Here’s some fascinating research from Strawhecker. Tracking leading US acquirers, they show that new customers are paying 20% less than existing ones for the same service.
This result is consistent with the mystery shopping research I carried out in the UK late last year in which retention teams readily knocked 20% off the bill to keep a customer.
This isn’t new. It’s a normal financial services practice to entice new customers with low prices and then to take advantage of the customer’s lack of knowledge to put them up later. Here’s a particularly creative example from WorldPay highlighted by Cardswitcher. Another tactic common in the UK is to hit the client with PCI charges. I found one small dry cleaner paying £50 a month to Global Payments for non compliance.
This sort of practice can’t persist in the digital world. Not only are sites like Cardswitcher throwing a welcome light on the industry but new entrants such as Credorax and EVO will help to drive down prices overall.
Instead of eking out their margins by bamboozling their clients, acquirers should be investing in new products and services that genuinely add value to their customer relationships. Here’s three good examples:
- WorldPay Total Mobile – making mobile payment acceptance easy in new retail environments
- Clover from First Data – complete in-store commerce solution for SME retailers
- Fanfare from Elavon – mobile loyalty service for SMEs
No doubt Barclaycard will come up with something equally interesting following their purchase of The Logic Group.
Price transparency is coming to the payment industry. When it does, the winners will be the providers with the widest product portfolio, the strongest brands and the best customer service; not the ones with the tricksiest pricing teams.