Merchant acquirers that offer proprietary software or hardware payment systems, such as integrated point of sale systems or applications that work with mobile phones, typically have higher client-retention rates than providers that sell off-the-shelf products, according to observers.
If a provider develops a system "and it doesn't work with [other systems on the market], that merchant will have to stay," said Adil Moussa, an analyst with Aite Group.
Merchants using products that are compatible with multiple systems and are widely available "can move to another provider if they aren't treated well," he said.
Conversely, switching away from a proprietary system can be more complicated. Because of this, merchants using a provider's proprietary system are less likely to switch to a competitor over concerns about transaction rates, said Henry Helgeson, the president and co-chief executive of Merchant Warehouse Inc., a Boston independent sales organization.
Having proprietary systems "has helped us with attrition quite a bit," he said. "Merchants don't leave over rates at this point."
Retention is "unbelievable" with United Bank Card Inc.'s Harbortouch proprietary point of sale system, agreed Jared Isaacman, the Hampton, N.J., independent sales organization's CEO. "The retention benefits are pretty obvious," he said.