As a retailer you naturally assume that accepting every possible form of payment would increase your business by making payments as easy as possible for your customers. Alternative payments have been around for many years and some people do prefer to use them. However, there are some good reasons to stick to standard credit cards.
Originally alternative payments were very easy to use for both consumer and retailer alike. They were easy to setup, very reliable and caused very little issues. Changes in regulations, fast growth and the institution of bureaucracies to run them seems to have taken away their luster.
Not everyone uses 3rd party payments but some people like using them primarily for their ability to not have to enter a credit card on every website customers buy from. They feel a little bit safer and perhaps they are if a website is not secure, though all reputable sites are today. Most people assume they will need a credit card to shop online and credit cards to offer a great deal of protection and ability to recover should a problem arise.
As a retailer you have to consider other things that can happen to you if you do accept these payments. At any time and with little explanation any of these companies can cut you off, freeze any funds in your account and not release them for 6 months. That means that every customer who has orders in the system has their money frozen but will still expect their orders from you. If you don’t send their orders, even though you have no compensation, they will file charge-backs and maybe even register complaints online that can damage your reputation. Obviously they feel that you are responsible because they placed the order with you and not with the payment processor. If you happen to be setup to only take these alternative payments, your whole business may be at risk. Many businesses run on a daily cash flow. To have a rush of orders that must be sent but that you can’t collect funds for could be devastating.
One company we talked to started off solely with a 3rd party payment system that also allowed customers to use credit cards rather than accepting them directly. For 6 years they had not problems and built their business to 60-100 orders per day. Suddenly they were cut off and the processor told them they would be holding thousands of dollars for a minimum of 6 months with no recourse.
Another company said that they started accepting the 3rd party payments and a week and a half later they received a notice that their account didn’t meet some guidelines but could not find out any more information. This after many years of accepting credit cards and doing business normally. Just for trying something new they had $1700 tied up indefinitely and customers expecting their orders.
Every business has to weight the pros and cons of accepting other forms of payment. You may be thinking that your business runs smoothly with little issues, this could not happen to you. Why would a company shut you down if they want to keep customers happy? That is a question these businesses are still scratching their heads about. If you do accept third party payments, always make sure you can handle a sudden interruption. Expect the best but prepare for the worst.