Merchants who process payments through acquirers and payment processors must worry about what would happen if payment processing faces hiccups.
While losses are unlikely, the current COVID-19 recession has had negative impacts even on large financial institutions like banks and may cause panic among merchants who rely on them for various services.
Payment processors are now tightening rules and making unprecedented changes that could put your business at risk.
Qualpay, for instance, has stopped processing transactions for merchants in high-risk categories. Square, on the other hand is holding back 30 percent of payments processed for specific merchants?
Many other processors are making moves that might affect how you do business. While such news are enough reason to panic but, businesses must recognize that this isn’t the first time the payment world is facing such disruptions.
So what’s the worst that could happen?
With payment companies taking extreme measures, business that fall on the wrong side of the new regulations may suffer frozen funds.
While many businesses will be affected, risky industries will likely feel more heat than other sectors.
Merchant categories like subscription boxes, digital products, adult entertainment, CBD dealers and forex will suffer most.
Affected businesses will receive an email explaining the changes in regulation that might lead to contract termination.
This situation can disrupt your business a great deal, especially if you rely entirely on a single merchant account and payment processor for all your business dealings.
How Merchants Can Survive a Chaotic Payment Environment
While a business can’t do much about regulatory changes and contract terminations, merchants can improve their chances of surviving and growing in a chaotic payment environment in the following ways;
Multiple Payment Options
While credit cards are a staple, they are not the only way to accept customer payments. Merchants can try alternatives like ACH processing and cryptocurrency payments.
These avenues come with extra benefits such as reduced chargebacks and affordable payment processing.
Bank Accounts versus electronic Wallets
You want to embrace traditional bank accounts for one reason; unlike e-wallets, they won’t bombard you with the sudden news of a closure.
It is okay to go digital, but is safer to store your finances in long-established banks that won’t liquidate and run out business in an instant.
Hammer out a Lower Reserve
Reserves often reach 20 to 30 percent depending on your payment enabler. To hammer out a lower reserve, a business must reduce chargeback levels and maintain a desirable ratio for three to six months.
Take quick steps to protect your business in a shaky payment ecosystem. Implementing today will not only push you through COVID-19 but also open new business opportunities in the future.