5 Issues You May Run Into With Payment Processors as an Entrepreneur

Many business owners, both big and small, deal with challenges with their payment processors. And, yes, even commonly used payment processors have their share of issues.

Whether you’re searching for a payment processor to kickstart your business or looking to make a switch to something better, below are five issues to keep in mind when selecting a processor. While some of these issues can be avoided, other times, they’re inevitable but may at least be less of a problem with certain processors.

1. Processing Fees

All payment processing companies charge processing fees in one way or another. Some charge per transaction, while others may offer a flat charge option or a subscription.

Regardless of whether you directly pay processing fees per transaction, have a flat-fee option, or pay your processing company via a membership or subscription, the associated fees – from assessment fees charged by card networks to interchange fees paid to banks – are eventually covered by your business or your customer if you pass the fees on to them.

When searching for a payment processor, be sure to weigh your options, as each payment processing company charges different fees. Keep in mind that paying fewer fees doesn’t necessarily mean the payment processor is right for you.

2. Failed Payments

Having payments fail is inevitable when you use a payment processor. There are many reasons payments may fail, such as the customer having insufficient funds or attempting to use an expired card.

However, with some payment processors, payments may fail more frequently. This can occur if they have strong security measures that wrongfully flag legit transactions or experience frequent technical issues.

3. System Outages

Outages and technical problems are bound to happen with any third-party card processor from time to time. However, some companies experience outages more often than others. Frequent downtime can lead you to having to turn customers away, which can be inconvenient for both yourself and your customers.

4. Delayed Transfers

Unless you want to pay an extra fee, the money you collect via your payment processor doesn’t immediately hit your bank account. It usually takes at least a few days. Business owners may find this not only inconvenient but challenging in terms of keeping up with the costs of their business.

What is more, transferring of money can be further delayed due to holidays, weekends, system issues, or even having your great PayPal account frozen for reasons like suspicious activity or a policy violation.

5. Security Concerns

Optimal security is a must with any payment processor. The last thing you want is a processor that doesn’t have adequate security to detect fraudulent payments or is prone to data breaches, which could put your business’ and customers’ personal data at risk. A well-secured payment processor is perhaps one of the most critical aspects to consider.

Conclusion

Payment processors may not be perfect, but they are typically a necessity for most businesses. Processing fees, failed payments, system outages, delayed transfers, and security concerns are all common issues entrepreneurs may face when using a payment processor. Weighing the pros and cons of each processor can help you determine the right fit for you.

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