Top 5 Mistakes Businesses Make with Merchant Services

Top 5 Mistakes Businesses Make with Merchant Services

Merchant services are an essential part of running a business, whether you're accepting credit card payments at a retail store, through an online platform, or in a restaurant. Unfortunately, many business owners make costly mistakes when setting up or managing their merchant services. These errors can result in higher fees, security risks, and lost revenue. This blog will explore the top five mistakes businesses make with merchant services and how to avoid them to improve your payment processing experience.

1. Not Shopping Around for the Right Provider

One of the most common mistakes businesses make is not comparing merchant service providers. Many business owners sign up with the first provider they come across, only to realize later that they're paying excessive fees or not getting the service they need.

Equally important, some businesses overlook the importance of ongoing support and customer service after the initial sale. It's not just about securing a competitive rate but ensuring that your provider will be responsive when issues arise, whether it's a problem with your equipment, a question about billing, or a need for PCI compliance support. Access to a dedicated support team can save you time, money, and headaches.

Avoid this mistake by:

• Researching providers: Look for providers who offer transparent pricing and a clear breakdown of fees.

• Requesting quotes: Get multiple quotes to compare fees, contract terms, and customer support.

• Ensuring post-sale support: Choose a provider with a proven track record of offering reliable and responsive service long after the initial account setup.

• Considering long-term needs: Opt for a provider that can grow with your business and offer scalable solutions as your payment processing needs expand.

2. Overlooking Hidden Fees and Contracts

Hidden fees buried deep in the contract catch many businesses off guard. These can include termination fees, PCI compliance fees, and surcharges for certain types of transactions. Even more elusive are annual charges that might only appear once a year, causing surprise expenses that disrupt cash flow.

Avoid this mistake by:

• Asking for a fee breakdown: Ensure you understand all potential fees, including monthly minimums, per-transaction charges, and equipment rental fees.

• Watching for annual fees: Don't overlook charges that only appear once a year, such as annual PCI compliance fees or equipment renewal charges. These can catch you by surprise if not budgeted for.

• Reading contracts carefully: Watch for early termination fees, and if possible, opt for month-to-month agreements with no long-term commitments.

3. Failing to Stay PCI-compliant

The Payment Card Industry Data Security Standards (PCI-DSS) are critical for protecting customer payment data. Yet, many business owners become frustrated with the complex PCI compliance process, especially the seemingly never-ending PCI Questionnaire and other requirements. While the process can be tedious, overlooking PCI compliance can lead to significant penalties, including hefty fines, higher transaction fees, or even losing the ability to process credit card payments.

Avoid this mistake by:

• Understanding the consequences of non-compliance: Failing to meet PCI standards can result in non-compliance fees ranging from $19 to $100 monthly for businesses until they are compliant again. Additionally, data breaches caused by non-compliance can lead to lost customer trust and reputational damage that could take years to recover from.

• Preparing for quarterly scans: Depending on how your business processes card transactions, you may be required to undergo quarterly network vulnerability scans to maintain PCI compliance. These scans check for potential security risks in your system, such as outdated software or weak firewalls.

• Handling a failed scan: If you fail a scan, your payment processor should be there to help. A quality merchant services provider will offer guidance and assistance in quickly fixing the issues. Some processors, however, may leave you to deal with the problem alone, resulting in prolonged non-compliance and increasing fines.

• Getting help with the setup: Sometimes, how your business is set up, or handles card transactions (e.g., through mobile or online systems) requires specific configurations to stay PCI compliant. A good provider offers PCI Concierge services, helping you navigate these requirements without the headache.

Avoiding PCI compliance mistakes requires regular attention and a proactive approach. Still, with the right support from your merchant service provider, it doesn't have to be overwhelming.

4. Not Understanding the Full Scope of Payment Options

Another common mistake is not offering enough payment options for your customers. In today's competitive market, businesses that only accept Tap, Dip, or Swipe methods (traditional card payments) are missing out on more flexible, modern alternatives that cater to changing customer preferences. Limiting payment options can lead to lost sales opportunities, especially as consumers embrace contactless and digital payment methods.

Avoid this mistake by:

• Expanding beyond traditional methods: While accepting card payments is essential, consider adding alternative payment methods like:

  • QR Codes: Customers can scan a code with their smartphone to complete a payment instantly, a method gaining popularity for its speed and convenience.

  • Payment Links: Send payment requests via email or text, allowing customers to pay from anywhere at their convenience.

  • Integrating with Accounting Software: Solutions like QuickBooks or Xero allow businesses to send invoices with built-in payment options, streamlining the payment and accounting processes in one step.

• Offering mobile wallets and online gateways: Mobile wallets like Apple Pay, Google Pay, and other digital wallets are increasingly popular and secure. Consider integrating these into your point-of-sale (POS) system to provide more flexibility.

5. Ignoring Chargeback Management

Chargebacks can be costly and time-consuming for businesses. Yet, many business owners don't have a plan to manage or reduce chargebacks. Failing to address chargebacks effectively can hurt your bottom line and impact your relationship with your payment processor.

Avoid this mistake by:

• Implementing clear refund policies: Make sure your return and refund policies are easy for customers to understand and accessible on your website.

• Tracking chargeback reasons: Monitor why chargebacks occur and work with your provider to develop strategies to reduce them, such as better fraud prevention or customer education.

Conclusion: Set Your Business Up for Success

Avoiding these common mistakes can help you manage your merchant services more effectively, reduce costs, and provide a better customer experience. From shopping around for the right provider to staying PCI compliant, being proactive in managing your payment processing can significantly impact your business's financial health.

At Wingman Payments, we're here to help you avoid these pitfalls and guide you through every step of your merchant services journey. Whether you need advice on cutting down hidden fees or staying PCI compliant, our team offers transparent pricing, exceptional customer support, and cutting-edge technology solutions tailored to your business needs.

Contact us today to see how Wingman Payments can help your business thrive with smarter payment solutions.