Scaling Up to Success: Hatch's Journey from Shark Tank to Industry Leader with Outsourced Accounting

Navigating the challenges of eCommerce payment processing

Navigating the treacherous waters of eCommerce payment processing can be a daunting task for businesses of all sizes. From the complexities of payment reconciliation to the ever-present threat of fraud, payment processing obstacles can quickly consume valuable time and resources. This is true not just for online retailers, but also for organizations in other industries that deal with complex compliance and reporting requirements, such as nonprofit financial reporting. We can help! We’ve taken a look at four of the critical challenges and shared solutions that help streamline and protect your payment processing operations and free up valuable time for you to focus on growing your business: Challenge #1 -Keeping track of multiple payment methods As an eCommerce business, you want customers to have a friction-free sales experience. That means choosing to take various payment methods such as credit cards, debit cards, online wallets, and bank transfers. When businesses are multi-national, you also introduce the need for currency conversions. While everything looks smoother from the customer’s point of view, it can make it difficult to keep track of all the different payment methods and reconcile them with your financial records. Implementing automation, such as a payment gateway that integrates with your systems, will help reduce the manual effort required for payment processing but you’ll also be paying payment processing fees, which can be complex. You still need to be able to rely on your accounting team to account for payment processing fees accurately and to manage all transactions, receivables, invoices, and taxes. Having access to technical accounting support ensures these complexities are handled correctly and in compliance with relevant accounting standards. This type of expertise is also critical in areas such as risk and SOX compliance, where accuracy and regulatory alignment are essential. Challenge #2 – Payment reconciliation Payment processing systems need to reconcile seamlessly with your bank account to ensure that transactions are accurately recorded. Reconciliation requires regular monitoring and matching of transactions to avoid errors and discrepancies. That means retaining detailed records of all transactions, including sales, refunds, and chargebacks, Including transaction dates, order numbers, payment amounts, and payment methods. The best approach is implementing rigorous processes to track transactions and reconcile them regularly. Challenge #3 – Fraud detection and prevention eCommerce online payment fraud cost businesses more than $20 billion in 2021, and according to a study by Juniper Research, the figure is set to rise to $24 billion by 2024. Typical fraud can include chargeback and refund fraud, identity theft, account takeover, and even friendly fraud when a customer forgets they made a purchase and disputes the charge. There’s also the risk of cyber-attacks that can compromise customers’ payment information. The best way to stay ahead of fraudsters is to have reliable and extensive record-keeping procedures and to monitor transactions for suspicious activity. Best practices include: Implementing more robust security systems and processes to prevent fraud, such as two-factor authentication Deploying identification software that allows businesses to thoroughly vet any customer’s identity and set up “red flag” systems to alert you to suspicious activity on your accounts. Educating yourself, your employees, and your customers about fraud prevention measures Challenge #4 – Keeping up with regulatory requirements eCommerce businesses must comply with various regulatory requirements related to payment processing, such as PCI-DSS (Payment Card Industry Data Security Standard) and AML (Anti-Money Laundering) regulations, as well as any other local regulations that apply. The regulations can be complex and evolving. Plus, if you do business in different states, you’ll find that sales and use taxes can vary substantially for the same product or service. The key is an accounts team who are knowledgeable about the latest regulations and compliance standards. Your accountants must stay on top of all the legislation that could potentially affect payment processing in all the jurisdictions in which you do business. It’s not easy, but it’s the best protection you have against fines and penalties for falling foul of the rules. Outsourcing is a great solution Outsourcing your accounting and finance functions can be a good solution to these challenges. With an outsourced team, you gain access to specialized expertise in payment processing, including tax compliance, financial analysis, and reporting. In addition, outsourced providers often have access to the latest fraud detection and tools to help secure your payment processing, all for a lower cost than an in-house team. And, because outsourced teams work with multiple eCommerce businesses, they have insight into best practices and an eye for anything that looks out of place.