Online merchants and customers alike expect easy, safe and effective buying and selling processes. New technologies are making that simpler and smoother. But user demands for additional payment features and options lead to growth in multiple directions. If you select a payment gateway for your business you should pay attention to these payment features.

As we see such a surge of growth in the fintech industry and the payments sector, due to advances in technology and growing demand for flexible ways to pay, we also start to see new challenges for payment processors.

This blog post looks at some of the challenges for payment processors, which will test fintech firms looking to grow and come out on top of the competition.

1.     Mobile Payments and Wallets

A rather obvious disruption to the payments industry this year is Apple Pay. Mobile payments and wallets have been at the top of many payment processors’ priority lists for a while and this year is set to see consumers demand even more from the payments sector. 

The internet of things is the driving force for this demand.

2.     Trust

A big concern for anything involving consumers’ well-deserved cash is trust. This is a critical challenge for payment processors to overcome. Many in the payments sector partner with banks in order to provide their services and many are even seen as a financial institution similar to a bank.

One of the challenges for payment processors is building rapport and trust with consumers. Payment firms need to reassure customers that their money will get to the bank account that it’s supposed to and, where necessary, that there is insurance for any account balances that consumers hold. Without doing this, growing in a competitive market will be almost impossible.

3.     Security

Linked to trust is security. Security is always a concern when it comes to personal data and consumers’ and businesses’ money. With consumers demanding access to their money and payments systems in more places (through their smartphones for example), there are of course concerns that go with this.

Payment processors and financial institutions have the challenge of implementing fail-safes that bestow consumer confidence so that they can increase uptake of their new technologies.

4.     Metamorphose

It’s no surprise that consumers and businesses want to transfer their money and make payments for free (or at least a really low price), so providing low fees is pretty much a given for all payment processors.

The challenge for payments firms then is providing a product or service which differentiates them from the rest. With most in the industry providing low prices, to remain competitive means providing an innovative piece of technology or customer service that is out of this world.

5.     New Regulation

With new technology and new security concerns come new regulations. Another challenge for payment processors is the introduction of new regulations in emerging markets which fintech firms must overcome should they wish to expand to these markets.

6.     Fraud Protection and chargebacks

 In addition to more obvious fraud-monitoring tools such as the customer account, validation services, and purchase tracking, a certified Level 1 Payment Card Industry Security Standards Council (PCI DSS) а processor can provide additional protection through security methods like:

  • Tokenization
  • Point-to-point encryption (P2PE)
  • Fraud management filters

7.     Multi-currency and payment methods

 Online payments help merchants compete in international markets by allowing their customers to pay in their native currencies and select different payment methods. For merchants, multi-currency, cross-border transactions can require new bank accounts, new business entities, and new regulatory hurdles in each national market. Selecting a payment service provider with the necessary infrastructure already in place can provide effective, and immediate, solutions to those problems. A merchant can easily collect payment in one currency and credit the merchant account in its home currency.

8.     Processing Fees

 Not everyone views processing fees as a “challenge” — it’s simply the cost of doing business. There is a lot of variances in processing fees and how they are calculated. Significant factors include a type of business, type of card used, methods you use to accept payments, average transaction size, etc.

This is why it’s crucial that you sit down with your provider and discuss how each fee actually works.

9.     Support

 Transaction issues can crop up any time, even in the dead of night. So, is your payment processor available after business hours?

It’s important to have a processor that is ready to help troubleshoot any problems you might be facing. Having accessible resources and video tutorials is also a plus.

In a nutshell,

In the past few years, we have seen many new firms enter the payments sector, increasing competition for the incumbent firms. Strong competition, changing consumer attitudes and global security concerns are pushing all payment processors to perform at their best and provide products and services which stand out.

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