Why British e-commerce SMEs fear switching payment providers?

By Puja Sharma

In the last two years, a third (34%) of UK SME e-commerce merchants have switched Payment service providers and a further 37% have considered switching. The main reasons for switching, or considering a switch, are cost, complexity, and poor customer support, but several factors prevent switching.

One of the fastest-growing payment service providers in Europe,  Mollie, shared initial findings from a survey examining the state of the UK e-commerce sector, through the lens of small and medium-sized (SME) merchants. The assessment of the 500-strong representative cohort reveals a lack of proactive advice and support from Payments Service Providers (PSPs) but also a fear of switching.

This report is based on an online survey of 500 UK SME merchants with e-commerce activities generating between £500,000 and £25 million in revenue per year. Respondents were either members of the merchant’s eCommerce senior decision-making team or the final decision-maker. The survey was completed by Coleman Parkes between December 2021 and January 2022.

More than half of SMEs (52%) reported being frustrated by slow response times. Nearly two in five (39%) complain that communications methods are not appropriate to their needs, and over a third (35%) say that their biggest frustration with their PSP’s customer service is the lack of issue resolution. Over one-third of businesses surveyed have unresolved issues and a staggering 95% of those report service issues – just 5% were completely satisfied with the service they receive.

In the last two years, a third (34%) of UK SME e-commerce merchants have switched PSP and a further 37% have considered switching. Only 12% have never changed and 9% have never even considered it. The main reasons for switching, or considering a switch, are cost, complexity, and poor customer support, but several factors prevent switching.

Uncertainty surrounding the potential impact on customer experience (31%), fear of the costs of adopting new technology (29%), and complications with switching (28%) are the key factors preventing UK SMEs from switching PSP. Also ranking highly is the feeling it is too risky (23%), a lack of internal skills to manage the change (18%); and integration concerns (28%). For almost a third (28%) of UK SME e-commerce merchants, contractual lock-in was a major factor preventing switching.

“UK SMEs are quietly dissatisfied with their payment service providers, accepting and working around unresolved problems and unresponsive support. Fear, uncertainty, and lock-in prevent them from switching,” said Josh Guthrie, Mollie’s UK Country Manager.

“Amazon already accounts for more than 30% of UK eCommerce sales and this will intensify, threatening UK SME growth ambitions. UK SMEs deserve better – they need PSP partners with hosted onboarding to ease switching, a superior checkout experience to drive conversion, and dedicated customer support that can help SMEs compete and grow, not just process their payments,” he added.

Key highlights

• Only 5% of UK SMEs have no issue with their current Payment Service Provider (PSP).
• More than half of SMEs (52%) are frustrated by slow response times.
• Fear (29% worry about adoption costs), uncertainty (31% worry a change will impact CX), and contract lock-in (28%) are preventing UK SMEs from switching PSP.