Assessing the total cost of payments—including factors such as uptime, authorization rates and ... [+] preexisting payment method integrations—is the best way to determine the true impact of payments on the top and bottom lines.

While payment service providers (PSP) may like to believe otherwise, cost will likely always be a top factor that merchants consider when choosing their primary PSP. In fact, 66% of respondents to 451 Research's Voice of the Enterprise: Customer Experience & Commerce, Merchant Study 2022 note that keeping payment acceptance costs as low as possible is a high priority for their business. The survey also indicated that cost remains the number one attribute merchants consider when selecting a PSP, although encouragingly, additional factors like quality of tech platform, software integrations and value-added service are not far behind – a signal that more merchants are weighing their PSP selection decisions against multiple business priorities.

The top attributes merchants seek in PSPs are by no means universally consistent, especially when it comes to the length of time they have been in business. Traditional factors in the payments industry – cost, uptime and scalability – matter considerably more to merchants that have been in business for over 25 years. Cost is by far the number one factor for merchants in business for 25-plus years when selecting a PSP (71%), but considerably less for merchants in business fewer than 10 years (40%), where it falls outside of the top five attributes they prioritize. Scalability and uptime also matter more to older merchants than newer ones (9-point and 13-point differentials, respectively). One plausible reason for these differences is that older companies' operations have likely grown more expansive over time, and therefore, the consequences that payments have on their business (both in terms of expense and revenue) have intensified.

Compared with their longer-tenured counterparts, merchants in business for fewer than 10 years place significantly more emphasis on the quality of a PSP's tech platform (26-point differential), their vertical expertise (19-point differential), integrations with relevant software (15-point differential) and pace of innovation (10-point differential). This tells us that newer merchants favor PSPs that understand them and can plug and play quickly, while providing them with a strong platform to build and expand their business. Younger merchants are often more likely to think of payments as a growth lever for their business and are seeking PSPs that can help accelerate their trajectory.

Source: 451 Research's Voice of the Enterprise: Customer Experience & Commerce, Merchant Study 2022 ... [+] Q. Which attributes are most important to your organization when selecting a payment-processing partner? Please select all that apply. Base: All respondents (n=252)

Generally, while payment-processing fundamentals are more top of mind for older merchants, newer ones are placing greater emphasis on technology and innovation. Overall, it is also evident that a wide variety of factors influence PSP selection, with each attribute selected by at least one-quarter or more of respondents. There isn't necessarily a right answer regarding which PSP attributes matter more, and priorities will inevitably differ based on business requirements.

Merchants should always take into consideration the total cost of payments when choosing a PSP. For instance, it is not uncommon for a merchant to quickly eliminate the PSP with the highest processing rate when reviewing requests for proposals. However, it is entirely possible that the higher rate could be offset by the PSP's ability to increase authorization rates or reduce developer hours and enhance conversions thanks to the PSP's preexisting integrations with alternative payment methods. Similarly, a PSP with the lowest rate may also have high instances of downtime, which would quickly negate any potential cost savings. Assessing the total cost of payments—including factors such as uptime, authorization rates and preexisting payment method integrations—is the best way to determine the true impact of payments on the top and bottom lines.