Exactly Payment Specialist, Elena Bazhenova, reveals common pitfalls that small to medium businesses face when making strategic decisions on their payment processing strategy
Small businesses and startups face numerous challenges when deciding on their payment processing strategy, especially in an era of fast-evolving banking technology. Payment specialist Elena Bazhenova emphasises the importance of making considered choices to ensure long-term financial health, customer satisfaction and optimal business performance. A poor decision on this front might result in high international banking fees, loss of customer trust, as well as potential damage to reputation and finances. Below are five key pitfalls that SMEs can sidestep to promote their financial health.
International transactions and chargebacks
One of the primary challenges for SMEs is managing cross-border transaction fees, which can erode profit margins. Elena Bazhenova advises: “When dealing with foreign markets or planning for future growth, it is crucial to choose a reliable payment solution provider. Your payment processing partner should offer clear and competitive fees, allowing you to assess your expenses in relation to your profit margins.”
Operating in international markets with the wrong payment partner can come with hidden expenses - often incurred by banks, intermediaries, and fraudulent payment service providers. However, these are not the only costs to consider; chargebacks - disputed payments that customers can reverse through their banks, frequently driven by fraudulent intent - are another key downside for SMEs. The challenges posed by language barriers and indirect customer service channels only exacerbate this risk. To mitigate penalties and extra costs, businesses should invest in robust customer service channels and effective fraud detection tools.
Integration challenges
Another challenge for SMEs is integrating various systems, including accounting, inventory management, CRM, and e-commerce platforms. With limited resources, businesses frequently struggle to make sure these systems integrate well with one another, particularly when adding a payment processing system to the mix. Investing in the right payment solution provider and ensuring seamless integration is crucial for resolving inconsistent financial reporting. Many modern payment processing services offer customisable Application Programming Interfaces (APIs) that can integrate with existing systems, so businesses should prioritise system compatibility to prosper in the long run, even if it comes with a higher initial cost.
Security risks
With the latest advancements in financial technology, cyber risks are advancing just as quickly, particularly with the rise of AI technology. Startups and SMEs are becoming increasingly vulnerable to these threats, and even one data breach can result in substantial financial losses as well as legal repercussions.
To protect against data breaches, firms should train their employees on a regular basis and stay current on cybersecurity best practices. Keeping systems up to date and one step ahead of fraudsters is critical for establishing cyber resilience and building customer confidence in online payments. Elena Bazhenova adds: “As hiring a dedicated security firm can be too costly for many SMEs, finding the right payment processing provider can really be a lifesaver. Partnering with a provider known for secure transactions and built-in cybersecurity features offers a cost-effective way to protect your business.”
Prioritising customer accessibility and the overall customer experience
Taking into account today’s mobile-first shopping landscape, customers are increasingly expecting a seamless payment experience. Offering a variety of payment methods - from digital wallets like Google Pay and Apple Pay to flexible options like "buy-now-pay-later" or installment plans - can significantly facilitate purchasing decisions. SMEs that fail to provide diversified payment options risk losing sales to competitors.
To meet customers’ demand for convenience, businesses must ensure their payment systems are fast and reliable. Partnering with a knowledgeable payment provider can help SMEs select the right solution, whether a merchant account, hosted payment system, or integrated option, to streamline the payment process. A modern, diversified payment system without unnecessary steps leading to checkout is key to guiding customers through the purchase.
Building customer trust
One last common pitfall for SMEs and startups is overlooking the importance of building customer trust. Prioritising transparency is essential when making decisions about payment processing strategy. Selecting a reliable payment provider that supports customers is crucial for ensuring that businesses are clear about their offerings and associated costs. In today’s digital era, tech-savvy customers play a vital role, and it is important to prevent negative experiences that could undermine trust and damage business reputation. Lastly, it is vital to choose a payment solution that can handle substantial website traffic and high-volume purchase processings, especially during peak shopping periods. This not only strengthens trust but also prevents customers from abandoning their purchases due to website issues at checkout.
Conclusion
As highlighted in these five points, there’s nothing more detrimental to a business than choosing the cheapest or easiest option when developing a payment strategy. While it shouldn't be a daunting task, selecting the right partner can make all the difference and significantly boost a business's financial health in the long run. By avoiding these common pitfalls and gaining the right knowledge and guidance from experienced payment specialists, businesses can set themselves up for success. For more information, check out Exactly.com.
