When it comes to paying for anything, few options outrank credit card payments. This happens because credit card payments increase profitability and are quick and easy to accept. Also, accepting credit card payments keeps you competitive in the market.
However, when you start accepting credit card payments, there are a few mistakes that you must be aware of. If not, accepting payments from credit cards would be a costly affair for you and could hamper your business financial condition.
So, here we are discussing the most common mistakes you must avoid or be cautious about:
Not Choosing The Right Payment Processor: This is one of the most common mistakes that businesses make, and which ends up putting them in huge crises. Each payment processor offers unique features to lure businesses, but not all end up providing the same.
So choose someone who can adhere to your business goals. For instance, if you run an offline business, you might need hardware like a POS terminal; but if you are running an online business, you need a payment processor remotely.
Selecting The Lowest Rate Payment Provider: While you might be looking for someone who provides the lowest rates, working with any random processor might lead you to trouble.
Also, not all processors who guarantee the lowest rates offer low rates. For instance, if you have quoted a rate of 2.45%, you may end up paying more than the quoted one because merchants usually follow the bait-and-switch technique to attract customers.
Keep in mind that when you process payments, the total cost associated consists of three parts: the cost of the bank, the processor’s cost, and the cost of the credit card company. This means that the total cost is not simply dedicated to the processor’s price; it includes all the above-said factors.
Not Keeping Card Details Secure: If you have a habit of writing card details anywhere or are storing your customer’s details in excel- you are putting your or your customer’s money at risk.
No matter how vigilant you are, manually storing data is not secure. If the card details fall into wrong hands, your business and the customer’s money can be at risk. So, protect each one by putting cards’ safety first. You can look for payment providers who are certified against the PCI industry standards.
Paying Too Much To Accept Credit Card Payments: There are various payment providers who offer credit card payments but offer high setting costs, ongoing fees, and much more.
Some also charge extra for things like point-of-sale card readers. So, think about your business budget and then decide when you want to do it. Make sure you compare deals with other providers and end up with the best one.
Not Generating Invoices: if you are only accepting payments from banks, you are making things complicated. Putting up the account numbers and BSBs is not just time-consuming, but frustrating.
Also, there’s a high chance of errors, which can result in missing payments. Plus, in this, your customers can have only cash. so, look for the providers who let you add a payment link to your invoice. This will increase flexibility and will be convenient for the customers.
Not Realizing That Accepting Credit Cards Can Be Risky: if you have ever heard that as a merchant, you must accept credit cards, you might be in misconception.
However, the fact is that some businesses like payfac as a service provider or online merchants may suffer high risk when allowing customers to accept credit cards.
For instance, if there’s any dispute between the online customer, it might take at least six months to dispute that charge. This means you will have to borrow this money until the dispute gets resolved. And, if not resolved, it could do damage to the cash flow.
Not Updating Equipment: As a merchant, your customers expect to be able to pay in the easiest, safest, and fastest way possible. This means you are required to have touch-free terminals and EMV chips installed.
And, if you haven’t done this yet, you must upgrade your hardware. This will keep your customers happy and also minimize fraudulent charges.
Not Avoiding Chargebacks: Chargebacks are not good for any business as you may end up paying a fee which will raise a red flag to your payment provider. Keep in mind that you must avoid chargeback at any cost and for that follow these steps:
- Set a clear return policy
- Make clear terms and conditions
- Issue refunds quickly
- Provide satisfied customer service
- Make things clear, especially for online merchants
- Always have a written agreement with your clients and customers for all the services you provide
- Never close any transaction without valid authorization
Believing You Are Safe And Protected: Because you have followed all the fraud-protecting policies doesn’t guarantee that you are safe. When accepting credit card payments, there are some risks associated with them.
For instance, high processing payments may put your profile at risk. Additionally, if you are working in a high-risk industry, your profile could be at risk. So, keep yourself protected and be vigilant about everything.
Ignoring The Pros And Cons Of Minimum Payments: Have you ever noticed a sign that says, ‘$10 minimum on credit-card purchases’? Yes, even though you just want a coffee, you can either leave the place or end up buying more stuff.
According to the Durbin Amendment of the Consumer Act, business owners do have the right to set a minimum amount of up to $10. Also, they can add surcharges and other fees to process credit card transactions.
Keeping that in mind, if you are running a small business that sells less expensive things, having a credit card machine may not be beneficial. Think of the pros and cons of installing a credit card machine and then spend.
Not Considering Customer Service Issue: As said, if you want to make a new customer, your repeat customer, you need to deliver a great experience. For instance, if your customer has a question regarding the transaction and you have chatbot functionality installed, you are delivering amazing services.
Ignoring Underwriting: If it’s the first time you are accepting credit cards, your processor may work with you nicely. But the moment you reach the revenue of $50,000 or more, you must work with the processor who is strict with underwriting. The processor will assess how risky it could be for your business to accept credit cards.
Not Keeping Records: Businesses must have accurate and detailed records. Also, when it comes to credit card payments, keeping a record might help in fighting chargebacks like when the customer forgets that they had made the purchase.
Not accepting credit card payments carefully may compromise your customer’s security and put your business in grave repercussions. It could also cost your business time and money. So keep in mind the above mistakes and accept money with peace.
