Top 5 Challenges of Online Payment Processing

It’s widely known that any competitive online business worth its name accepts digital transactions to survive in the modern economy. Obvious as this might be, even though the large majority are familiar with online payment processing by virtue of using it frequently, this does not always take place without difficulty.

Usually, consumers purchase items digitally with limited fuss, and if there is an issue this is corrected by the use of a different payment method, or another factor on the customer’s end.

For vendors, the situation remains more complicated. The watchword for many is security and optimal customer experiences – as well as ensuring that all transactions are settled promptly. In the coming months, online businesses will also be urged to accommodate evolving user expectations by updating services, such as including additional flexibility for credit and debit card transactions and staggered payment options like buy now, pay later (BNPL). This will inevitably involve further adjustments to the payments process.

We can identify the common issues encountered by a wide range of businesses, and this helps us analyse where the impactful friction arises at each step of the payment process. The right payment processing system should guarantee secure digital transactions, cost-effective international payments and state of the art customer support in case anything does go wrong. These are just a handful of obstacles many businesses regularly have to deal with online. Explore our detailed guide to the top five most frequent online payment processing challenges, and find out how you can eliminate these problems for good.

The Online Payment Process: Explained

A more detailed guide to the steps of the online payment process can be found in a separate article. Before we explore the common challenges, however, it is useful to revisit the general overview of how digital transactions are facilitated. In a few short steps, here is the process refined to six key steps:

  1. The customer initiates the online transaction process.

  2. The cardholder’s sensitive card information is transferred to the payment gateway, which encrypts the data and sends it to the payment processor along with other transactions in the ‘batch’. The payment processor then takes the transaction data to the connecting card network.

  3. Customer credit/debit card details are confirmed and verified or denied. If the card data is verified, payment is authorised and the issuing bank debits the funds.

  4. Transaction info is then relayed from the issuing bank to the card network, informing them that they have been authorised to complete the transaction. The card network verifies the online transaction to the processor and payment gateway.

  5. The payment gateway notifies the merchant that the transaction has been authorised.

  6. The funds from a customer’s issuing bank account are transferred to the merchant acquirer. The merchant acquirer deposits the funds it has been holding into the seller’s bank account.

The flow of the transaction, from card payments through each payment gateway to the receipt of funds in the merchant banks has four stages: authorisation, batching, clearing and settlement. At each juncture, the payment meets the requirements of a discrete payment gateway that fulfils each stage. Individual entities perform different functions in this transaction – the card network, payment gateway, payment processor, merchant acquirer and issuing bank.

The 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.


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.


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.


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.


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.

5. Customer Service

Finally, the payment process can prevent avoidable pitfalls and errors, often leading to abandoned purchases, with adequate user support on the other end. Technology has enabled customers to expect quick and comprehensive support for online payments as these processes are more complicated and can incur further risk. It goes further, however, in that online payment can present accessibility issues that alienate some users.

The modern customer does not want to feel limited by the technology they use – they want to feel able to get instant customer service via their tablet, smartphone or interface they’re using. Older customers or those with disabilities may also encounter issues that can be easily solved through a chat bot feature – as numerous big banks have recognised and implemented. The evolution of payment ecosystems will ensure that consumers soon expect to receive such support from their smartphone at the same level as a desktop feature.


To create a safe, easy and scalable payment interface, use a PSP that offers reliable customer support around-the-clock. Companies can then support customers throughout their transaction journey, particularly in the event of a disruption, so as to guarantee a seamless payment with minimal fuss. This is also invaluable for guaranteeing that customers remain loyal to your brand, as a positive memory of the experience at its end will have the most impact, even if there are hiccups along the way.

Overcome your payment challenges

Schedule an introductory call to better understand your challenges and get ahead of your competition.