The Hidden Costs of Staying with the Wrong Payment Provider.

Introduction.

As business owners, we’re always looking for ways to maximize profits and minimize expenses. However, there’s one area that is often overlooked - your payment processing provider. While you may be comfortable with your current payment processor, are you aware of the hidden costs you may be incurring by staying with them? In this article, we’ll explore some of the most common hidden costs associated with subpar payment providers and how optimizing this aspect of your business could significantly boost your bottom line.

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Lack of Competitive Pricing

Chances are, when you first signed up with your current payment processor several years ago, their rates seemed reasonable. However, the payment processing industry is constantly evolving. New providers are entering the market all the time with more competitive pricing structures aimed at attracting new business. Have you taken a look at rates from other providers lately? You may find you’re paying far more than you need to be in per transaction and other fees. Without periodically shopping around, you have no way of knowing if you’re getting the best deal.

Inefficient Technology and Features

Modern payment processors recognize that technology and features are just as important as pricing when it comes to delivering value. However, some older providers still rely on outdated systems and interfaces that create inefficiencies. They may not offer robust reporting and analytics tools, making it difficult to track important metrics. Their mobile payment options could be subpar as well. These technological shortcomings translate to wasted time and resources on your end. By partnering with a provider known for their innovative technology, you open yourself up to streamlined processes and data-driven insights that can boost your business.

Lack of Customer Support

Have you ever tried reaching out to your payment processor’s customer support team only to face long hold times or unhelpful responses? Poor customer service leads to frustration and lost time that cuts into your productivity. It also increases the risk of errors or payment issues that could negatively impact your customers. Top providers invest heavily in responsive, knowledgeable support staff who are empowered to quickly resolve any issues. Their priority is keeping you up and running smoothly. Settling for subpar support will continue to hamper your operations.

Hidden or Pass-Through Fees

It’s easy to focus on the rates listed on your payment processor agreement. However, did you know some providers make part of their profits from “pass-through” or “pass-up” fees that are never explicitly disclosed? These are charges tacked on by the card brands or banks that your processor passes along to you but keeps a portion of. They may also hide other administrative or non-transparent fees in the fine print. Work with a provider known for pricing transparency. They have no reason to rely on opaque fees because their competitive rates win business on their merit.

Lack of Value-Added Services

Beyond processing payments, leading providers function as true partners to help grow your business. They offer value-added services like customized marketing support, data analytics, and integrations with major platforms and systems. These extras are often included for no additional cost. However, some older processors operate as a commodity without investing in complementary solutions. This means you miss out on powerful tools that could help increase sales and optimize operations. Why limit yourself when a better partner can help propel your success?

Cost of High Attrition Rates

Have you noticed the rate at which your current processor loses merchant clients? Consistently high attrition is a red flag, often a sign they are not delivering what businesses need. When clients frequently change providers, it indicates underlying issues with things like pricing, technology, or service. As a remaining customer, you indirectly subsidize the costs of client losses through higher rates. It also means the processor has less bargaining power to negotiate lower costs from card brands since they represent a smaller volume of transactions. Staying in this dynamic will keep your costs elevated over time.

Lack of Value Around Regulatory Changes

As the payments industry evolves, new regulations are regularly introduced that processors must comply with, such as PCI standards, EMV chip requirements, and data privacy laws. However, some providers treat these changes as a “cost of doing business” without passing the value on to clients. Top firms view regulatory investments as an opportunity. They develop innovative solutions to help merchants adjust seamlessly while gaining a competitive edge. Things like point-to-point encryption services or new payment types. By empowering compliance, they deliver hidden worth. Sticking with a provider not committed to adding long-term value leaves money on the table.

Lost Revenue from Delayed Payments

Does your current processor withhold a portion of your funds for several business days before depositing? While this is an acceptable industry practice known as “settlement delay,” it's important to understand the opportunity cost. Those delayed funds represent working capital your business is doing without. Even a few days of unavailability can negatively impact cash flow and operations. Forward-thinking processors minimize delays, often releasing a higher percentage up front and cutting waiting times significantly. Failing to prioritize quick settlements causes merchants to indirectly subsidize processors’ own cash flow needs rather than optimizing their own.

Lack of Strategic Guidance

Beyond just processing payments, leading providers function as advisors and consultants to help businesses grow strategically. They offer guidance on impactful initiatives like expanding into new markets, implementing loyalty programs, or launching mobile-first strategies. However, some processors keep clients at arm's length without investing in these value-added dimensions. As a result, merchants miss out on opportunities to accelerate growth. Why limit your potential when a partner can provide the insights to take your organization to the next level?

In summary, while the fees on your payment processing statement appear standard, you could be paying much higher hidden costs by staying with the wrong provider. The time has come to lift the hood and scrutinize this important aspect of your operations. Conducting a cost-benefit analysis and getting quotes from other firms will reveal if you’re truly getting the best overall value. With so many capable processors competing vigorously for your business, settling should no longer be an option. It’s time to partner with the right payment processor as committed as you are to maximizing profits through streamlined operations and strategic support. Take control of your payment costs and watch your bottom line benefits.