Common Payment Processing Challenges for Small Businesses

The Internet is an unavoidable component in the day-to-day life of an average citizen in any country. Using a card machine in your brick-and-mortar store is no longer sufficient if you want to expand your business in the modern world. It is vital to connect your business to the internet. You must use online payment processing if you want to conduct business online. The act of taking electronic payments for products or services ordered online is referred to as online payment processing. It outlines the methods required to move money from a customer’s bank account to the company’s bank account. It operates quite similarly to a card reader. The only difference is that online payment processing doesn’t need a physical device to operate.

Online payment processing comes in many different forms, such as credit and debit card purchases, bank transfers, and electronic wallets. A payment gateway typically processes the transaction, authorising online payments by securely encrypting and transmitting payment information. With the help of online payment processing, businesses can now accept payments swiftly and securely, and customers can shop whenever they want, from anywhere in the globe.

Businesses should offer outstanding customer service, maximum flexibility, and high-security standards in addition to accepting online payments. Online payment processing provides businesses with several advantages in addition to giving clients a simple way to pay. For instance, it can help simplify accounting and reporting procedures and lower the risk of fraud and chargebacks.

Payment Processing Challenges Small Businesses Face

Despite the benefits of accepting payments online, businesses will encounter some challenges when attempting to implement online payment processing. What are they? Keep reading as the challenges are listed below.

Expensive Transaction Fees

One of the biggest problems small e-commerce enterprises have been the high cost of transaction fees. The price charged by the payment processor for processing each online transaction mounts up quickly, especially for small businesses with little cash flow. To solve this problem, small e-commerce enterprises should evaluate transaction costs and look around for payment processors. For small firms, some payment processors have cheaper transaction fees, while others give discounts for large numbers of transactions.

Additionally, small enterprises should haggle over transaction costs with their payment processor. Payment processors usually agree to work with small businesses to create a pricing strategy that suits their requirements and financial constraints.

Client Payment Preferences

Choosing appropriate payment alternatives to offer customers is a problem that many businesses owners face. Recognising and adopting client payment preferences is one of the tactics used by small firms to remain competitive. If you hired a different payment processor for each payment method, you would soon find that you were spending more time managing your finances and bookkeeping than running your business. Fortunately, multi-channel payment options can spare you from this inconvenience.

According to a survey by 2021 Podium, people care more about the ease of payment alternatives than they do about discounts, coupons, or refunds when deciding whether to patronise a local business. Additionally, the survey revealed that if a customer’s preferred payment option is not offered, nearly a quarter of them will cancel their transaction.

Security Concerns

Security concerns are a problem for small e-commerce companies when they accept payments online. Due to the sensitive financial information involved in each transaction, customers want payment processing to be safe and secure. To get around this problem, small e-commerce companies should prioritise security and put safeguards in place to secure customer data. This includes employing secure payment channels, encrypting information, and abiding by industry regulations like the Payment Card Industry Data Security Standard (PCI DSS).

To provide their clients with a sense of security, small businesses must explain the security measures they have in place. This may help people grow to trust and have confidence in the online payment processing procedure.

Disputed Payments and Chargebacks

Chargebacks and payment disputes are common issues for brick-and-mortar e-commerce enterprises. A payment dispute occurs when a consumer rejects a charge on their credit card, but a chargeback happens when a customer disputes a charge, and the funds are returned to the customer. To get over this problem, small e-commerce companies should have a transparent refund policy and let their customers know about it. It’s also crucial to resolve payment disputes and chargebacks as soon as possible and to back up the transaction with proof.

Small businesses ought to think about putting fraud prevention tools like address verification and two-factor authentication into place to lessen the probability of payment disputes and chargebacks.

Checkout Experience

Simple checkout procedures that meet the user’s needs are one of the most challenging aspects of small business. Any customer who has a bad checkout experience will lose interest in your company quickly.

What is the typical processing time for credit card payments on your e-commerce website, for instance? You will lose the consumer if your processor isn’t faster.

If the checkout procedure is excessively complicated or lengthy, 87% of online shoppers abandon their carts. The integration of an easy-to-use system for both the merchant and his consumers by the payment processor is crucial. Additionally, the top payment gateways will take a variety of payment methods, including credit and debit cards as well as applications like PayPal.

Lack of support

Businesses now operate for longer than the standard 8-hour workday. When their payment partners fail to offer them accessible support when they desperately require it, it can be frustrating. The financial flow of your business may be strained by unprocessed or delayed payments, which can also irritate customers. Payment processing must be rapid, simple, and always accessible. You might need to select a different payment processor if you’re not receiving service during and after regular business hours.

Integration issues

Your present systems and software must smoothly interact with your new online payment platform. Otherwise, they could make your operations more difficult and cost you more time and money during the processing process. The operational efficiency of your payment platform might be increased when it is fully integrated. Therefore, you won’t need to bother about laborious administrative tasks like manually updating transaction data.

Multi-Currency and Payment Methods

Online transactions enable businesses to compete on a global scale, and customers can use a variety of payment options to pay in their own currencies. However, there are hurdles merchant face in each national market due to cross-border transactions, multi-currency transactions and new regulations.

It is beneficial for businesses if they can find a payment processing solution that can provide effective and immediate answers to these problems.