Rising fees impacting online merchants ahead of holiday season
A majority of online merchants are adjusting their payment policies in the face of economic challenges.
Seven-in-10 (69%) merchants say they’ve changed how they accept or process customer payments due to economic headwinds and rising fees, while another 12% plan to make changes, according to new research from merchant services and credit card processing provider Wind River Payments.
The report found that merchants are encouraging consumers to use lower-cost payment methods such as debit and ACH (25%), offering cash discounts (23%) and adding fees to credit card transactions (25%). Meanwhile, independent software vendors (ISVs) are doubling down on payments monetization. Almost all (96%) ISVs that offer integrated payments today either have already or plan to explore new ways to monetize payments this year.
[READ MORE: Adobe: U.S. online holiday sales to hit new record of $253B]
Nearly half of merchants say their payment processing rates have increased in the past year. Many merchants are responding to higher payment processing costs by raising costs for consumers (46%) and surcharging (36%).
Increased fees are not the only problem online merchants are facing. Nearly two-thirds of merchants experienced fraud in the past year, and many are willing to open their wallets to fight back. Most (88%) say they would pay more for enhanced fraud prevention.
Fraudulent chargebacks (28%) were the most pervasive fraud type last year, followed by return and refund fraud (25%) and phishing or scam attempts targeting merchants’ business or staff (20%). Merchants report experiencing direct loss of funds (34%), lost or delayed revenue (27%), and customer trust issues (15%) because of fraud incidents.
Nearly 30% of merchants have lost revenue due to payment issues in the last three months. Top challenges include lost sales due to slow checkout or payment failures (15%) and an inability to support consumers’ preferred payment methods (19%).
“Payments have evolved from a back-office function to a strategic lever,” said Tyler Kattre, president at Wind River Payments. “Merchants are using payment choice more deliberately to manage rising costs, while software providers are using integrated payments to create stickier products and increased revenue. This sharper focus on payments will continue to grow as merchants and ISVs look for new ways to stay competitive, build resilience, and adapt to rising economic pressures.”
Wind River Payments’ research – The 2025 Payments Report: Macro Pressures Shaping the Landscape for Software Providers and Merchants – is based on a survey of 200 ISVs and merchants across the U.S.
