How much of an edge can your credit card processor give your business? You are about to find out, and the best part is that even small innovations make life easier for you as a business owner.
This quick read covers the following topics (then wraps up with a bonus Q&A section):
- Latest innovations in credit card processing technology
- How modern credit card processors are changing businesses
- Efficient credit card processing solutions for SMBs
Be sure to note two game-changers you’re likely reading about for the first time so you don’t get caught off guard down the line.
All Industries Feel Effects of Credit Card Processor Changes
Payment innovations and updates are affecting all industries, including e-commerce, brick-and-mortar stores, and traditional businesses. Staying on top of these changes sets your business up for success.
Three key payment topics to specifically monitor are:
#1 Evolving security enhancements
#2 Regulatory changes
#3 Processing fee options
We’ll get into the details of all three. Just know that security will only become more crucial as technology marches forward. Governments, card networks, and banks will try to stay ahead of technology that impacts businesses. And while processing fees are part of doing business, that doesn’t mean you don’t have options for saving money.
Let’s look at the latest innovations in credit card processing technology for…
Brick-And-Mortar Stores
The ability to accept a wide range of payments is vital to “meeting customers where they are.” They expect the ability to tap, swipe, dip, use EBT and debit cards, and even scan QR codes. Ensure your business offers all the above… even as the list grows with digital wallets, too.
Your credit card processor devices should pack a punch for positive customer experiences. Handheld card readers, barcode scanners, and customer-facing screens make purchases super-efficient. And self-checkout? When it’s user-friendly, customers love the convenience!
E-commerce
Naturally less secure than in-person payments, e-commerce can benefit even more from secure processing innovations. Biometric authentication and blockchain technology are helping fight fraud. But most business owners have not heard about the possibilities of quantum computing— a game-changer in payment security.
Experts say quantum computing can process data 10 million times faster than even supercomputers. As you know, speed is key to stopping fraudulent purchases before they go through. So, quantum computing has major upside for businesses and credit card processors.
“A survey of 300 executives across retail, commercial and private banking around the world, found 63% of them thought new technologies – including quantum computing – would have the biggest impact on banks in the next five years.” ~Fintech Magazine
Traditional Businesses
Businesses such as heating and air companies, accountants, law firms, etc., can now scale their business using credit card processor tools and features. Sales trends, customer history, and loyalty programs are some of the most useful features available. The ability to accept mobile payments at a client’s office, customer’s home, or via text message is also a giant leap forward.
These modern advances are helping businesses grow and increase profitability. However, processing fees add up, especially on big-ticket purchases. So, it has never been more important to compare payment providers and constantly monitor transaction reports for extra fees and chargeback patterns.
Now for more insights on security…
How Modern Credit Card Processors are Changing Businesses
When you partner with a reliable payment processor, they will be your shield against many forms of fraud. Two innovations they are likely to utilize are tokenization and machine learning.
Tokenization is a simple tool that, ironically, makes stealing a credit card number super-complicated for bad guys. This innovation basically hides credit/debit card data during payment transactions.
Machine learning has been shown to pick up on patterns and problems at lightning speed. This technology can stop fraudulent payments before they complete which saves business owners serious money lost to fraud. It also saves time they would have spent trying to undo the damage of a fraudulent purchase.
We have to mention a third security issue that could become a problematic game-changer in e-commerce— returnless refunds.
Returnless refunds or “keep it” policies allow customers to keep an item they are unhappy with but still get their money back. Amazon’s use of this policy encouraged other online retailers to do the same. It’s great for honest customers, but the potential for abuse is obvious.
*Merchant Risk Council reports 33% of merchants are experiencing first-party misuse or so-called “friendly fraud.”
Regulatory Updates Impact Credit Card Processing for SMBs
Of course, not all regulation changes are positive. Still, all updates should be monitored by small to medium-sized businesses. Ways to stay updated are:
- National Processing’s Newsletter and Blog
- Google Alerts for “payment processing regulation”
- Create business forum notifications on the topic
A couple of updates you might have missed:
- Compliance with PCI DSS 4.0 will be required by March 2025 – to combat fraud and losses, projected at $400+ billion over the next decade.
- The Federal Reserve Board updates concerning debit card transactions, emphasizing debit card issuers should enable at least two unaffiliated networks to process transactions.
Innovative Management of Credit Card Processing Fees
Fees are part of accepting electronic payments. But there are innovative solutions to lower your costs.
(Also, see our simple guide on various fee structures that can save your business the most money.)
Next, for businesses just starting out, we will look at QR codes.
What’s special about QR codes? They can allow you to accept payments right away without buying or leasing additional equipment. Not needing equipment may give you more flexibility in choosing a fee structure suited to your unique business. The QR code payment market is expected to be worth over $33.81 billion by 2030!
Even established businesses with full-stack point-of-sale terminals can utilize QR codes because they are incredibly flexible for online and offline marketing / sales. They can be a handy back-up in the field, too, in case a mobile card reader stops working.
Digital wallets are also an expanding innovation. Please don’t let your business miss out on revenue via digital wallets stored on smartphones. Statista reports there are nearly three billion digital wallets in use. This popularity may be leading to business-friendly fee structures with this technology.
It’s important to remember that these digital payments are not just available on phones. They are also used in wearable technology like smartwatches.
One more fee-related innovation is coming up.
Payments As A Service (PaaS)
In our eyes at National Processing, all credit card processors should naturally provide full service to business owners. That is how we do business. It’s a partnership with our customers.
However, with many providers offering less than stellar service and hitting customers with hidden fees, a new industry has emerged – Payments as a Service (focused on B2B).
The idea is that a business can offload the hassles of payment processing to a third-party company to:
- Speed up payments for invoices
- Monitor fees
- Prevent fraud
- Implement new payment tech
- Ensure regulatory compliance
Merchants must judge for themselves whether this is a positive or negative innovation. But it is hard to understand how adding another “middle-man” to the mix would reduce costs for businesses. And processing costs are the main concern for businesses, as a recent J.D. Power study showed.
Now for the Q&A:
Credit Card Processor FAQ
How many credit card processing payment options should my business offer?
At least four because a recent report showed North American businesses offered 4.3 payment options on average for customers.
What are underutilized modern credit card processor tools for preventing fraud?
Individualized fraud scoring models and multi-merchant purchase velocity models (both expand security checks).
What is a top problem credit card processor innovation can solve for merchants?
Having to manually review orders to prevent fraud. One report showed 60% of merchants plan to eliminate or reduce their time spent on this inefficient task.
