Top 5 Challenges of Online Payment Processing

Now that we have established the process of online payments, we can focus on what commonly goes wrong, and determine clear solutions to each problem that is as swift as possible.

1. Fraud Protection

As digital payments worldwide accelerate, to the point that over 6 billion people will use them by 2023, fraud is estimated to correspond with this enormous rise. Payment fraud is forecasted to cost ecommerce merchants $48bn next year, marking a 16% increase from 2022. To resist this, it is vital to recognise the different types of fraud that users and sellers risk falling prey to with each transaction: friendly fraud, triangulation and clean fraud.

Friendly fraud or ‘chargeback’ is an increasingly popular practice that occurs when buyers take their credit card transactions and contact their issuing bank to dispute the charge. Customers then claim they were not in receipt of their products, or they do not remember paying at all – all of which is damaging for sellers.

When customers make transactions with online vendors that are untrustworthy or unreliable, this is known as triangulation. After a customer pays for something, fake sellers use this gateway to steal their card details, either for self-use or to sell that information on to a third party. Clean fraud involves individuals using authentic information to make purchases without the cardholder’s knowledge, and can use synthetic identity theft to aggregate a range of stolen data to subvert fraud detection processes.

Solution

Shielding your business and your customers from any of these types of fraud is a top priority, and there are numerous tools available to detect fraud as it occurs and enhance the overall payment processes. To start, businesses should conduct a security audit or outsource an audit to a third party in order to evaluate their security systems. Conducting regular updates will keep payment platforms aligned with technological advances and the vulnerabilities that stem from it.

Payment Orchestrators are also valuable to place preventative measures to combat fraud. CellPoint Digital recently partnered with Cybersource Decision Manager, a leading fraud detection radar that deploys machine learning to support merchants by automatically classifying transactions as good, bad, or suspicious. With these advanced fraud capabilities, merchants can see acceptance rates increase and remove the need for frequent security audits.

2. Integrated Payments

The exponential growth of e-commerce has also seen a rapid rise in customer expectations. A business’s digital transaction capabilities or merchant services are now usually expected to satisfy these growing needs, including accommodating multiple vendors and enhanced payment options so as to enable a smooth and seamless user experience.

Achieving this can be problematic, however. Without proper payment integration, businesses will struggle to adapt their processing platforms to meet evolving e-commerce demands, particularly in adopting new payment methods. The complex technology required to process online payments has numerous components, and so the choice of provider can have a significant impact. Alternative payment methods (APMs) are also on the up – as we explored in a previous article, digital wallets, mobile payments, and cryptocurrencies are expected to grow in Europe over the next four years, while card transactions are expected to represent a mere 33% of online payment by 2026.

Solution

CellPoint’s Payment Orchestrator lets you easily add new payment methods. Our integrated platform, Velocity, provides access to more than 410 global payment methods, and can directly integrate with your existing networks through API or mobile SDK. This enables a fully-integrated, omni-channel payment experience, from web to mobile and beyond.

3. Cross-border payments

The issue of fully integrated payment platforms becomes especially important when it comes to international transactions. Our global economy means that, in theory, customers can make purchases from wherever they are in the world. The challenges to e-commerce and other digital platforms, however, necessitates the capacity for non-native electronic payments, which is not so simple. Even though the majority of digital transactions within one country can navigate different payment methods, from mobile to credit or debit cards, when multi-currency is involved the process becomes more complicated.

Cross-border payments can entail that the payment process goes through a range of bank accounts, business entities and regulatory compliance belonging to whichever national market is involved. This has led to innovations in payment service provider (PSP) technologies, where software infrastructure has expanded to incorporate solutions to non-native payments.

Solution

In using a global payments platform, vendors can save time and money by permitting the choice of cheapest and fastest transaction type. One example of this is by sending an international bank ACH (Automated Clearing House) transfer whenever a specific destination is involved. Businesses can also automatically enable specific transaction types based on custom rules – for example, through checking every time that a minimum of three payment methods are available for credit card transactions, or by using a designated bank or network for transactions that exceed a certain limit.

4. Processing Fees

For most sellers, the best outcome for each transaction is to create revenue with as little overheads or additional costs as possible. The cost of business does however regularly generate fees and taxes, but these can vary depending on the business type and the payment processors a company uses, along with the discrete payment methods. Some are unavoidable, such as setup fees. Some fees, on the other hand, can be minimised if businesses are careful in their choices. For example, payment providers vary in terms of pricing models.

For example, some PSPs involve early termination fees and monthly usage fees. In addition, processing credit cards can involve higher fees depending on the industry or transaction type, along with the volume of transactions processed. Lastly, when you process credit cards, you may be charged a higher processing fee based on factors like your industry, the type of transaction, the type of card being used, and your processing volume.

Solution

Where possible, use valuable information to your advantage. Compare different providers based on the additional fees they charge based on their services. Encouraging customers to use debit cards also lowers processing fees as it usually involves reduced risk. Eliminating third-parties by choosing bigger banks that will not outsource processing also removes some costly fees. You should also stay updated with financial and legal requirements so as to not shoulder any unnecessary costs that arise from a lack of knowledge on new regulations.

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