The Companies Obsessed With Fees Are the Ones Who Can't Afford Not to Be

PSP fee negotiation feels like a smart move. It's actionable, measurable, and efficient, or, at least, it looks that way on the surface. In reality, optimizing the dollar cost of each action in your payment stack can create a false sense of control.

Our research has shown that companies with the highest payments capability score lower on fee transparency. It may be, then, that the companies devoting focus to PSP fee negotiation are doing so because they have no other levers to pull.

Bargaining on fees may feel powerful, but it can be a symptom of a deeper issue rather than a cure to any ills.

What fee transparency actually measures

At a glance, prioritizing fee transparency looks like best practice. Look a little closer and the picture becomes less clear.

The definition

In the context of payment processing, fee transparency refers to the level of visibility you have into what you pay each provider in your payment stack and why. Beyond your transaction fees, this can also include breakdowns into your interchange mix and any markups. It also gives you the ability to benchmark against market rates.

This may sound like a sophisticated dataset, but it's only so in isolation. The problem we've uncovered in our Orchestration Advantage research is that transparency tends to be highest among companies that cannot do much with that information.

Why low-capability companies invest in PSP fee negotiation

Switching providers can be expensive, slow, and involve deep technical challenges. For companies that can't afford (technically or financially) to switch, the only power they have left is to negotiate a better deal with the provider they can't leave.

Fee benchmarking, renegotiation, and SLA tweaks become the primary strategy for managing costs and performance, not because they're optimal, but because anything more meaningful is out of reach.

In fact, our report found that benchmarking and renegotiation is the most common cost management strategy, used by 65% of companies. Only 35% are using multiple payment gateways to create pricing competition.

Attempting to negotiate lower fees with a single PSP might help next quarter's costs, but it gets nowhere near the deeper structural inefficiencies that really move the needle on performance.

The structural reason high-capability companies have moved on

It seems counterintuitive that a company with a high-capability payment stack would score lower on fee transparency. Managing costs protects margins and commercial performance, after all.

The distinction is in the detail: these companies do care about fees, but they're managing costs at a higher, more impactful, level.

Multi-provider competition as a cost lever

When a company can route transactions across multiple providers, the power shifts. The PSP no longer has de facto control over the vendor's sales volumes when they can move freely between platforms.

Their redirect decision might be based on uptime, failure rates, or, of course, costs. Whatever the reason, optionality begets credibility. And credibility changes the dynamic. The entire provider relationship moves onto the negotiating table, not just the last-mile metric of what they charge.

Providers can no longer say "put up or shut up" when the vendor challenges them. They know they have to compete. That could be on transaction costs, sure, but it can also extend into areas like intelligent payment routing and service levels.

Token portability and its role in pricing leverage

It's not just the freedom to switch providers that offers a greater bargaining chip, it's the ownership of key data.

Typically, switching to a new PSP means starting fresh. Asking customers to reenter their credentials inevitably leads to churn, losses, and some damage to your brand. It doesn't matter how well you communicate it, it's friction, and friction is a threat for all businesses.

When a company owns its payment tokens, the cost of leaving becomes that much lower. The PSP loses key leverage over you and the pricing conversation changes accordingly.

With 93% of companies lacking full control over their payment tokens, this is a high-value capability for any company to unlock. And if you're starting from scratch with a new PSP, the best move you can make is to prioritize ownership of your new (and renewed) tokens before sharing them.

Why fee transparency becomes less critical when you have options

The freedom and flexibility to switch PSPs is the ultimate trigger for fee transparency to become less and less important.

What seemed counterintuitive, that the highest-performing companies have less visibility of the fees they're paying, is actually because they manage costs in entirely different ways. They don't need to negotiate about 0.01% of a transaction fee when they can pick up their whole sales ledger and move it off-platform.

Instead, they can play the whole market. Line-item costs matter less when the stakes are raised. The market can negotiate on your behalf.

Payment orchestration simplifies this process for companies, as switching PSPs can be as simple as a toggle on a dashboard. A low-risk, high-reward strategy is a rare commodity for merchants.

The consolidation trap

A popular school of thought argues that fewer providers means lower costs. That's true until it isn't. 58% of companies are consolidating to fewer providers. This can, conversely, end up raising costs through vendor lock-in.

Providers should be more than cost centers, they should also be value engines. Trimming them back to the bare minimum is a short-term gain with long-term consequences.

Why companies are consolidating

Managing multiple providers in a patchwork of dashboards, logins, and email threads is not a good way to spend your time. Without a complete orchestration stack, consolidating providers makes plenty of sense. For these companies, a new provider is another siloed system to manage, reconcile, and maintain.

McKinsey estimates that payments teams "can spend between 30 and 40 percent of their time searching for data if a clear inventory of available data is not available, and they can devote 20 to 30 percent of their time to data cleansing."

The overheads (in human and financial resources) keep climbing. Consolidation cuts them, but sacrifices your leverage in pricing negotiations. We're back at square one. The only caveat is that you never really knew the difference you could have had.

What consolidation costs in the long run

Cost-reduction is a valid and important program to follow. Consolidation is more like cost-avoidance.

Today, you make a cost saving. Tomorrow and beyond, you lack a powerful lever for creating a more effective and efficient payment stack.

Consolidating to two providers and negotiating hard to secure a great deal with both is still only as good as those two deals. Your competitor who can route across five providers with full token portability gets a better deal with little more than a quick email.

For a long time, your PSP was a fixed relationship. Now, it's a negotiable. Once you build the infrastructure to own and route your transactions as you please, you're no longer beholden to a single provider. You most definitely aren't beholden to their pricing.

PSP fee negotiation vs. payment orchestration: a side-by-side view

The image below shows you a comparison of what fee negotiation vs orchestration looks like. As a merchant, you want to be on the right side, holding all the chips.

What to do if PSP fee negotiation is your primary cost lever

The data points throughout this article should have made one thing clear: this is a widespread issue, throughout the ecommerce sector. The majority of companies don't have full control over their payment data, nor are they using multiple providers to drive competition.

It also means you've got enviable headroom for growth.

The diagnostic question

Most companies are asking "are we paying competitive rates?" That's the wrong framing. Instead, the more important question is "do we have the architecture to access competitive rates through competition, rather than negotiation?"

With that, you unlock a new direction of travel.

If your answer is no, if the idea of switching providers looks like months of work, technical debt, and customer risk, then fee negotiation is a ceiling you'll keep bumping up against. With payment orchestration, it could be your floor.

93% of the companies we surveyed would spend at least one month onboarding a new supplier. The architectural constraint keeps companies from enjoying genuine multi-provider bargaining power.

The path from negotiation to leverage

There's work to be done, but a clear journey to follow. We found five payments capabilities that define the best-performing companies:

1. Token portability
2. Fast provider onboarding
3. Dynamic routing
4. Routing logic updates
5. Failover redundancy

The first three capabilities are essential for unlocking better provision, as they enable data ownership, speed of execution, and provider agnosticism.

If you can build these five capabilities into your payment stack, you'll leave fee transparency behind and let the market do the work for you.

You'll have the architecture in place to build a high-performing, intelligent payment stack that does your negotiating for you. The path is clear, find out how to walk it in the full report.