4 payment processing challenges and how to solve them

Challenge #1: Allowing payment options

When accepting online payments, you can take funds from anywhere in the world instantly, no matter where your customers are. By accepting card payments or bank transfers, you get paid quickly, regardless of physical borders.

Giving your customers more payment options opens your business to growth. But accepting multiple payment methods can be tricky. Let’s say you have a POS terminal and accept credit card payments. But your customer doesn’t have a credit card, and can only pay with a bank transfer.

Solution: Choose software that allows multiple payment options

A 2021 survey has shown that the convenience of payment options is the second most important factor when supporting a local business—customers care about it more than about refunds, discounts, or coupons.

But if you choose a separate payment processor for each payment method, you’d quickly find yourself spending more time on accounting than on running your business. That’s where a multiple-channel payment solution comes into play.

If your customers are other businesses, you can use Melio to get paid. You’ll receive a secure bank transfer, and they can choose to pay by credit or debit card, or ACH bank transfer.

Challenge #2: High fees

Generally speaking, you can’t process credit card payments without using a third party service. Most of those tools have a high transaction fee. The fee usually depends on the number of transactions you make or their value. Meaning some services charge a percentage of each transaction, while others have a flat fee. In addition, some processors have hidden fees and charge for additional line items not initially disclosed to the business.

Solution: Choose the right service

To make sure you save on fees, first you should define your needs. That way, you make sure you’re getting what you look for, and pay fees that are actually required. Some things to consider include what fees are there? Does the service support foreign currencies? What kind of customer support does it offer? Can it support your growth? What payment methods does the service accept? And what is the integration process like?

Another thing you can do is pass on fees to the customers. It doesn’t matter if the fees are calculated per transaction or monthly—the numbers really pile up. And adding a small fee to cover the cost can go a long way for your business. Don’t forget to be transparent and let customers know that the fee only applies when using a credit card.

Challenge #3: Fraud and chargebacks 

While online payments have many benefits, they raise concerns about information security. Small businesses are extremely vulnerable to cyber fraud and your business must protect your customers from fraudulent credit card transactions.

Another risk that comes into play are chargebacks, which occur when a customer disputes a charge. When approved, the issuing bank reverses the charge, reimbursing the cardholder and debiting the business’s account. And unfortunately, these can cost businesses between $20 and $100 per transaction.

Solution: Data security

The most effective way to protect your business and clients from fraud is by ensuring data and payment security. How do you guarantee that as a small business? Choose a reputable, secure payment processing solution. If you want to ensure that credit card payments are processed securely, your payment vendor has to be PCI compliant.

Challenge #4: Integration issues

Keeping track of incoming payments is difficult when your financial records are all over the place. If you use multiple tools to process payments from different sources, you may find yourself in over your head and lose track of where payments are coming from. Losing track of payments can also mean you miss a suspicious transaction which may alert you to the fact that fraud has occurred.

Solution: Choose a tool that syncs with your accounting software

To make sure your books are in order and that your bank account reflects money coming in and out, it’s important to use online tools that can sync in real time. If you use an online accounting software, choose a payment processor that works with it and updates data in real time.

For business payments, you can use Melio–which integrates with top accounting software–to get paid. This means that all your invoices and transactions are synced between the systems, and every payment you receive via Melio is automatically updated in your accounting software.