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5 Online Payment Processing Challenges for Small Business and How to Deal with Them

As a merchant, doing business online can be a great way to instantly expand your customer base and increase sales. After all, a website is open for business 24/7 and customers can shop your products from the comfort of home. For all its benefits, there are also some common online payment processing challenges for small businesses that can impact your bottom line or even threaten your security. Here are some of the most common ecommerce payment processing challenges for merchants—and what you can do about them.

The 5 Most Common Online Payment Processing Challenges for Small Business

Fraud and hacking are the most serious challenges merchants have to contend with but you will also need to think about fees, software functionality, integrations, and other challenges that can affect your day-to-day operations. 

1. Data Security

When doing business online, both you and your customers are vulnerable to data breaches at the hands of hackers and malware. When customer data is compromised on your website, you not only face the risk of chargebacks and costly fines but also the loss of trust among your customer base. 

While merchants don’t have the power to completely block a hack, there are things you can do to minimize the risk. In addition to making sure your website is compliant with PCI standards, it’s also worth taking additional steps to prevent data breaches, including:

  • Use a firewall. A firewall monitors traffic to and from your network to identify and block threats, whether that’s malicious scripts trying to get into your website or suspicious transactions trying to pull data from your website. It’s an ecommerce business’s first line of defense. 
  • Add bot protection. As much as 57% of all cyberattacks targeting ecommerce websites are committed by bots. Rather than manually hacking one site at a time, bots give hackers a way to quickly target hundreds or thousands of websites at once. Use CAPTCHA and other bot detection strategies to prevent bots from infiltrating your website or committing fraud. Then, periodically update them because bots are getting more and more sophisticated all the time so detection tools, likewise, need to be updated to detect the latest bots. 
  • Regularly purge old records from your database. The less information you have stored, the less there is for a hacker to steal if they do breach your security. While multiple layers of security can drastically reduce the number of successful attacks, there’s always the threat that a hacker eventually will break through. Make sure that if they do, there isn’t much for them to find. 

Data breaches aren’t the only security threat merchants face online. Credit card fraud is also common. To make things worse, it can be so hard to prevent. Without being there in person, a lot of the basic prevention strategies like checking ID or requiring a pin code aren’t available. 

That doesn’t mean you’re powerless, though! Again, PCI compliance will also help reduce the risk of fraud. Beyond that, implement red flag alerts to suspicious activity or transactions and make use of other security tools that help you detect and stop fraud before it happens. 

2. Chargebacks

While preventing fraud and hacking will also minimize the risk of chargebacks, merchants also face the risk of chargeback requests from customers who did initially authorize the purchase. This category of chargebacks can happen when the customer did not get what they paid for, was accidentally charged twice or charged the wrong amount, received the delivery later than expected, or did not get a refund they requested.

Whether it was the result of a legitimate mistake on your part or not, a chargeback can hurt your business and cost you money. Fortunately, there are things you can do prevent these kinds of chargebacks:

  • Set realistic expectations. The products or services you offer should be clearly and accurately described on your website. Include detailed information about size, quantity, condition, and any other features of a product that would be relevant. For services you offer, be extremely clear about what is and is not included in your service price. Ensuring a customer knows exactly what they are buying prevents them from making mistaken assumptions. It also gives you a strong defense against any claims that you misled the customer. 
  • Communicate clearly and often about orders. Provide estimated delivery windows. Promptly alert customers to any delays that come up. For services, offer regular progress updates. If a customer feels like an order is taking longer than it should, they might assume something is wrong. 
  • Provide a clear refund process. No matter how great your product or service is, refunds happen. If you provide a clear and straightforward process for handling those refunds yourself, you can avoid having customers turn to their bank to request a chargeback. In addition to offering refunds, be sure to communicate clearly throughout the refund process including what the customer needs to do, when the refund will be authorized, and how long it will take for the funds to appear on their card.

3. Processing Fees

In a store, you can curb processing fees by accepting cash payments and even offering a cash discount program to incentivize customers to pay with cash. Online, you don’t have that option. Every online transaction will come with a fee. 

That makes it all the more important to ensure you check the fees carefully when choosing a payment processing service. Be especially wary of processors that charge a flat fee regardless of the card used or payment type. While it might seem like a simpler fee structure, it can often end up costing merchants more because they’re paying the same fee for all transactions regardless of how much it actually costs the service to process each transaction. 

Payment processing services like National Processing, on the other hand, use an interchange-plus pricing model so that merchants can save by paying less for transactions that also cost less for the service to process. Instead of a flat fee across the board, merchants pay the interchange rate plus a fixed processing fee.

4. Software Integrations

Whichever payment processor you choose, it’s important to make sure the payment gateway can integrate seamlessly with your existing technology stack. That includes your ecommerce software, like Shopify or BigCommerce, as well as accounting software like Quickbooks. Smooth integration ensures a seamless process for customers from shopping through to placing the order. It also makes it easier for businesses to keep track of transactions, inventory, and orders. 

5. Payment Methods

Even without the option of cash, there are still tons of payment methods customers might want to use when placing orders online. Credit and debit cards might be the most common but some customers will prefer to pay with PayPal, Apple Pay, or another digital wallet. Others might want a buy now, pay later option like Klarna or Afterpay. Still others might want to use ACH transfers or cryptocurrency wallets. 

Being able to offer as many payment options as possible via a single payment processor gives customers the convenience to pay however they want—which means you can decrease the risk of customers abandoning their cart because they find out they can’t pay using their preferred method.

Learn more about the payment types, software integrations, and security tools National Processing offers to ecommerce merchants here!

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Christian Woodward

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Customer focused

If we can't beat your current rates, we'll give you $500!*

We happily accept merchants processing any amount. Price guarantee for merchants processing $10,000 or more per month. Free terminals and other promotions depend on processing volume, credit and qualifications.

Customer focused

If we can't beat your current rates, we'll give you $500!*

We happily accept merchants processing any amount. Price guarantee for merchants processing $10,000 or more per month. Free terminals and other promotions depend on processing volume, credit and qualifications.