The global market size for payment processing solutions was valued at $74.4 billion in 2020. That figure will surpass $120 billion by 2025. The increasing popularity of contactless payments will drive this growth.
Offering your clients various reliable payment processing solutions is a good way to add value to your services. But implementing a foolproof payment processing system is easier said than done.
Too often, businesses make payment processing mistakes that end up frustrating both the client and the business. In today’s post, we highlight some of these mistakes and show you how to process payments in a manner that boosts your company.
What Is Payment Processing?
Payment processing refers to a series of steps taken for authenticating and approving a transaction. The steps are then followed by transferring money from the client’s account to that of the merchant.
All transactions that do not involve physical currency and paper checks need to be processed. These include such payments as those performed using credit cards, debit cards, and electronic checks.
To conduct payment processing, you need a payment processor. This refers to a business entity whose role is to coordinate non-cash payments by first authenticating the payment information and then disbursing money to the merchant as soon as the sale is complete.
A payment processor ensures that the relevant parties involved in the transaction receive their portion of the money. These parties include the merchant, the credit card association, and the issuing bank. One of the most popular credit card processing solutions for small businesses is Microsoft Dynamics 365 Business Central Credit Card Processing.
Top Payment Processing Mistakes Businesses Make
The nature of your payment processing system can either foster or hinder your growth as a business. That’s why you need to assess every decision you make carefully to choose a system that works for you. Here are four pitfalls to steer clear of.
1. Choosing the First Payment Processing Company You Come Across
As you’re going to find out, there are numerous payment processing service providers in the US. Note that not all of these companies offer the same capabilities or charge the same prices. That’s why you should always compare multiple payment processing companies before you make a final decision.
When choosing a payment processing service, try to match the features on offer to the needs of your customers. For instance, if your clients use mobile point of sale (mPOS), you want a payment processing solution that supports that. Similarly, if your customers want to set up recurring payments, the payment processing service you choose must offer that feature.
Make sure that you’re partnering with a service provider who has experience working with businesses like yours. Legal businesses, auto dealers, HVAC companies, and B2B accept payments differently. A provider with experience in your industry will understand the baselines required for accepting payments.
2. Ignoring a Payment Provider’s Reputation
The reputation of a service provider is the clearest indication of what kind of experience you can expect working with them. That’s why you need to do your homework about what others say about the company before you partner with them.
Your prospective payments company will provide several references you can talk to. Be sure to call at least three of these references to see what they have to say about the company. Read online reviews of the service provider to get a clearer picture of how your prospective partner handles clients.
3. Not Paying Close Attention to the Fees
Many entrepreneurs don’t take enough time to understand the costs associated with a merchant account. You need to get familiar with the wholesale fees charged for card payments, as well as other ongoing expenses.
- Generally, a merchant account will attract:
- Setup fees
- Address verification costs
- Discount rates
- Ongoing expenses for using a payment gateway
If you decide to terminate your contract with your payment processing company, you may need to pay a termination fee.
Before you sign up for a payment processing service, go through the contract and understand all the fees associated with setting up an account. Read the fine print to ensure you don’t lock yourself into a long-term commitment that doesn’t suit your business.
4. Ignoring Chargeback Issues
As soon as you’ve signed up for a payment processing service, you need to take necessary action to protect your company’s finances. One of the issues you’ll need to tackle has to do with chargebacks.
On some occasions, chargebacks are genuine mistakes where clients forget that they purchased an item or service and file a chargeback. But chargebacks can also be deliberate fraud. Either way, you need to take action to ensure you aren’t losing money through chargebacks.
The best way to deal with chargeback issues is to keep an accurate record of all payments along with a record of all orders. This way, you can challenge chargebacks where necessary.
Ensure that your return policy is clear to minimize chargebacks. In addition, have a list of terms and conditions that clients can easily understand and provide the highest possible standard of customer service.
Get the Most Out of Your Payment Processing Solution
One of the best ways to keep your business running efficiently is to invest in a reliable payment processing system. That entails avoiding payment processing mistakes that can lead to customer frustration or lose you money.
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