7 Common Small Business Payment Processing Challenges and How to Avoid Them

A customer making a contactless payment purchase at a restaurant.

There’s no doubt that having the right payment processing systems can benefit your business in a multitude of ways. In fact, by simply installing the right systems, you can avoid many issues, including the following seven common payment challenges that every merchant faces.

1. Fraud

Fraud accounts for billions of dollars being lost by U.S. business each year, and it’s on the rise. The good news is twofold: You can address it by continually educating yourself on types of fraud and where they are occurring, and you can choose a merchant service that’s on top of the following fraud types, which all can negatively impact your business.

Problem: Clean Fraud

Clean fraud occurs when an individual possesses a lot of legitimate knowledge about a card owner, and uses this information to commit fraud. Typically, clean fraud occurs in three steps:

  1. The individual obtains cardholder information like their SSN and card number.
  2. They visit an online store and fill their cart with purchases.
  3. They complete their transaction with the information and stolen credit card number.

A business that has experienced several instances of clean fraud may lose the trust of their customers, who may doubt their card information is secure when shopping at a particular location.

Solution: Persistence and Technology

Combating clean fraud requires diligence and vigilance to overcome. Adept Systems provides merchants with several options for combating fraud, including live support around the clock.

Problem: Friendly Fraud

Friendly fraud is committed when a legitimate cardholder purchases an item or service, only to claim that their purchase was fraudulent. A friendly fraudster will:

  1. Make their purchase.
  2. Wait to receive their credit card statement.
  3. Call their issuing bank to claim they didn’t purchase the item or service.
  4. File a chargeback with the bank.

Should the issuing bank agree with the cardholder, they will mark the transaction as fraudulent, and the merchant doesn’t receive payment for their purchase. For the merchant, friendly fraud can effectively and quickly erode their bottom line.

Solution: Monitoring and Delivery Confirmation

Friendly fraud can be stopped with a prevention strategy that includes communication with the customer to confirm their intent to make a purchase when that purchase seems unusual for that particular client.

However, it’s impossible to know when a customer’s purchase is unusual without some way to monitor their purchase history. Another way that merchants can defend themselves from this type of fraud is to require confirmation of the delivery from the service that delivered the item.

Problem: Account Takeover Fraud

This type of fraud occurs when the online store account or personal bank account information is stolen and used to access an individual’s account and make unauthorized purchases from that account.

Once an individual has the information needed for account access, they change the delivery address to their own, effectively re-routing all deliveries. Once account takeover fraud is discovered, the account owner will cancel payment by notifying their bank.

Solution: Tokenization

Tokenization adds a layer of security that protects individuals from account takeover fraud. It accomplishes this by assigning a piece of random data, called a token, to identify it. Then a tokenization system is used in order to match a customer’s random data.

Card readers from Adept Payments offer enhanced fraud protection with EMV level 1 & 2 compliance for both chip and magnetic stripe cards. We also employ tokenization to help merchants combat fraud.

Problem: Triangulation Fraud

Triangulation fraud is another common type that can be prevented with the right steps. In this type of fraud, a person creates a false identity by combining an untraceable address with a real SSN. Then, the person:

  • Opens an online store
  • Purchases items using stolen credit cards
  • Resells the items at the online store to honest customers at a discount

Triangulation fraud diverts business away from the honest merchant, but can also cause customer confusion about a particular business’s integrity, risking the reputation the merchant has worked so hard to build.

Solution: POS Protection

A POS terminal with the right kind of protection will be instrumental in preventing triangulation fraud.

For example, POS systems from Adept Payments provide cardholder verification and transaction authorization and encrypt sensitive financial and identifying data as it’s being communicated to and from the issuing bank.

As well, our readers are EMV-compliant on levels 1 & 2, offering greatly enhanced fraud protection.

2. Chargebacks

Chargebacks represent another major problem for merchants. Although the majority of chargebacks occur for legitimate reasons, such as an item not being received or arriving late, some chargebacks occur due to claims of fraudulent purchases, or those made without the cardholder’s knowledge or permission.

Unfortunately, whether or not a chargeback is a legitimate one, a merchant can be red-flagged by payment gateways, causing irreparable damage to their reputation. Too many chargebacks can cause closure of a merchant account.

This is why it’s so important to have a merchant service provider that will help you limit chargebacks and offer around-the-clock support so that you can stay informed. Adept Payments helps customers manage chargebacks in the following ways:

  • By offering cardholder verification and transaction authorization via EMV technology
  • By providing live customer support, no matter when you call
  • By protecting merchants from chargeback liability with EMV-compliant readers

3. Payment Support

With the advent of online shopping, purchases can be made at any time of the day or night. That being said, having a payment processor who can offer the same around-the-clock support for those payments just makes sense.

Adept Payments customers never have to worry about being left without answers to their payment support questions because we’re always available. Whether you want to ask us something or simply need help with troubleshooting a particular issue, our live support is always there for you.

4. Payment/Technical Integration

There’s nothing more frustrating for a merchant than having to enter transaction data into outdated software systems or, worse, manually. A business that must spend precious hours entering data not only loses valuable time but also significantly increases the risk of making costly data errors.

In order for any business to survive in an intensely competitive arena, they must be able to automate as many of these processes as possible. Systems like NCR Silver and Clover both offer the automation you’re looking for, whether you’re seeking comprehensive inventory management or a basic POS system.

Wireless card terminals from Adept Payments don’t require time-consuming installation of complex software systems; all that’s needed is to link your POS system to your existing Wi-Fi connection.

Your customized payment depot can also be set up to accept not only credit and debit but other forms of electronic payments as well.

5. Multi-Currency and Payment Methods

Customers from around the world are able to shop with you, but, unless you can offer multi-currency payments, their experience can quickly become frustrating enough to cause dreaded shopping cart abandonment. Adept Payments keeps business operating globally with multi-currency support.

When you’re able to accept credit cards, as well as contactless payment methods like those occurring from a mobile device or Apple Pay, you are truly and completely able to reach every type of customer. You can do this without having to worry learning complex technology.

Virtual terminals and other solutions from Adept Payments help you accomplish this seamlessly and almost instantly.

Our tailored packages can combine:

  • Mobile payments
  • EMV card readers
  • Wireless terminals
  • Payment gateways

If you’re having payment gateway problems or another issue, not to worry; our experts are always ready to handle the technical end of things so that you can do what you do best: Run your business.

6. Processing Fees

Processing and other fees are simply included as a cost of doing business, but that doesn’t mean a merchant has to pay high transaction fees regardless; quite the contrary. The keys to avoiding high fees is in finding a company that can offer competitive low rates for these  business must-haves.

Another necessity is locating a payment processing company that is willing to take the time to explain not only what each fee is but offer education on how each of these impacts your business.

In addition, the fees you pay to your provider for things like maintenance and setup will also have a big impact on your business. Here, again, it’s crucial to find a provider that is transparent with pricing models so you can always know exactly what you’re paying for, without any unwanted surprises lurking in hidden monthly fees.

7. Compliance

In a world where technology and the regulations governing them continue to evolve, much confusion can surround the issue of compliance as it applies to payment providers. Do they have the appropriate types of compliance and at sufficient levels to offer the protection a merchant needs to process payments securely?

To answer this question, it becomes important to know which types of compliance, such as PCI and EMV, are available to merchants from credit card processors and how these compliance types help to protect and add value.

PCI Compliance

Briefly put, PCI DSS stands for payment card industry data security standard. PCI governs how merchants must handle credit card transactions in terms of how customer card information is processed, stored, and transmitted when a card is used at a merchant’s store.

The aim of PCI compliance is to protect cardholder data from security breaches and hacks. This involves building and maintaining a secure network and employing best practices like frequent password changes and complex passwords.

EMV Compliance

A customer making a contactless payment purchase at a clothing store.

EMV, or Europay, Mastercard, and Visa is now a global standard for any credit card having a chip. This standard, also used for the purpose of preventing credit card fraud, is now mandatory on all POS equipment merchants use for accepting payment.

The data stored in the integrated circuits of a chip card, plus the magnetic stripe on that card, offer two levels of protection against credit card fraud. However, a merchant who swipes a chip card without an EMV-compatible reader will be held liable in the event that a transaction is found to be fraudulent.

EMV level 1 compliance ensures that the data on cards tapped over a POS terminal during  contactless payment will be protected as data is transmitted to and from the unit. EMV level 2 involves the security of the software that runs on an EMV level 1 terminal.

EMV-compliant POS systems, as well as EMV conversions, are available from Adept Payments for merchants with existing POS systems who wish to achieve compliance.

Payment Processing Challenges Are Preventable and Surmountable

The sheer number of problems merchants can face with payment processing, along with all of the information available regarding security levels and measures, can make overcoming the above common challenges seem impossible.

However, when you choose a provider that offers solutions for all of these challenges, you can conduct every transaction with confidence. Adept Payments helps to protect your business and support its expansion.

Our credit and debit card processing solutions are not only PCI and EMV level 1 & 2 compliant, but our innovative mobile solutions allow you to reach customers literally anywhere they happen to be.

Discover the benefits of working with a company that delivers a simplified approach to payment processing with seamless integration at the lowest processing rates, guaranteed; contact Adept Payments by going online or calling 888-732-3838.

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