Is Your Credit Card Payment Processor Holding You Hostage?

Have you ever closed a sale only to have a credit card payment processor hold your funds?

In today's world of increasing fraudulent charges, it's becoming more common for credit card payment processors to put holds on funds, so you're likely not alone.

But why?

Simply put, risk is the primary reason why credit card payment processors put holds on funds.

This risk manifests primarily in chargebacks, fraud, and merchants canceling accounts.

So, how do these things put processors at risk?

Why Credit Card Payment Processors Hold Your Funds

The answer is straightforward since merchant accounts are not depository accounts like checking and savings accounts. Instead, consider them as a "line of credit."

Think about it like this: When a customer makes a credit card purchase, a bank extends credit to that customer and processes the transaction.

Additionally, processors give credit to merchants by paying them before banks collect money from customers.

In essence, credit card processing businesses serve as an intermediary between banks and retailers, taking on the burden of providing debits and credits between the two.

They may be left with the tab as middlemen if a bank is owed money but cannot collect it from the merchant.

The risk of chargebacks

Consider the scenario where a business charges a customer (either honestly or fraudulently) for a sizable transaction.

The merchant ceases operations shortly after the transaction, or if it was a fraudulent company, it vanishes without a trace.

Later, the customer challenges the charge and requests a refund (clients often have up to 180 days to contest a credit card charge).

The processor cannot collect from the merchant because it no longer exists; therefore, the processor must pay the bank with their own funds.

Although merchant fraud is a significant threat, chargeback scenarios are among the most common ways processors lose money.

Shielding processors from high-risk scenarios

A credit card payment processor often puts holds on merchant payments to shield against chargebacks, fraud, or merchant account risk.

Significant risks arise when there are challenges in processing funds, dealing with high-risk businesses, and handling transactions susceptible to chargebacks or fraud.

A light at the end of the tunnel: USTPay

Of course, there are many reasons why businesses outgrow or become frustrated with their credit card payment processor—from rigid terms and withheld funds to rising fees and poor service.

The good news is that you have options.

You don't have to be held hostage by your credit card processor – or pay fees for a service that doesn't meet your needs.

Withheld funds are more than just a minor inconvenience.

For small-medium businesses, a significant delay in receiving funds can mean the difference between sufficient cash flow and not making payroll or re-stocking inventory.

And that can be catastrophic.

That's where UST comes in.

UST is a flexible credit card payment processor that doubles as a merchant services provider, giving you full control over your transactions.

The company's brainchild, USTPay, is pre-integrated and built into Microsoft Dynamics 365 Business Central.

It allows you to select from more than 120 gateways and processors and alter or add them whenever needed.

The choice of credit card processor or supplier is entirely up to the user – putting you in complete control of your cash flow.

Features and benefits of USTPay for Microsoft Dynamics 365 Business Central:

• Lower payment processing costs

• Full integration with Microsoft D365/BC

• Maximum data security level for payments

• Multi-currency payment options

• Universal tokenization

• PCI and GDPR compliant

• Top-level service and support

• Choice of over 120 payment gateways

A USTPay success story

USTPay has helped clients break free from rigid credit card payment processor contracts, increasing flexibility and improving payment operations across the board.

Here's one example of how partnering with UST can make a business more successful.

Client profile: Company A is a $200 million enterprise company that provides goods and services to other businesses, the state, and the federal government. Visa, MasterCard, Discover, and American Express transactions account for about 15% of their total sales.

One of the highest expense categories on Company A's income statement is credit card processing fees, which are over $500,000 annually.

The challenge

Company A wanted to keep its existing D365/BC workflow procedure. In addition to the high expense, the management team was dissatisfied with the limited options and felt "locked in" to their current solution.

Their requirements were:

• Use an integrated solution built into D365/BC

• Ensure PCI compliance

• Provide Visa and MasterCard Level-3 data to lower their fees

• Choose their preferred gateway

Our approach

Thanks to our tailored integration, Company A now has the freedom to select from more than 100 different PCI-compliant payment gateways (e.g., PayPal, Authorize.net, Stripe, Sage, BluePay, CardConnect, etc.).

Inside D365/BC, Company A has a PCI-compliant gateway that complies with all requirements. A certified D365 partner fully supports the solution.

With USTPay's help, Company A can execute the demanding Level-3 data specifications of Visa and Mastercard.

The outcome

Company A qualified for substantially lower prices with less than 5 hours of IT implementation support, saving them $70,741 in the first year.

Overall results

• Higher service standards

• More accurate batch reconciliation

• Increased uptime

• Improved customer service

• Consolidation of various payment processes

• Highest level of compliance and security

• Annual savings: $70,741

Company A’s ability to break free from their limited credit card payment processor gave them flexibility, compliance confidence, and significant savings.

Next Steps

Tired of feeling trapped by your credit card payment processor?

Let USTPay show you how to regain control of your transactions, cash flow, and vendor relationships.

Are you prepared for B2B transactions?

Every detail counts to ensure your transactions are profitable and effective.

It might be challenging to stay on top of the specifics with Interchange's ever-shifting laws and regulations.

These minor processing adjustments can significantly impact your revenue, saving or costing you thousands of dollars.

That's why U.S. Transactions Corp (UST) is here – to assist you in leveraging every transaction and helping secure your approval for quick funding at the lowest feasible cost!

Learn more at https://www.ustranscorp.com/ustpay or contact us for a complimentary evaluation of how USTPay for Microsoft Dynamics 365 Business Central can help you take control of your cash flow at https://www.ustranscorp.com/support.

Related Reading

If you missed our recent blog on the importance – and security – of tokenization versus encryption, you can read it here.

About Wade Tetsuka:

Wade Tetsuka is a visionary leader with over 15 years of experience as President of U.S. Transactions Corporation, where he has helped transform the landscape of B2B merchant services.

His deep expertise in finance, coupled with a keen understanding of compliance and client management, has positioned UST–a leading Fintech company and Independent Software Vendor (ISV) for Microsoft Dynamics 365–as a trailblazer in helping businesses save money and streamline payment processes.

As the founder of Presidential Forum LLC, an exclusive network for C-level executives, Wade fosters thought-provoking discussions that shape industry trends and leadership strategies. His commitment to excellence and forward-thinking approach makes him a sought-after voice in both the Fintech and executive leadership arenas.

Connect with Wade on LinkedIn.