Womply’s data science team recently studied the long term impact of deploying their merchant-facing Insights software across acquirer and processor merchant portfolios. The study looked at over 400,000 merchants from more than ten of Womply’s partners over the past three years. After controlling for other factors, the study concluded that merchant portfolios that used Womply Insights saw an average 17% reduction in attrition, as compared to those that did not use Womply Insights.
As seen below, three representative examples show the impact that Womply Insights had on merchant attrition across a wide variety of partner portfolios. A Top 10 Acquirer saw attrition drop from 28.8% to 23.5% (an 18.4% reduction), a Top 25 ISO decreased from 40.3% to 35.1% (-12.9%), and a Top 10 ISO moved from 27.2% down to 22% (-19.1%).
Merchant attrition is one of the biggest issues facing the merchant acquiring industry. Many companies have already set plans in motion but realize the scale of the issue means there will not be an overnight solution.
“We know we have more work to do here to drive significant improvement, and we’re relentlessly focused on [reducing attrition].” - Frank Bisignano, CEO of First Data, Q3’16 Quarterly Review
The merchant acquiring industry loses more than $2b each year as a result of merchant attrition and spends more than $1b per year acquiring merchants to replace the ones they’ve lost. Often the replacement merchants are acquired with less favorable pricing, which has led to a steady decline in gross margins over the past few years. According to Goldman Sachs Equity Research, “the industry continues to face significant pricing headwinds as a result of the relatively commoditized nature of merchant processing services.”
Interviews with merchants suggest three major reasons why Womply Insights makes them more likely to stay with their acquirer. First, Insights helps merchants grow their business, which is a valuable benefit they don’t get from most acquirers. Second, once merchants start using Insights, inviting their staff, and contributing their own data, they don’t want to leave that investment behind. And finally, Womply’s deployment of Insights enhances the acquirers’ brands, which has been measured with improved NPS scores. Together, these factors make it harder for low priced competitors to get a foothold. Womply Insights is viewed by the merchant as a value-add instead of as a utility.
“We and our partners are thrilled with the results Womply Insights has shown in reducing merchant attrition,” said Nathan Scripps, Head of Special Projects at Womply. “We look forward to announcing more products and solutions that can help our partners tackle this important issue in the near future as we continue to create a better merchant experience.”
If you’d like to learn more about this study, contact our Partnerships team by email at email@example.com.
First Data is a registered trademark of First Data Corporation (NYSE:FDC) and the reference to First Data is not intended to imply partnership between Womply and First Data.