Top 10 Payment Processing Mistakes Businesses Make (And How to Avoid Them)

A seamless and secure payment experience is no longer a luxury – it’s a necessity for businesses. A well-oiled payment processing system is the lifeblood of your operation. It’s the bridge between your customers’ desire and your bottom line. But navigating the world of payment processing can be a minefield, especially for businesses just starting out or those looking to optimize their existing systems. This guide will equip you with the knowledge to avoid the top 10 payment processing mistakes businesses make, ensuring a smooth and successful journey for both you and your customers.

Mistake #1: Choosing the Wrong Payment Processor

Your payment processor is your partner in financial success, so choosing the right one is critical. Don’t get caught in the trap of simply going with the first name you see. Here’s what to consider:

• Industry Expertise: Does the processor cater to your specific industry’s needs? Subscription boxes have different requirements than e-commerce stores. Look for a processor with experience in your industry and features that address your specific needs.

• Global Reach: Do you have international ambitions? Ensure your processor facilitates secure and compliant transactions across borders. Choose a processor that supports a wide range of international payment methods and currencies.

• Payment Methods Offered: Does their range of options cater to your target audience? Limited options can lead to cart abandonment. Look for a processor that offers a comprehensive suite of payment methods, including credit and debit cards, e-wallets, local payment options, and alternative payment methods like Buy Now, Pay Later.

• Security Measures: Data breaches are a nightmare. Choose a processor with robust security protocols and fraud prevention tools. Look for features like PCI compliance, data encryption, and advanced fraud detection tools.

• Pricing Structure: Transparent and competitive pricing is key. Beware of hidden fees and ensure the pricing model aligns with your business volume. Choose a processor with transparent pricing structures and flexible plans that scale with your business growth.

• Additional Services: Consider the value-added services offered by the processor. Look for features that can streamline your operations and improve your customer experience. These might include:

  • Payment Guarantee: Improve your cash flow with Payment Guarantee. Get paid in advance for approved invoices and SEPA Direct Debit transactions, even before your customer settles the payment. This frees up your working capital and allows you to focus on growth.

  • Instalment Payments: Offering instalment payments can make your products or services more accessible to customers and increase your average order value. Look for a processor that seamlessly manages instalment plans.

  • Automated Subscription Management: If you offer subscriptions, choose a processor with automated subscription management tools. This can automate recurring billing, handle dunning emails, and provide valuable insights into your subscriber base.

Want to streamline your payments with a single provider? Novalnet offers all these services and more under one convenient contract. Ready to streamline your payments? Contact our sales team to learn more and take your business to the next level. If you’re ready to get started now, create an account today and start accepting secure payments for your business (subject to regulatory compliance).

Mistake #2: Not Accepting Enough Payment Options

Customers today have diverse preferences when it comes to parting with their hard-earned cash. Limiting yourself to just credit cards is a surefire way to lose sales. Embrace a variety of options, including:

• Credit and Debit Cards: The classics are still king, ensure you accept major brands like Visa, Mastercard, and American Express.

• E-wallets: Digital wallets like Apple Pay and Google Pay are exploding in popularity, cater to this tech-savvy demographic.

• Local Payment Methods: Going global? Integrate local payment methods like Alipay in China or Sofort in Germany to increase conversion rates.

• Alternative Payment Methods: Consider Buy Now, Pay Later options or bank transfers to cater to a wider customer base.

Mistake #3: Ignoring Mobile Payments

The smartphone has become an extension of ourselves, and payments are no exception. Ensure your payment processing system is optimized for mobile devices to cater to the on-the-go shopper. Look for features like one-click payments and mobile wallets for a frictionless experience.

Mistake #4: Forgetting About Security

Data breaches are a devastating blow to any business. Make security a top priority by choosing a processor with robust security measures in place. Look for features like:

• PCI Compliance: Ensure your processor adheres to the Payment Card Industry Data Security Standard (PCI DSS), a rigorous set of security requirements.

• Encryption: Sensitive information like credit card details should be encrypted both at rest and in transit.

• Fraud Prevention Tools: Minimize the risk of fraudulent transactions with advanced fraud detection and risk management tools.

Mistake #5: Not Automating Repetitive Tasks

Time is money, and automating repetitive tasks like invoicing, chasing late payments, and sending dunning emails frees up your valuable resources for more strategic pursuits. Modern payment processors offer automation features that can streamline your operations and save you precious time.

Mistake #6: Neglecting Customer Support

Payment hiccups happen. Ensure your chosen processor offers reliable and responsive customer support to address any issues promptly and efficiently. Both you and your customers deserve peace of mind.

Mistake #7: Not Tracking and Analyzing Data

Payment processing data is a goldmine of insights into your customer behavior. Use the data provided by your processor to understand your customers’ spending habits and identify areas for improvement. This data can inform strategic decisions about marketing campaigns, product offerings, and pricing structures.

Mistake #8: Failing to Adapt to Changing Regulations

The payments landscape is constantly evolving, with new regulations and security standards emerging. Choose a processor that stays ahead of the curve and keeps you compliant with the latest industry standards.

Mistake #9: Poor Communication with Customers

Transparency is key. Keep your customers informed about any changes to your payment process, including the types of payment methods you accept and any potential fees associated with them. Clear communication builds trust and fosters a positive customer experience.

Mistake #10: Not Regularly Reviewing Your Payment Processing Needs

Don’t let your payment processing become an afterthought! As your business grows and evolves, so too will your payment processing needs. Here’s why regular reviews are crucial:

• Changing Customer Base: Your initial customer base might have been primarily domestic and credit card reliant. As you expand your reach, you might need to integrate new payment methods like e-wallets or local payment options to cater to a more diverse clientele.

• Evolving Business Model: Are you launching a subscription service? This requires a payment processor with robust subscription management features. Maybe you’re venturing into high-risk industries? Ensure your processor has the tools to mitigate fraud risks associated with your new ventures.

• Technological Advancements: The payments landscape is constantly innovating. New technologies like tokenization and real-time fraud detection emerge regularly. Regularly reviewing your processor ensures you’re leveraging the latest advancements to improve security and streamline operations.

• Pricing Optimization: As your transaction volume increases, you might be eligible for better pricing structures or negotiate lower fees with your current processor. Staying informed about pricing options allows you to optimize your costs and maximize your profit margins.

Here’s how to make reviewing your payment processing needs a breeze:

• Schedule Quarterly Reviews: Block time in your calendar every quarter to assess your current payment processing setup.
• Analyze Trends: Look at data like transaction volume, customer demographics, and abandoned carts to identify any areas needing improvement.
• Research New Technologies: Stay up-to-date on the latest trends in payment processing by attending industry events, reading industry publications, and researching online resources.
• Compare Your Options: Don’t be afraid to shop around! Evaluate competitor offerings to ensure you’re getting the best possible value from your current processor.

By taking a proactive approach and regularly reviewing your payment processing needs, you can ensure your business has the tools and flexibility to thrive in an ever-evolving landscape.

Emmanuel Kirse

Emmanuel Kirse, or Emma as his colleagues refer to him, spent the last decade building and managing teams who developed Novalnet’s innovative payment ecosystem with all its value-added features. Emmanuel was also instrumental in high-value technology partnerships with SAP, Salesforce, etc.