Payment Processing Challenges

Even if a company has a healthy revenue, issues with payment processing can still cause harm to cash flow, profitability, customer trust, and more. Let’s look at some of these challenges in more detail.

Payment Delays:
Not receiving payments on time can disrupt merchants’ cash flow and ability to meet their financial obligations such as payroll or paying vendors, distributors, and their personal bills. Payment delays may also result in bounced payments and checks or overdraft fees — not only for the merchant, but also for their customers. When customers are affected, that can lead to bad reviews or other negative customer actions.

High Fees:
When customers make a purchase, payment processors charge a fee deducted from the transaction amount. Excessive fees or high fees can eat into merchants’ profitability especially for smaller merchants who have low margins. And for those businesses with high volumes of low-ticket transactions, those fees can add up quickly.

Chargebacks:
Disputes over transactions can lead to chargebacks, which result in merchants losing the sales and incurring additional fees. Those disputes can be costly, not to mention time consuming.

PCI Compliance:
Payment Card Industry (PCI) compliance ensures a merchant is meeting security standards when accepting payments. These PCI requirements are set by the Payment Card Industry Data Security Standard (PCI DSS) and are managed by the PCI Security Standards Council (PCI SSC).

PCI compliance reduces a merchant’s risk exposure, data breaches, and fraud. Unfortunately, some merchants do not understand the importance of being PCI compliant, and this can lead to financial losses and reputation damage.

Integration Options:
Merchants are looking for more integration options. They want a more streamlined process that allows them to not have multiple systems, which can be costly. More integration options also allow for scalability, making it easier to adapt and expand as their business grows, as well as enhancing the customer experience.

Payment Processing Solutions:
A good merchant services provider should have solutions to each of the payment processing challenges listed above. The next step is to ensure you are receiving the following offerings.

Next Day Funding
To help solve payment delays, some merchant services providers offer next-day funding. This feature allows merchants to forgo the standard holds and receive their payouts within one business day.

Interchange Optimization
One of the payment processing fees merchants face is interchange. Interchange is the cost the merchant incurs to accept credit cards at their business. They’re usually non-negotiable because this cost covers the risks associated with payment processing, such as fraud.

Interchange optimization allows business-to-business and business-to-government merchants to get the best interchange rates by providing Level II and Level III data to credit card associations (Level I data, which is collected by the average merchant, is usually just a customer’s basic billing information). Those additional data levels are captured at the point of sale when a customer uses purchasing cards. In order for a merchant to benefit from this, they must process transactions through a third-party gateway that supports Level II and Level III processing.

While B2B and B2G most commonly benefit from interchange optimization, retail businesses can as well. In fact, business cards have become more commonplace in retail, making interchange optimization even more important for any business accepting credit cards.

Chargeback Protection Tools
While there’s no way to completely eliminate chargebacks, there are tools that can help merchants prevent them from happening as well as diminish or avoid the repercussions of a chargeback.

Fraud screening and fraud scoring are two examples of pre-transaction chargeback prevention tools. Fraud screening tools include address verification service (AVS) and fraud blacklists. AVS helps reduce fraud risk by checking the billing address in the transaction with the address registered with the issuing bank or card provider. Fraud scoring uses machine learning and artificial intelligence to compare transaction details against a list of common fraud indicators.

Post-transaction tools include chargeback alerts and network inquiries. Chargeback alerts allow merchants to issue a refund for a disputed transaction before the chargeback is officially filed. This can save the merchant fees (even though they’ll still have to pay out the refund) as well as damage to their business and reputation. Network inquiries work like chargeback alerts, but it is possible to resolve the disputed transaction without having to issue a refund. A network inquiry program allows card issuers to electronically request additional information from the merchant about the transaction. This can help remedy fraudulent claims before they turn into chargebacks.

PCI Compliance Educational Materials
While being PCI compliant is not a legal requirement, merchants who accept card payments should follow these PCI SSC regulations if they want to avoid data theft and all the problems it can cause..

Integrated Payments
A good merchant services provider will provide payment solutions that businesses can integrate with their preferred shopping cart, accounting software, or website solution. An even better merchant services provider offers up valuable extensions that help to streamline business processes, enhance payment offerings, and generate more sales.

For example, CardPointe users can access integrations such as the Amex OptBlue® Program, Money Network payroll tool, or CardPointe Card Account Updater, to name a few.

These integrations give merchants the flexibility to incorporate new solutions as they grow or swap out tools as their business needs change.

In conclusion, ensure you are working with partners, such as Clarity EPS, who utilize the latest in technology to help business process transactions, more efficiently, securely and always for less money.