Majority of US, UK, Eurozone Firms Aim to Consolidate Number of PSPs They Use – GoCardless Report

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 US, UK, and Eurozone say they are looking to consolidate the number of PSPs they use.” A third (34%) plan to end these relationships within the next 12 months, “increasing to 46% of companies in the US.”

The top motivator for doing this, “chosen by 31% of merchants globally, 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.”

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.”

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. American-based providers are especially conscious of this delicate balance.

More than half of US PSPs (56%) say “taking a long time to deliver” is also a big worry, compared to 45% of businesses across all five markets surveyed.

Figures cited in this release are based “on a survey of 1,250 merchants and 200 payment service providers across the US, UK, France, Germany and Netherlands.”

The study was conducted “online via Attest in June and July 2023.”

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