10 Deadly Mistakes to Avoid when Choosing a Payment Processor

According to data from The Nilson Report, a leading source for news and proprietary research on consumer payment systems, global credit card fraud losses increases by around 10% every year.

Whether you’re in the market for an ACH payment processor, a payment gateway or credit card card processor, the importance of choosing the right processor and ensuring you’re following industry best practices should never be underestimated.

Choosing the wrong payment processor can have significant impact on your overall business and some major companies that have experienced payment security breaches in the past are:

  • CardSystems Solutions – a breach of over 40 million credit cards that eventually led to the company being shut down
  • TJX Companies – over 45 million credit cards were breached and the impact was significant
  • Bank of America – a hack in which over 1.2 million customer records were lost

While the above are just some notable examples, it isn’t uncommon to see businesses of all kinds going into payment processing issues and this has often resulted in companies going out of business.

You only have one shot at getting this right or it could cost you your business on the long run.

If you’re in the market for a new payment processor or if you’re not sure your current processor effectively solves your needs, here are 10 mistakes you should avoid when choosing a payment processor.

Mistake #10 – Not Making Provisions for Mobile Payments

According to data from a recent survey conducted by Google, 96% of consumers had encountered a mobile site and 75% prefer a mobile-friendly site over a non-friendly. 67% of those surveyed went on to say that they’re more likely to buy from a mobile-friendly site.

The shocker is that half of those surveyed said that, even if they like a business, they will use it less often if it’s not mobile friendly; some even went on to say that non-mobile-friendly sites irritate and annoy them.

What this means? If your payment processor isn’t making provisions for mobile devices, you’re losing a lot; you’re probably irritating half of your customer base and are losing a lot of potential customers to “smart” competitors on a consistent basis. When going for a payment processor, make sure it has mobile payment options.

Mistake #9 – Keeping Payment Details by Yourself

Majority of the major breaches ever experienced in the payment processing industry has to do with not properly storing data.

While there are a lot of factors that go into ensuring payment processing security, one of the most deadly mistakes you should avoid is storing payment details by yourself; whether in log books, file cabinets, spreadsheets, computer servers etc. It’s important to avoid storing payment details in a way that can easily be accessed. It’s recommended instead to choose a secure payment gateway, especially one that is PCI compliant and effectively implements payment data tokenization.

Mistake #8 – Not being PCI DSS Compliant

The Payment Card Industry Data Security Standard (PCI DSS) is a proprietary information security standard for organizations that handle cardholder information for the major debit, credit, prepaid, e-purse, ATM, and POS cards” – Wikipedia

With all the credit card and payment processing fraud reports out there, how do you know if a particular payment processor is reliable? By confirming if it is PCI compliant.

With 12 requirements at the time of writing this – requirements can be seen here – the PCI standard was introduced to limit credit card fraud and protect data security of cardholders. It’s required that payment processors be PCI DSS compliant and any payment processor not meeting the requirements should be avoided.

Mistake #7 – Payment Processing Fees

When a particular payment processor advertises a certain rate in its marketing materials, it doesn’t necessary mean it’ll charge that rate.

Depending on the payment processor and the industry, the charges will be different; make sure you double-check via the website and by contacting representatives, with potential payment processors you plan to use, what their REAL charge is.

Mistake #6 – Not Including Many Payment Options

According to data from Bank Card SD, “82% of American Express card members and 79% of Visa & MasterCard card holders agree that regardless of the nature of the business, merchants should offer customers as wide an array of payment vehicles as possible.

When it comes to choosing a payment processor, it’s important to ensure you can securely accept payment from any source possible. This is a something most merchants/businesses fail to consider when using a service like Paypal; while Paypal is widely used, it limits payments from certain countries and requires customers to have an account. There are also other payment processors like this and you might want to avoid using them depending on the nature of your business.

The more payment options a processor can securely help you process, the better it is for your business.

Mistake #5 – Not Reading the Fine Print

Those small texts written and designed to be hidden could pose a very serious threat to your business.

Just because you didn’t read them doesn’t mean you’re not binded by them. When choosing a payment processor, it’s very important to read the fine prints; some processors will have you sign long, expensive contracts while some will have you agree to exceedingly outrageous rates.

It will probably take you a few minutes to look for and read the fine prints, but this could save you thousands or even millions of dollars in processing fees depending on the size of your business.

Mistake #4 – Poor Customer Service

There will always be problems.

Whether it is with an issue you’re confused about, a bug you want fixed or someone you want to talk with to confirm that the latest strings of credit card hacking won’t affect your business in any way, you need someone to talk to.

When the customer service of a particular payment processor is rude, unresponsive or uninformed, you want to stay away from them as much as possible.

Mistake #3 – Not being Flexible Enough with Accepting Payments

Your customers should be able to pay via phone, online or in person; the more options available, the better.

Your payment processor shouldn’t restrict you from accepting various forms of payment from anywhere; the more flexible your payment processor is, the better.

Mistake #2 – Choosing a Payment Processor Just Based on “Rates”

Earlier on, we talked about the importance of being clear about how much you’re being charged. Something much more important is to avoid going for a payment processor just because of their rates.

Naturally, sometimes you’ll get a bargain and there’ll be offers you’ll be crazy to ignore but that alone shouldn’t influence your decision to choose a payment processor; you should also ensure your payment processor meets all the other factors in this post, or you could be in trouble.

Mistake #1 – Accessibility to Funds

While the above are all important factors, something much more important is accessibility to funds.

It doesn’t make sense to meet all compliance requirements, have a reliable provider and be able to accept payment from anywhere and in all possible means if you can’t access your funds when you need it.

With a reliable payment processor, you should be able to access your funds when you need it. Not the other way around.

The above are some of the most common mistakes you want to look out for in payment processors and something effectively helps you solve.

What other Mistakes Should You Look out for?

This post contains some very common mistakes you definitely want to avoid but there are uncommon mistakes that are probably only encountered thanks to personal experience. If you know any such mistake(s), please share in the comments below!