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How to solve attrition for merchant banks & acquirers ?

The payment industry is in a continuous revolution !

The payment industry underwent drastic changes since 2010:

  • Consolidation of payment specialists (M&A deals in 2019 amounted to $123 billion value deal (3))
  • The increase of new issuers (N26, Revolut, …) and acquirers (Stripe, Checkout.com, Adyen, Square)
  • New regulations (Contactless, Open banking, SCA, DSP2, Instant payment, BNPL, …)
  • Growing threat of tech giants (Facebook, Google, Wechat)

While the global digitization of payments slowed down in 2019, it drove a 7.4% annual revenue growth from 2010-2018.

And when the sanitary crisis hit, our industry was significantly impacted. As a result, the payment industry global revenue is expected to decrease by 7% in 2020 (1). The crisis acted as an accelerator to numerous steady trends: the share of cash-based transaction dropped, the share of online payment tripled (e.g. UK online payment jumped from 20% to 30%) and big tech giants share of the economy increased (Amazon’s revenues in the second quarter of 2020 increased by 40% year to year).

What’s next ?

3 emerging trends :

  • Focus on SME: McKinsey found that 76% of the acceptance industry revenue growth between 2017 and 2019 was generated by SMEs (1). The share of SMEs in the industry growth will continue to be high, since:
    • The growth of Acquiring orchestration to optimize transaction costs will erode the acceptance profit from large retailers
    • SMEs needs to integrate new payment method and develop their online presence
  • Added-value services: Mastercard revealed during MPE 2021 that 36% OF European acquirers think Buy-Now-Pay-Latter will be the norm in 2025. Additionally, 75% of acquirers think that POS will offer personalized and Instant rewards.
  • Optimized Sales & Marketing: Global consolidation focuses on production cost synergies. the Payment industry also enables the reduction of Sales & Marketing costs, through an intensive use of CRM and tooling, branding at global level, and better optimisation of the customer life cycle.

SME Attrition

The 3 profit pools identified above have a common denominator: SME Attrition. Pre-COVID-19, Attrition remained high and stable in the U.S.: 23-25% (5). In Europe, the situation varies between for 14% to 25% according to our discussions with acquirers. We can estimate that each lost merchant is a profit loss of 200$ to 1000$ (advertising, sales effort, and price discount).

With phones serving as in-store payment terminal without requiring additional hardware, changing from one acquirer to another will be simpler. In this scenario, acquirers must find ways to bring additional & binding services to SMBs to preserve this profit pool.

Loyalty services impact on payment acquirers


Large retailers and brands invest in Loyalty & Communication because it positively impacts customer behaviour. SMEs should be using a similar approach as our merchants experienced a 15% increase in their revenue. Merchants are willing to pay for loyalty services because the profit generated is significant compared to SMB acquiring fees. Additionally, if an acquirer’s merchant increases its revenue, it will increase the transaction fees and reduce the chance of merchant default.


Successful loyalty program entails an investment for merchants to enroll customers, offer vouchers and communicate regularly.

Izicap can successfully provide these benefits through the following steps:

  • Provide a better understanding of their activity using analytics
  • Set up a loyalty program with the help of their marketing experts (provided by Izicap)
  • Facilitate enrolments of customers so that they can accumulate loyalty points, come back to claim rewards and to chase new ones.
  • Generate automated communications and improve their e-reputation.

These efforts will generate new revenues (+10-20%), new habits for the merchants and a strong relationship with its Izicap marketing expert. Therefore, the risk of the merchant switching to another acquirer will be strongly reduced.

Moreover, switching to a new acquirer & loyalty service provider means losing transaction data history (and the ability to communicate automatically based on segmentation) and the status of customers loyalty account (earned points & vouchers).

Izicap impact on attrition

Izicap reduces the attrition of merchants from their payment acquirers by 20-40%.

In addition to the direct benefits of Izicap, the reduction of attrition can be explained by merchants’ willingness to invest money and time in a CRM Solution provided by their acquirer. These merchants have a better relationship with their customers and a higher interest for digital marketing. Both factors would affect attrition independently of Izicap. However, if there is a selection bias, it can not explain the difference between merchants with Izicap Analytics (mainly analytics services) and merchants with Izicap-Loyalty (CRM, Loyalty & communication solution).

Therefore, we can confidently assume Izicap is reducing the expected merchant attrition from its acquiring contract by 20%. For an acquirer with an average attrition of 25% and 100 000 merchants, the reduction of attrition will increase the yearly profit by $1 to $5M!

Why CRM & Loyalty Service is the natural next step for payment acquirers

Payment acquirers have 2 competitive advantages for the SMB market:

  • The payment terminal
  • The payment transaction data

Both are very useful for setting up successful loyalty programs and explain the success of Izicap:

  • We use the terminal to systematically inform the merchant’s customers of the existence of the loyalty program and to facilitate the enrollment process
  • We use the transaction data to:
    • Design the most suitable loyalty program based on current consumption habits of their customers
    • Automate loyalty tracking and voucher emission
    • Targeted communication based on customer data


Izicap decreases the merchant attrition rate from their acquirer by a minimum of 20%. In countries with low attrition, like France, it means merchants keep 2-4% more customers every year, which translates into 1-2% increase in revenue . In countries with high attrition, like Spain or the US, it means 4-8% more customers every year, which translates to a 2-4% revenue increase. In addition to the impact on attrition, Card-linked loyalty solution increases the transaction revenue by 10-20% and is an additional revenue stream for acquirers.

Loyalty works and is a natural next step for acquirers who needs new growth levers. In fact, 75% of them thinks Loyalty service at the POS will be a norm in 5 years!

Beyond the figures, we need to protect local merchants from the threat of large retailers who are strengthened by globalisation and digitization. One strategy is to provide them with digital marketing tools and expertise which is the core mission of Izicap. The Covid-19 crisis made this mission even more critical and made the merchants more aware of their needs for such services. So, I am very excited the Izicap team and our acquiring partners (Credit Agricole, Banques Populaire, Caisse d’Epargne, NEXI and Mastercard) empower them.

(1) The 2020 McKinsey Global Payments Report

(2) Office for National Statistics, McKinsey, Benedi Evans

(3) BCG during Money 20/20 2020

(4) https://www.adilconsulting.com/demystifying-merchant-attrition/

(5) https://www.digitaltransactions.net/magazine_articles/damage-control/ / Strawhecker Group