Accepting payments online isn’t really an option these days, but a necessity. If you have yet to venture into online payments, there are some things you need to know that some people often miss. From payment holding and delays to higher fraud potential, here are some examples.
Transactions and Hidden Fees
Any business that accepts payment through a payment processor is subject to fees, even online. For online businesses, the fees can be higher. This is because there are many high risk merchant services on the web, such as gambling, video games and adult entertainment. These come with per-transaction fees and monthly subscriptions, which some providers increase for “risky” businesses. Then there are the issues of chargebacks, which we will come to later.
Payment Hold and Settlement Delays
You might think that accepting online payments will speed things up, and it can. Real-Time Payment (RTP) systems can indeed accelerate the cash flow of a business. However, your payment provider might actually hold onto a payment or delay it for days, weeks or even months. There are various reasons this can happen, including fraud prevention and even checking new accounts. But you will need to account for these delays in your budget.
Accepting Payments Online Comes with Chargebacks
The average business handles 6 chargebacks per 1,000 transactions. This can add up to a lot of lost revenue during a bust period like the Christmas holidays. However, alongside analytics, there are some ways to reduce chargebacks, such as offering payment flexibility that covers a range of options, such as cards, digital wallets and cash. You should make every effort to reduce chargebacks because you will incur a fee, as well as lose the money from the sale, when a customer makes a claim.
More Potential for Fraud
Online fraud is at an all-time high, and you can have your credit card used without even knowing about it. Personal data is also sold online, which businesses use for verification, although online sales are classed as “Card not Present”. However, the potential for fraud is much higher than in an in-person transaction that can be quickly verified with an ID. Fraud detection tools like Kount are excellent, but you are still liable for any charges, such as shipping and payment processing.
Vulnerability to Cyber Criminals
Further to fraud, an online payment system is vulnerable to cybercrime. There is so much data floating around the global payment processing networks that it is irresistible to hackers and fraudsters. So, there are costs involved to protect customer data and prevent criminals from stealing it. This includes online security that complies with PCI-DSS regulations. However, it would also help to have insurance against online crime, as you might be liable for lost money.
Summary
Transaction fees and subscription charges are just two of the many costs of accepting payments online. You will also face chargebacks, which you will incur for every claim, as well as losing the initial money. However, you will also need to invest in robust online security measures.
