How Payment Choice Can Impact The Customer Experience

Many of us appreciate having choice about how we pay for goods and services. Maybe we like to put larger purchases on a credit card rather than a debit card. Or to use different payment methods for in-store purchases and online shopping. And perhaps we find eChecks handy for paying bills.

Offering your customers a range of ways to pay can have a positive impact on their shopping experience. Add in convenience and security, and you can be well on the way to building a loyal customer base and accelerating your growth.

Offer the payment types customers prefer

So, can offering different payment types make your customers happy to shop with you? Whether you sell online, in store, or both, you should try to offer the options that meet most customers' preferences. Your payment processing platform should allow you to accept:

• Debit and credit cards. Card payments are pretty much a must-have for both eCommerce and in-person payments. For in-person purchases, you'll probably want to offer customers the convenience of contactless card payments, too.
• Digital payments. Add more choice by enabling customers to pay using digital wallets like Apple Pay and PayPal.
• eChecks. Ideal for recurring transactions like bill payments and subscriptions, eChecks also offer faster processing and deposits than traditional paper checks.

A smoother payment experience

As well as giving customers choice about how they pay, look for a payment processing platform with additional features that can positively impact the payment experience. In general, most people will choose options that require them to make the least amount of effort. This so-called 'principle of least effort' is widely applied to consumer behavior. So, it's worth considering ways to:

Make things easier for returning customers. Make checkout faster and easier for returning customers by securely storing their payment information so customers don't have to re-enter their details every time they check out. 

Simplify recurring billing. A great solution for subscription—and membership-based businesses—customers just set up their payment details once and are automatically charged at each billing cycle.

Avoid the hassle of expired cards. Save customers the trouble of updating their stored details when they receive a new card. Use a service that automatically updates their card-on-file information to help avoid the friction and lost sales that can have a negative impact on the shopping experience. 

A more secure payment experience

On top of payment choice and convenience, customers also care about the security of their payment information and transactions. If they think a payment method could be risky, they may be less likely to use it—even if it can make shopping easier or checkout quicker.

Investing in secure payment systems and communicating about your security measures can help reduce perceived risk and increase customer trust. Look for a payment processor that helps you store customers' payment information in a PCI DSS-compliant manner.

You should also consider using a fraud detection solution that helps identify, manage, and prevent suspicious and potentially fraudulent transactions to give customers peace of mind and minimize the impact of fraud on your business. Source

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"The legacy of brave men and women who have fought and died for their country is the freedom we enjoy as Americans." – Lucian Adams

1099-K: History and Hints

Section 6050W of the IRS tax code came with the Housing Assistance Act of 2008 (although it’s completely unrelated to housing) and introduced us to the 1099-K.

Known as the “Merchant Card and Third Party Network Payments” form, the 1099-K is an IRS effort to increase tax compliance and decrease the “tax gap,” or the difference between what people earn and what they actually report for taxes. It went into action during the 2012 tax season for 2011 income.

Payment settlement entities (PSEs), like us, are required to submit an annual 1099-K to the IRS showing, month by month, exactly how much each of our client merchants earned in electronic sales—credit, debit, stored-value cards and electronic funds transfers—over the fiscal year.

PSEs also send the 1099-K to merchants (by January 31) so that they can use it to properly file their other tax forms.

Before the dawn of the 1099-K, a lot of tax gaps were thought to come from small businesses accepting payments through platforms like eBay, Etsy, Amazon, ridesharing apps and other third-party sites.

Others also managed to fly under the radar with underreported, or completely unreported, sales. The 1099-K allows the IRS to tighten up the accuracy and enforcement of business taxes.

Businesses who bring in less than $20,000/year and have fewer than 200 transactions/year are exempt from the requirement and won’t receive a 1099-K.

1099-K Business Tips

Make sure you provide your payment processor with the correct Tax Identification Number (TIN), tax filing name and your legal name as the business owner. Also, be sure these match all of the information on your other tax documents. If you provide an incorrect TIN, the IRS may instate backup withholding—taking a hefty 24% of your future earnings until the federal income tax is met. If you do become subject to this backup withholding (you’ll receive what’s called a B Notice warning you of it), you can fix it by providing the correct TIN, amending your return, properly filing any returns that were missing, and paying the owed taxes. Avoid this (literally and figuratively) taxing process by double checking that your business information is up to date and consistent everywhere!

Provide your payment processor with the correct mailing address to ensure timely receipt of your 1099-K. This is particularly pertinent for ecommerce merchants who may not be tied to a physical location.

If you switched payment processors at some point during the year, be sure to include 1099-K reporting data from both of them. A business with multiple merchant accounts will need separate 1099-Ks for each. But any businesses, or branches of a business, with the same TIN use the same 1099-K.

During the year, avoid processing any personal expenses through your business’s electronic payment system. For example, say your friend owes you money and wants to pay you back with a credit card. It might be tempting to use your business’s payment terminal to take the payment. However, that money then becomes part of the 1099-K, and is taxable.

Your 1099-K shows your gross sales from electronic transactions, and does not include chargebacks or returns, so you’ll have to report adjustments under the Returns and Allowances section of your tax return. The IRS understands discrepancies between tax returns and 1099-Ks, particularly for entities like restaurants, as tips made with payment cards aren’t considered taxable income. But they will investigate large inconsistencies that seem suspicious by asking for more documentation to account for the differences, so it’s important to keep all of your transaction records handy.

1099-K requirements can either be a pain or a breeze you barely notice. To keep it the latter, the main things to remember are to keep your TIN up to date with your payment processor, file your taxes honestly, and, when in doubt, bring questions to your payment processor to avoid problems down the road.

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Key Components of Card Processing

Credit card processing involves several components that work together. Here is an overview of the main players involved:

Cardholder

The cardholder is the customer who owns a credit card issued by a bank or financial institution.

Merchant

The merchant is the business or individual that sells goods or services and accepts credit card payments.

Acquiring bank

The acquiring bank, or acquirer, is the financial institution that partners with the business to process credit card transactions. The acquiring bank receives transaction information from the business and communicates with the issuing bank to obtain authorization.

Issuing bank

The issuing bank, or issuer, is the bank or financial institution that issues the credit card to the cardholder. The issuing bank approves or declines transactions based on factors such as the cardholder’s available credit and account status.

Card networks

Card networks are organizations—such as Visa, Mastercard, American Express, and Discover—that provide the infrastructure and rules for processing credit card transactions. Card networks act as intermediaries between acquiring banks and issuing banks to facilitate transaction communication, authorization, and settlement.

Payment gateway

A payment gateway is a tool that transmits payment information from the business’s point-of-sale (POS) system or ecommerce platform to the acquiring bank for processing. It encrypts the cardholder’s data and ensures the transaction complies with security standards.

Payment processor

A payment processor, or payment processing provider, is a company that manages the transaction process on behalf of the acquiring bank, handling tasks such as communicating with payment networks, obtaining authorization, and managing the settlement process.

POS system

A POS system is the hardware and software businesses use to accept credit card payments. For in-person payments, this might include a card reader or a retail terminal. For online transactions, this would include the e-commerce platform and payment gateway.

These parties ensure that credit card transactions are secure and efficient and comply with regulations and industry standards, providing an easy and fast payment experience for customers and businesses.

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The Rise of Digital Payments and Digital Wallets

With more customers opting for cashless and contactless transactions, studies show 25% of B2B customers are choosing to pay using digital payment options such as credit cards, debit cards, and digital wallets. Further, findings from a recent B2B ecommerce report also shows 65% of B2B companies are fully transacting online in 2022—and are more likely to offer ecommerce over in-person sales. With this in mind, digital payment methods are becoming a top priority for business owners and financial decision-makers for the following reasons:

• 95% say digitizing payments benefits their customers and vendors
• 64% want to automate their current manual processes
• 37% seek to accelerate their transaction processing
• 75% of CFOs want more transparent transactions to boost their customers’ lifetime value

With the increased adoption of digital payments and digital wallets, credit card use will continue to climb, prompting the need for payment processors to successfully complete digital transactions. Payment processing centers are at the heart of digital payment transactions.

How Visa and MasterCard make their money

 

 

Millions of people today own plastic cards and use them to purchase almost everything from household appliances to plane tickets. As convenient as they are, how do they actually work? Find out in this video.

10 Tips to Grow Your SMB

Businesses that employ 100 or fewer employees are usually considered small. Medium-sized businesses are in the 101-999 employee range. Together they fall under the SMB, or small to medium sized business, umbrella. Whether you are beginning to accept credit cards in store, have just launched an ecommerce website or simply want to attract more customers, there are some universal ways to drive sales with the help of a credit card processing solution and the valuable time one can free up for you. 

Here are 10:

1.) Implement a loyalty program

Referral programs, point systems, gift cards and membership deals can optimize your existing customer base and attract new customers. Don’t have enough time or employees to spare to get any of these projects off the ground? Don’t worry. Loyalty software that links directly to your credit card processing terminal, whether it’s in store or online, automates the whole process. The influx of new customers will pay off—and exceed—the cost of integrating loyalty software. High-volume offer redemption is the key to profitable loyalty programs, so software designed to facilitate just that, and show real results, is a solid option over manual program management.

2.) Expand your online presence

While social media doesn’t guarantee a spike in sales, it’s a good way to draw attention to your brand and display your team’s personality. Depending on your products, services, and target audience, you can determine which social media platforms will help your business impact more people. For example, if your products are highly visual, Pinterest and Instagram would be smart options to leverage. Facebook and Twitter are always great for updates or special promotions. If you offer services to professionals, LinkedIn would be a practical addition to your marketing agenda.

You can easily find demographic information for each social media platform. For example, according to Sprout Social, 45% of internet using women use Pinterest, while only 17% of internet using men do. Facebook sees the majority of action from women as well, at 83%, compared to men at 75%. It’s the most popular social site, and also the most popular for older adults (72% of internet users ages 50-65 use Facebook, while 62% of those 65 and older use Facebook—a higher percentage than all the other social media sites). Twitter has an almost equal amount of men and women users, while LinkedIn is the only site that sees more men users (31%), compared to women (27%), and the majority of users have at least a bachelor’s degree. While these are just a few examples, you can drill down to specific age groups, salaries, areas, and more. So if you have questions about where to promote your material online, you can take a look at where your target audience is showing up the most.

With a quick post, you can promote products and services and let customers know what’s new. Through an API, you can even incorporate features from other websites, like a Facebook “Share” button right on your blog so viewers can share your material with one click. Or, just post a picture of the office cat wearing a tie behind the checkout stand to get a few laughs and increase your visibility without coming off as having a not-so-hidden sales-pushing agenda. People appreciate humor and the absence of financial motive when it comes to social media.

3.) Look at your area

Learn about growing neighborhoods in your city or county and consider relocating or adding another branch of your business to a spot that’s booming. Identify your target market and bring the products to the customers. A great option would be opening a pop-up shop that can go to different community events and trade shows. A pop-up shop, sometimes known as flash retailing, is a temporary version of your store, online or retail, that can move around to different areas, fostering fresh, unique engagement with customers.

4.) If you think you have enough payment options, offer more

Take advantage of every demographic by offering flexible payment methods. Most payment solutions come with automated invoicing features, so you can send customer invoices with an easy “click to pay” button. Say you own a landscaping company and only accept cash or paper checks in the mail. When you email an invoice at the time of your service, customers are more likely to pay you on time with their credit cards, and you’ll have the funds for that job way faster than you would if you had to wait for a check, bring it to the bank, and wait for it to (hopefully) clear.

If you already accept credit and debit cards, adding an electronic check option gives you access to more customers who prefer paying directly from their bank account. Depending on what kinds of products or services you sell, you could start accepting healthcare payment cards or EBT. The ability to accept all forms of payment over the phone, online and in person will give your customers the convenience they’re looking for.

5.) Track the performance of your team and adjust accordingly

If you look at the sales reports generated by your POS system and numbers are dropping, try something like adding new team members working off commission only. It’ll create more competition among existing employees and motivate them to take more interest in what they’re doing. Being adaptable and paying attention to employees’ performance, and using positive reinforcement like bonuses or recognition to reward the exemplary ones, help keep your team on the same page about what your goals are. Passionate employees incite passion in customers.

6.) Get to know your customers

Use your credit card processing records to look at customer spending habits, then capitalize on the most popular products and personalize your advertising methods. Survey them. Listen to their responses. Make changes as needed. The odd bad review happens, but it can actually lead to a “service recovery paradox,” when you make up for a negative experience with a very positive correction and end up with an even stronger relationship with that customer than before.

7.) Get to know and communicate with your competitors

While it may seem counterintuitive to mingle with the competition, you could come up with a mutually beneficial advertising partnership, like offering a restricted open-loop gift card that only works at your stores. If your new frenemies decide to close, you never know what doors the relationship could open down the road. For example, you might end up with an investment opportunity or new clientele when someone retires. Building partnerships and referral networks is a good way to get your business more exposure and footholds in the community.

8.) Streamline business activities with software and automation

For example, if you’re spending a lot of time counting inventory by hand, look into a new POS system that tracks inventory for you. See how your POS system can link with QuickBooks to make accounting easier. Instead of guessing and taking chances, you can look to online reports generated by your POS system to guide smart business decisions. For customers making monthly payments, automated recurring billing plans are low-maintenance ways to stay on top of those payments. If you have an ecommerce site and retail location, your payment gateway and POS can integrate to give you a comprehensive view of your sales data. Use your employees for face-to-face customer service rather than tasks that can be done by POS technology and your merchant account provider.

9.) Accentuate your strengths

Being small is definitely a cool factor today. Accentuate your grassroots charm and get the “shop local” crowd on board. Mom-and-pop stores have a growing appeal in an increasingly corporate economy. Use your POS system to recognize repeat customers, create accounts for them and offer rewards. For example, your loyalty software could alert you when it’s a customer’s birthday, and you could give them a special discount or free item. You can never go wrong adding a personal touch to customer service, and this option is most viable for SMBs.

10.) Make sure your products match advertising

Make sure your advertising matches your products and provide customers with in-depth return policies in plain language. It’s also a good idea to make sure your business name matches your billing name so that customers recognize it on their card statements. Not only will it improve customer satisfaction, it will lower the risk of returns and, worse, chargebacks. Quality products with appropriate advertising can help you manage customer expectations and give your brand a reputation of honesty and transparency.

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Consistent Customer Experience Is the Key to Brand Loyalty

Why do customers choose one brand over another? Customers consider customer experience one of the most important factors in their decision. A consistent customer experience across your franchise will result in more significant revenue and customer loyalty.

What Is the Customer Experience?

The customer experience is how customers engage with your brand. When brands actively engage with customers and offer relevant and timely solutions, customers have a positive experience. However, when a brand doesn’t invest in customers and leaves a negative impression, customers have a poor experience. As a result, they are more likely to switch to a different brand that cares more about customer satisfaction.

Some factors that influence the customer experience include:

• Customer service: Is there a consistent customer service experience with knowledgeable and timely responses?
• Products: Do products have consistently high quality?
• Customer support: What resources and solutions does a brand offer for problems, and are the resources easy to access?
• Branding: Is the brand transparent and contact customers consistently with updates and new information?
• Social listening: Does the brand show it’s listening to customer comments and feedback and adjusts accordingly?
• Social responsibility: Does the brand care about ESG issues impacting the customers and community?
• Online content: Does the business website, social media, and online content have a single brand voice and appearance that unites the brand?

Benefits of Having a Consistent Customer Experience

The customer experience is crucial for success in today’s market because customers have greater power than in the past when making purchase decisions. The internet gives customers access to more information and options, increasing competition between brands.

Businesses responded to this customer-centric market by focusing more energy and resources on the customer’s experience over promoting products, as the experience directly impacts purchase behavior. A consistent customer experience means customers receive the same amount of care and attention across all devices and channels to improve a customer’s overall impression of a brand.

Consistent Customer Experiences Leads to Loyalty

Customer loyalty is crucial for company success because 65% of business comes from loyal customers. In addition, retention is more cost-efficient than customer acquisition.

One of the best ways to encourage customer loyalty is by improving the customer experience. Having a positive customer experience encourages customers to come back repeatedly. Nearly three-quarters of senior executives say customer experience directly impacts customer loyalty.

However, to enjoy the full benefits of a positive customer experience, franchises must ensure that the same experience is available across all channels and locations so that other marketing and customer service efforts aren’t counterproductive to the brand’s message and loyalty goals.

The more locations a brand has, the more challenges arise for delivering a consistent customer experience. Instead of focusing on one store and one set of products, a company has to track all stores and each store’s needs.

Investing in that consistent experience may require additional strategies but is worth the payoff as businesses can boost their profits from increased loyalty.

5 Tips to Improve Brand Loyalty through Customer Experience

Use these five tips to create a seamless and consistent customer experience across all your franchise locations and channels.

1. Personalize the Customer Experience

Three-quarters of US consumers are loyal to brands that personally understand them. Therefore, franchises that want to increase their loyalty should start by personalizing the customer experience across locations. A key to creating a personalized buyer’s journey is understanding the audience through customer insights.

Marketing automation that gathers customer data gives marketers the tools and information they need to create personalized content and interactions. Then, centralizing that data on a database for all locations to access ensures that personalization is consistent no matter where the customer is in the franchise.

2. Connect Marketing Channels Across Locations

Most senior-level marketers say a unified customer experience across touchpoints is essential for marketing success. However, when marketers deal with several channels and locations, a seamless experience becomes more difficult.

Businesses that use an automated marketing system can connect each channel in one place to track and run several marketing strategies at once across several locations. Running campaigns and tracking leads from one centralized system aligns marketing campaigns and messaging for a consistent customer experience.

3. Map the Customer Journey to Find New Opportunities

Customer journey mapping follows customers through each touchpoint. This visual tells marketers which channels customers interact with, where customers are most satisfied, and where there are potential issues.

Brands that use a customer journey map fully understand customers from end to end. This increased understanding helps brands deliver a consistent experience at each touchpoint along the way and identify touchpoints and channels that aren’t providing that same experience and are causing customers to leave the brand.

4. Clearly Define Your Brand

Brands that have a clear mission, values, and goals and share those with customers create a consistent experience as that message ties all channels and franchises together with a unified direction and purpose.

Each franchise location should also be aware of the brand’s mission and objectives to improve a brand’s messaging around those goals.

Brands can create a consistent experience by training employees with specific guidelines and definitions, so all locations and teams are on the same page about the company’s message and values.

5. Measure Customer Satisfaction to Continually Improve

Continually auditing the franchise and measuring multichannel marketing results keeps the marketing managers on top of customer experience by measuring customer satisfaction. Managers can identify issues early, determine what works well, and find areas to improve.

An audit fully analyzes the entire franchise and each location’s efforts. The audit looks at what each store is doing to improve customer satisfaction. Some ways to track and measure customer satisfaction are:

• Customer survey results
• Customer feedback
• Customer churn
• Customer support tickets
• Customer reviews

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What Is Digital Banking?

Revolut, Fidor, Simple, N26, and Monzo are just some of the well-known digital banks that allow customers to open an account on their phone in minutes, whenever and wherever they want. But digital banking is not limited only to online banks. Over the past decade, banks that have created internal digital bank spin-offs optimized revenues and reduced operating costs by up to 70%.

What is a digital bank?

In layman’s terms, a digital bank is a bank that operates online and provides its customers the services that were previously available only at a bank branch.

What is meant by online banking?

Digital banking involves the digitization of all traditional banking products, processes, and activities to serve customers through online channels.

What are digital banking services exactly?

Most frequently, they include the following operations and activities (all the traditional banking services that are available 24/7 on mobile phones, computers, and compatible smart devices, without the need for a customer’s presence in the bank branch):

• Obtaining bank statements
• Cash withdrawals
• Transfer money
• Checking/savings account management
• Opening a digital bank account
• Loan management
• Bill payments
• Cheques management
• Transaction records monitoring

Obviously, digital banking software makes all traditional services easier to access, understand and manage.

This approach allows us to test digital banking risk concepts before moving parts of the old legacy business to the new system. Notable examples include Goldman Sachs’ Marcus, RBS’ Bó, and State Bank of India’s YONO, which gained more than 26 million customers and reached profitability within 18 months. 

Digital banking vs. online banking: are they the same?

Although the two terms may seem interchangeable, there are actually fundamental differences between digital and online banking.

Online banking includes only some transactional functions of the underlying core banking system. Online banking is typically accessed via the Internet and provides basic banking functions such as account management and statement access. The capabilities of an online banking system are limited and cannot be quickly expanded to provide additional banking services to consumers. 

Digital banking systems are much more flexible and allow banks to add and expand features much faster than traditional systems. Digital banking relies on high-level process automation, web-based services and APIs to provide banks and their customers with high levels of cost efficiency, security and flexibility. Modern banking solutions enable a fully digital customer journey, generating real-time data streams and accelerating key analytics. There’s one more term frequently confused with online and digital banking – mobile banking. It can be defined as a service provided by an existing bank to its customers enabling them to perform transactions via their mobile devices, without the need to visit a bank branch. 

The benefits of digital banking for consumers

As more and more digital banks enter the market, it is important to understand how modern digital banking solutions enable them to offer better and cheaper services than traditional competitors. Here we highlight the most essential advantages of digital banking:

Cost savings

Traditional banks invest a lot of time and resources in checking and accounting. By eliminating redundant back-office processes, digital banking software significantly reduces operating costs. Digital banking systems remove a lot of work from banks by automating the processes associated with daily financial transactions. Digitization reduces the number of steps and people involved in transactions, reducing the risk of costly financial errors.

Improved usability

Integrated KYC and AML protocols enable digital banks and customers to open accounts within minutes from any internet-enabled device. ID Verification systems and risk assessments enable banks to serve customers quickly and easily, allowing people who are not bank customers to access financial services. A major advantage of personal banking is that it is available 24/7. This means that customers can carry out any transaction from anywhere and access a wide range of services. 

Greater personalization

Digital banking software enables sophisticated personalization strategies powered by artificial intelligence (AI) and machine learning (ML). Banks can offer customers relevant financial options, interactive tools, and educational resources at the right time. Automated budgeting, spending analytics, savings reminders, and many other tools help inform and engage customers.

Wow-features

Digital banks already have many features that established banks simply cannot offer, such as buying cryptocurrencies and gold or investing in stock markets directly in the banking app. Mobile and online banking customers can instantly change their security settings, and transaction limits, and even specify whether or not they want to enable NFC or magnetic stripe payments.

Continue reading more on this topic here..

Why Does Credit Card Transaction Processing Matter For Businesses?

Credit card transaction processing directly impacts a business’s ability to provide convenient and secure payment options for customers, which can affect sales, customer satisfaction, and overall growth. 

Finding the optimal credit card processing system offers several benefits in these areas, including:

• Enhanced customer experience

By offering a simple, convenient credit card payment experience, businesses can meet the evolving needs of their customers, leading to increased customer satisfaction and loyalty. The benefits are even greater with a unified commerce model, where businesses integrate all sales channels, data, and backend systems into a single, seamless platform.

• Increased sales and revenue

Credit card payments can boost sales for businesses by lowering the barriers that customers face when making a purchase. Generally, customers spend more when using credit cards compared to cash. Accepting credit cards also enables businesses to accept payments in different currencies without needing to deal with conversion, further expanding their market reach.

• Improved cash flow

Credit card transactions are typically settled and deposited into the business’s bank account within 1–3 business days, resulting in faster access to funds compared to other payment methods such as checks.

• Secure and compliant transactions

A strong credit card processing system helps protect both the business and its customers from fraud and data breaches by adhering to security standards such as PCI DSS. This compliance is important for safeguarding sensitive customer information and maintaining trust.

• Competitive advantage

Accepting credit card payments and providing a simple payment experience can give businesses a competitive edge over competitors that do not offer these options, helping them attract more customers and increase their market share.

• Cost optimization

By carefully selecting the right credit card processor and negotiating favorable rates and fees, businesses can streamline operations, minimize processing expenses, and maximize their cost margins.

• Access to valuable data and insights

Credit card processors often provide detailed transaction data and reports, allowing businesses to track sales, identify trends, and make data-driven decisions that can optimize their operations and marketing strategies.

• Reduced risk

By accepting credit cards, businesses can minimize the risks associated with handling large amounts of cash, such as theft, loss, or mismanagement.

• Adaptability

A thoughtfully designed credit card processing system enables businesses to embrace flexibility and adapt to new payment technologies, such as contactless payments or digital wallets, helping them stay ahead of industry trends and cater to evolving customer preferences. Setting up a credit card processing system in a strategic way enables businesses to access these benefits and create a more robust, adaptable foundation for growth and stability.

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