to:

• bank payment schemes in the UK, Eurozone and US, with more to come in the near future

• end-to-end payment processing capabilities for bank payments including reconciliation, mandate management, reporting and refunds

• open banking-powered features, including instant one-off and recurring payments in the UK and account verification and fraud prevention across the three markets

About GoCardless GoCardless is a global leader in direct bank payments. We help more than 85,000 businesses, from start-ups to household names, collect both recurring and one-off payments, without the chasing, stress or expensive fees. Each year GoCardless processes more than US$30 billion of payments across 30+ countries. Our acquisition of Nordigen means we’re also helping businesses make faster and more informed decisions through easy access to bank account data. We are headquartered in the UK, with additional offices in Australia, France, Latvia and the United States. For more information, please visit www.gocardless.com and follow us on Twitter @GoCardless.