Economic conditions, costs and ongoing difficulties with payment processing technology have driven a drop in small business satisfaction with merchant services providers.

The J.D. Power 2023 U.S. Merchant Services Satisfaction Study found that restaurants and businesses with less than $1 million in annual revenue had the largest declines in satisfaction with providers of payment processing services compared to the previous year.

“It’s tough out there for small businesses right now,” John Cabell, managing director of payments intelligence at J.D. Power, said in a statement. “Nearly two-thirds – 66 percent – of small business owners say inflation is having a ‘severe impact’ or ‘major impact’ on their businesses this year, and many are still fighting supply chain issues and challenges related to the COVID-19 pandemic. Accordingly, the costs and fees associated with payment processing solutions are driving significant declines in customer satisfaction among small business owners.”

J.D. Power’s study was conducted from September through November 2022 and included responses from 4,825 small business customers of merchant services providers.

Overall small business satisfaction with merchant services providers was 853 on a 1,000-point scale, down 6 points from 2022. J.D. Power said the decline was driven largely by lower satisfaction with cost of service, which accounted for 30 percent of the overall satisfaction score.

The study did find that businesses that use in-person mobile devices have faster account funding and significantly higher satisfaction with cost of service compared to businesses in the 2022 study.

The service provider’s customer service channels had a role in customer satisfaction. Small businesses that used providers’ mobile apps, video conferencing and websites had higher levels of satisfaction and saw faster problem resolution compared to businesses that communicated through email, phone calls to account representatives or interactive voice response, the study found.

Businesses often said that retail customers needed assistance to use debit and credit cards, another driver of dissatisfaction. Only 43 percent of transactions were always completed without assistance when retail customers used their credit or debit cards to pay for goods, according to the survey. For ecommerce transactions, only 47 percent of transactions were always completed without the retail customer needing some type of assistance. The study found that common problems included the card being declined, tap/dip/swipe issues, frozen screens and receipt malfunctions.

The biggest declines in overall customer satisfaction with merchant services providers came from the restaurant industry and small businesses with less than $1 million in annual revenue. These businesses said they received less support from their merchant services provider related to understanding payment processing and fee structure. They also had less satisfaction with cost of service for in-person payment methods compared to the cost of service for takeout or delivery ecommerce platforms.

“Now is the time when merchant services providers really need to prove their value to small businesses by offering proactive service and support to address inflationary concerns and high-quality technology that works every time,” Cabell said.

Bank of America, with a score of 886, ranked highest for merchant services satisfaction for a second consecutive year.