Avoid these three pitfalls to process credit card payments
Finding a trusted merchant account provider is probably not the first thing you think about when writing a business plan. But neglecting careful planning about how to accept credit card payments can jeopardize the entire venture. If customers cannot make secure payment transactions in their preferred payment method, they are less likely to frequent a business.
To demonstrate what can go wrong when setting up payment processing, let’s take a look at a fictional small business owner’s experience.
Sarah Sue’s Stationery Shop
After years of creating handmade greeting cards for friends and family, Sarah Sue decided to turn her hobby into a business. She snagged a prime spot along the busy downtown avenue that attracts visitors from across the region.
Between getting the necessary permits, designing the store, ordering inventory, marketing the launch, and many other tasks, choosing a payment processing solution fell to the bottom of Sarah’s to-do list. By the time she got around to it, she opted for a simple credit card reader that included free processing software. After all, why not save a little money?
At first, everything seemed to work perfectly. Sarah’s networking and marketing efforts paid off and she was busier than ever. But after a few months, issues started to pop up. Soon, it was apparent that the payment solution Sarah chose was the common denominator of all her problems.
The “free” credit card terminal was not necessarily free
When Sarah received her free credit card terminal, it seemed to do the trick. It was unobtrusive and accepted the new chip cards her customers use. But soon enough, Sarah realized that even though the equipment was free, the solution wasn’t devoid of costs. Here are three specific issues she encountered.
#1. Lack of customer support
The first issue Sarah ran into was customer support. Turns out that setting up the new terminal required some technical expertise, which Sarah didn’t have. She called the customer support number provided, but discovered that help was only available during designated hours. So, she had to wait until the next day to try again.
With a little delay, Sarah finally got the help she needed. But her frustration didn’t end there. When she received her first billing statement, she noticed it was a little higher than the initial quote she had received from the provider. Upon closer inspection, she discovered there was an additional fee attached to the support call.
Lesson: Some merchant service solutions don’t have any upfront charges, but also don’t include customer support or other valuable services.
Support services vary widely, with some providers charging fees for product installation, training, and ongoing services. In contrast, many payment processors back up their offerings by with comprehensive support services that small business merchants like Sarah typically need—services that often come without additional costs.
#2. Inability to expand to selling online
The next issue Sarah encountered came from one of those good-to-have problems. Still, while it was good for business it introduced other challenges. The local magazine targeting the town’s vibrant tourism market featured Sarah’s shop. The publicity resulted in so many inquiries from out-of-towners about whether the shop had a website that Sarah decided to expand sales online.
Although it was relatively easy to set up a website, Sarah found that incorporating payments into the site was something else altogether. There were so many options, she didn’t know which one to choose. She ended up working with a second provider, which resulted in a reconciliation nightmare between her in-store and online sales, as well as an unwelcome increase in processing fees.
Lesson: The way a business is run the day the door opens isn’t necessarily how it will be run several months or years later. Merchants need to plan for a changing marketplace, clientele, and how payments are accepted. A simple “free” payment solution may be sufficient in the beginning, but may not be able to grow with a business.
Accepting payments online is a natural next step for many small businesses, and choosing a processing solution that can scale with such an expansion is important. It’s a whole lot easier to add online payments if the provider you are working with for in-store payments also offers capabilities for other payment types.
#3. Insufficient payment security tools
The last problem Sarah encountered was perhaps the worst—and nearly caused her to close up shop. Although she was using an EMV-enabled terminal to help secure in-store transactions, her online sales solution wasn’t equipped with the protections needed in a virtual environment. She was hacked.
It wasn’t until Sarah’s business was identified as a common connection across a number of cards used fraudulently online that a data breach was discovered. . Not only was she unsure where to turn when her provider offered little assistance, she didn’t realize what solutions might have helped her lessen the damage associated with an online payments data breach.
Lesson: You don’t have to look very far to see how much of a concern payment security is today. But while large enterprises get the most attention in the media, the fact is that small businesses are even more vulnerable and an easy target for thieves.
Providers that say they offer secure payments don’t always offer the type of comprehensive payment security small businesses need. It’s worth taking time to find a payment processor that offers solutions spanning all aspects of security—from EMV, card encryption, and tokenization to compliance with Payment Card Industry requirements and breach protection. A provider that takes security as seriously as you take your business is the only provider you should consider.
Cutting corners isn’t really an option
Like with most things in life, you get what you pay for. And saving a little money here and there on processing credit card payments doesn’t usually work out in the end. Take a cue from Sarah Sue’s experience so you can avoid the same pitfalls she encountered.
To learn more and speak with a payments professional that can help build a solution best for you, contact Vantiv.