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Is Your Credit Card Payment Processor Holding You Hostage?

Have you ever closed a sale only to have a credit card 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.


Image of hostage's hands tied together because of their Credit Card Payment processor

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?


Processors may be left hanging


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


Credit card processors put holds on merchant payments to protect themselves from chargebacks, prevent losses from fraud, and make sure they can cover expenses in case of a business closure.


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 other reasons why companies might be unhappy with their credit card processor, including unexpected fee hikes, poor customer service, and more.

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 merchant service provider in credit card processing. 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 across the globe increase their flexibility in payment processes, saving them money, time, and frustration along the way.


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


Ready to take control of your payments and your cash flow?


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 the author


U.S. Transactions Corp., a premier B2B enterprise service provider, collaborates with its clients to deliver an exceptional experience every time, from industry-lowest rates and cutting-edge technology to Level-3 processing that can save your organization up to 30 percent on costs!


Since 2009, UST has been a trusted source for Commercial Enterprises, Associations, and Nonprofits looking to maximize their success rate through superior payment solutions designed specifically for them.


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