5 Signs It’s Time to Switch Payment Processors

5 Signs It’s Time to Switch Payment Processors

If you allow customers to pay with debit or credit, then your payment processor is like the backbone of your business.

Among other things, a great processor will ensure transactions are seamless, costs are kept to a minimum, and customers remain satisfied.

But if you’re with a payment processor that subjects you to things like frequent downtime, hidden fees, or outdated technology, it can severely impact not just your bottom line, but also your reputation, your relationships with customers, and your ability to grow your business.

And considering how common some of this stuff is today, it’s no surprise that business owners are becoming less and less satisfied with their payment processors.

According to a J.D. Power survey, which polled more than 4,800 U.S. small businesses, as of 2023, small business satisfaction with payment processors had gone down six points from the previous year, as the cost of services increased and issues with processing payments continued.

Interestingly enough, here in Canada, regardless of how satisfied businesses are with these services, the vast majority said they’d be willing to switch payment processors, if they’re given the right incentives.

As you can see from the graph below, a survey from Chase, which polled over 2,200 Canadian businesses, found that 86% of respondents were “at least somewhat willing to switch vendors.”

chase survey

But in an industry that’s as convoluted as ours, it can be tough to know when it’s time to switch payment processors.

So, if you’re not happy with the services you’re currently getting, and you want to find a new payment processor, we want to help you make the best decision for your business by highlighting five signs it’s time to switch.

 

Is it Time to Switch Payment Processors?

time to switch payment processors

If you don’t have a good grasp of how things work in our industry, then it’s going to be tough to tell if it’s time to switch payment processors.

And by the time you’ve noticed something’s not right, it may be too late, as the damage has already been done.

With that in mind, let’s explore five telltale signs that it’s time to switch payment processors.

 

1) You’re Paying Flat-Rate Pricing

In the payment processing industry, flat-rate pricing tends to be advertised as more convenient and affordable, but the truth is, it’s the most expensive way to pay.

Unfortunately, because of the way it’s advertised, and the fact that most business owners don’t know any better, many get fooled into thinking they’re getting a good deal.

But as we pointed out in our article on Why Interchange Plus Pricing Is the Best Way to Pay for Payment Processing, a CFIB survey found that 54% of respondents had trouble understanding the contract they signed with their payment processor, and 41% are unsure about their pricing.

That being said, it’s no surprise that business owners are being taken advantage of in this way.

What’s more, the average flat rate offered in our industry is currently 2.4%, with some processors charging up to 2.65% or even more.

But only a select few credit cards have an interchange rate of more than 2.4%.

So, while flat-rate pricing might sound great in a slick ad campaign, at the end of the day, it’s going to cost you more money.

With that in mind, if you’re paying flat-rate pricing, it’s time to switch payment processors.

And if you’re not sure what interchange rates are, or you just need a little refresher, you can read our article on What You Need to Know About Interchange Rates in Canada.

 

2) You’re Finding Hidden Fees on Your Statement

In addition to promoting misleading pricing, unscrupulous payment processors are also notorious for adding miscellaneous “hidden” fees to your statement.

Truth be told, these fees aren’t really hidden at all, if you know where to look.

But the problem is many business owners don’t know how to decipher what’s on their statements.

As a result, payment processors will often sell business owners on a “discounted rate” but then make up for those lower interchange rates, and then some, by tacking hundreds or even thousands of dollars in extra fees onto your monthly bill.

They’re also known to do things like charging different amounts for the same fee multiple times on the same statement or adding extra fees to cards for which you’ve already paid interchange.

If you’re not familiar with this sort of thing, it can be somewhat difficult to determine, but our article on What You Need to Know to Spot Hidden Payment Processing Fees explains everything.

And if you do find these kinds of fees on your statement, you should definitely start thinking about switching payment processors.

 

3) You’re Unable to Accept All Forms of Payment

Today’s consumers expect convenience and flexibility, regardless of how they choose to pay.

And whether they’re making purchases using a credit card, debit card, digital wallet, or any other form of payment, if your payment processor doesn’t support these options, it can lead to lost sales, dissatisfied customers, and a ruined reputation.

Like it or not, the popularity of new forms of payment, including mobile payment options like Apple Pay and Google Pay, continues to grow, and if your processor doesn’t allow you to accept these forms of payment, you risk alienating a significant portion of your customers.

Similarly, if you operate internationally, being unable to accept foreign cards or currencies can limit your growth and deter potential customers.

With all that in mind, you’d be surprised how many processors are still using outdated technology that limits how customers can pay.

But the truth is, you don’t have to let limited payment options hold your business back, and there are many processors out there (us included) that support all major forms of payment.

So, if you’re turning customers away because they can’t pay the way they want, then it is definitely time to switch payment processors.

 

4) Your Payment Terminal Is Falling Apart

Believe it or not, there are many merchants out there who are still using old beat-up payment terminals.

This may not sound like a big deal, but the truth is a malfunctioning or outdated payment terminal can seriously harm your business.

At the end of the day, a functional, modern terminal is not just a convenience – it’s a critical part of your business’ reputation and revenue.

Because when customers encounter a slow, unreliable, or poorly functioning payment terminal, or they see that yours is falling apart, it makes you look unprofessional and unreliable, creating a negative impression that can lead to frustration and abandoned purchases.

And aside from the fact that they may not support the latest payment methods, older terminals might not comply with current security standards, which can expose your business – and your customers – to potential fraud or data breaches.

Frequent breakdowns or maintenance issues can also disrupt your operations, resulting in lost sales and time wasted on troubleshooting.

In any case, if your payment processor isn’t offering upgraded equipment or providing prompt technical support, it’s a clear sign that they’re not prioritizing your needs and it’s time to think about changing payment processors.

 

5) Your Provider Doesn’t Offer Online Integration

This doesn’t apply to all businesses, as some do all their sales in-person.

However, if you want to sell stuff online, but your provider can’t do eCommerce, then it’s probably time to switch payment processors.

Because if you’re unable to accept online payments, you could be missing out on a vast and growing market of customers who prefer the convenience of shopping from their devices.

And even if you primarily operate a physical store, offering an online option can help to boost sales, expand your reach, and provide a safety net during unexpected disruptions, like having to temporarily close your physical location.

At any rate, without seamless eCommerce integration, managing sales across different channels can be incredibly inefficient and prone to errors, and dealing with online transactions manually can lead to wasted time, accounting inaccuracies, and frustration for you and your staff.

 

Are you thinking about switching payment processors? Book a Rate Reduction Review to find out how much you can save with Lucid Payments or contact us for more information.

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