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Category: Merchant Insights

Stories, playbooks, and guides for merchants

  • Credit Card Processing Rates: What They Are and How to Lower Them

    Credit Card Processing Rates: What They Are and How to Lower Them

    Every time a customer makes a purchase with a credit card, a small slice of that sale is carved out in processing rates, typically 1.5% to 3.5%.

    Imagine selling a $100 item: your customer swipes, and behind the scenes, about $1.50 to $3.50 is divided among banks, networks, and processors before the rest reaches your business’s bank account. If your business does $100,000 a month in credit card transactions, it will cost your business about $1,500 to $3,500 in fees, on average.

    For small businesses, these seemingly small fees add up. In fact, U.S. merchants paid $224 billion in credit card processing fees alone in 2023, according to The Merchants Payments Coalition. That’s why understanding how these fees work—and how to reduce them—is critical to protecting your margins.

    As a leading credit card processor, Aurora Payments offers a transparent, low-cost pricing model designed to help businesses understand their credit card processing fees and learn how to keep more of what they earn.

    What Are Credit Card Processing Fees?

    Credit card processing fees—or processing rates—are the cost merchants pay to accept credit and debit card payments for goods and services.


    These fees are split among multiple players in the payment chain:

    • The card-issuing bank (like Citi, Chase, or Bank of America)
    • The card network (like Visa or Mastercard)
    • The payment processor (like Square, Stripe, or Aurora Payments)

    Rates typically range from 1.5% to 3.5% of each transaction, depending on the type of card used and method of payment.

    How Processing Rates Affect High-Risk Businesses

    For businesses in high-risk industries—such as CBD and firearms—processing rates usually skew higher. That’s because these sectors face elevated risks of fraud, chargebacks, or legal restrictions, which increase the cost of underwriting and compliance for processors. As a result, high-risk merchants may see rates closer to 4% to 6%, and they often have fewer processing partners to choose from.

    How Processing Rates Affect B2B Transactions

    Business-to-business (B2B) transactions often involve high-ticket payments, like invoices for equipment, materials, or services. These transactions are eligible for Level 2 or Level 3 processing, which allows for more detailed transaction data to be submitted (like invoice numbers, tax amounts, and shipping info).

    If this enhanced data is passed correctly, the interchange fees charged by card networks can be significantly reduced.

    How Processing Rates Affects Seasonal and Nonprofit Businesses

    Nonprofits and seasonal businesses often have irregular or low-volume payment activity, which makes flat monthly fees or high minimums costly.

    Many processors charge monthly minimums, PCI non-compliance fees, or other surcharges that can eat into limited revenue during off-seasons or donation lulls.

    Who Gets a Cut of Each Transaction?

    Every time your customer swipes, dips, or taps their card, the multiple entities in the payment chain take a slice of the sale. Here’s where that processing fee goes:

    Issuer Bank – Interchange Fee

    The card-issuing bank (like Citi, Chase, or Wells Fargo) earns the largest portion of the fee. This interchange fee compensates them for assuming credit risk, fraud protection, and handling the transaction.

    Card Network – Assessment Fee

    Networks like Visa, Mastercard, Discover, and American Express charge assessment fees for access to their infrastructure. These payment processing fees support the secure, global systems that allow card transactions to occur in seconds.

    Payment Processor – Markup or Service Fee

    Companies like Aurora Payments, Square, or Stripe charge a markup to manage transaction logistics, deposit funds into your merchant account, and offer tools like reporting, customer support, or POS integration.

    Payment Gateway (if separate) – Gateway Fee

    In online transactions, a payment gateway (like Authorize.net) securely transmits the customer’s payment information to the processor. Sometimes built into the processor’s platform, this may also be a separate fee if using a third-party gateway.

    Understanding who gets what helps demystify the true cost of accepting credit cards and gives you leverage when comparing providers.

    Types of Merchant Processing Fees You Might See

    Credit card fees go beyond the standard percentage cut per transaction. Here’s a breakdown of the most common fees you might encounter as a business owner:

    Interchange Fees

    The typical range for interchange fees is 1.15% to 3.25% + $0.10 per transaction.

    Paid to the issuing bank, these fees vary by:

    • Card type – A standard debit or credit card with no rewards programs will often have lower fees compared to a credit card with a generous rewards program.
    • Transaction method – A card that is swiped in person often has lower fees compared to a card manually entered for an online transaction.
    • Industry – High-risk industries will typically have higher fees than low-risk ones.

    Assessment Fees

    The typical range for assessment fees is 0.13% to 0.15% per transaction.

    These are paid to the card networks (such as Visa or Mastercard) and remain fairly consistent across most transactions.

    Processor Markup Fees

    Processor markup fees will vary based on your pricing model. Common options include:

    • Flat-rate pricing
    • Tiered pricing
    •  Interchange-plus

    We’ll explore these options more in depth below.

    Gateway Fees

    Gateway fees are usually $10–$25/month or a per-transaction charge (e.g., $0.05–$0.10)

    If your payment processor doesn’t include a gateway, you may pay separately for services like Authorize.net or NMI to handle secure online transactions.

    PCI Compliance Fees

    PCI compliance fees will run you about $75–$150 annually (or spread out across monthly installments).

    These fees are charged to cover costs of maintaining PCI DSS (Payment Card Industry Data Security Standard) compliance, which helps protect customer card data.

    Monthly Minimums

    Some providers require you to process a minimum volume (for example, $25–$50 in fees per month), or you’ll be

    Chargeback or Retrieval Fees

    Chargeback or retrieval fees can cost $15–$100 per occurrence.

    These processing rates are charged when a customer disputes a transaction. Some processors also charge for retrieval requests, even if the dispute is resolved in your favor.

    Statement or Account Fees

    These fees are monthly administrative or “junk” fees (usually $5–$15) for account maintenance or printed statements. These are often negotiable or avoidable with the right provider.

    Common Pricing Models Explained

    Credit card processing fees are structured in different ways depending on the payment provider. Here are the three most common pricing models you’ll encounter, along with their pros and cons.

    Flat-Rate Pricing

    Flat-rate pricing is typically offered by aggregators like Square and PayPal, companies that are not considered true credit card processors. An example of a common processing rate is 2.6% + $0.10 per transaction. This is the most expensive pricing structure and while it can be convenient for certain merchants, its processing rates can quickly affect profit margins in high-volume businesses.

    Pros and cons of the flat-rate pricing model:

    • Pros:
      • It’s easy to understand.
      • Costs are predictable.
      • It’s suitable for small or low-volume businesses.
    • Cons:
      • It’s often more expensive overall.
      • You may end up paying more than necessary for lower-cost transactions.

    Tiered Pricing

    Tiered pricing divides transactions into three categories based on card type and how the payment is processed.

    Transactions are categorized as:

    • Qualified — Debit or basic credit cards
    • Mid-Qualified — Cards that are entered manually and cards with some rewards, such as the Chase Sapphire Preferred® Card
    • Non-Qualified — Premium rewards or corporate cards, such as the American Express Platinum card

    In tiered pricing, interchange rates (the largest portion of credit card fees that go to the issuing bank) are the lowest for Qualified transactions and the highest for Non-qualified transactions. This structure also includes a percentage-based fee, but the fee is based on the type of card presented for payment and varies based upon the card. It’s less expensive than flat-rate pricing because you pay less for qualified transactions. As an example, a non-rewards Visa card might have an interchange rate of 1.56% and that’s what you would pay instead of flat-rate price of 2.6%.

    Pros and cons of the tiered pricing model:

    • Pros:
      • It can be more nuanced than flat-rate pricing.
      • It involves potentially lower credit card fees for qualified transactions.
    • Cons:
      • It can be hard to audit or predict.
      • It lacks transparency—you often don’t know which tier a transaction falls into until after the fact.

    Interchange-Plus Pricing (Aurora’s Model)

    This model charges you the actual interchange fee (set by the card networks) plus a fixed markup from the processor. For example, you might pay 1.80% + $0.10, depending on the card and how it’s used.

    Pros and cons of the interchange-plus pricing model:

    • Pros:
      • It’s transparent so you see exactly what goes to the bank and what goes to the processor.
      • It scales well with business growth.
      • It is typically the most cost-effective model.
    • Cons:
      • It’s slightly more complex to understand at first.
      • Your monthly statements may include more line items.

    We know that interchange rates vary based on card brand (Visa, Mastercard, etc.), card type (rewards vs. non-rewards), and method of entry (in-person vs. online). With the interchange-plus pricing structure, you always pay the true underlying rate plus a consistent, clearly defined markup that goes to the processor. You will enjoy the lowest interchange rate based upon the card presented to you with this pricing method and that makes it the best for merchants.

    Aurora Payments uses the interchange-plus pricing model, but also offers:

    • Cash discounting – lets you offset processing fees by offering a lower price to customers who pay with cash.
    • Dual pricing – displays both cash and card prices, giving customers a clear choice at checkout.
    • Surcharging – adds a small fee to credit card payments to help recoup processing costs.

    Consider Your Total Cost of Ownership (TCO) When Choosing a Pricing Model

    Credit card processing rates aren’t just a transactional expense—they directly impact your total cost of ownership over time. A seemingly small difference in credit card processing fees (say, 2.9% vs. 2.3%) can translate into thousands of dollars annually, especially for businesses with high sales volume. Hidden fees, inflated markups, and unnecessary equipment leases can quietly erode margins month after month. Choosing a transparent, cost-efficient pricing model—like interchange-plus—can significantly lower your long-term expenses and improve profitability without changing how you do business.

    How to Lower Your Credit Card Processing Rates

    Credit card processing fees can add up quickly. But with the right strategies, you can reduce what you pay without sacrificing service. Here are a few practical ways to lower your costs:

    • Choose interchange-plus pricing – This transparent model separates the true card network costs from your processor’s markup, so you know exactly where your money is going and can often save more in the long run.
    •  Negotiate processor markups or flat fees – Many payment processors have wiggle room in their pricing. Ask about lowering the per-transaction fee or monthly service charges, especially if your business has steady volume.
    • Avoid equipment leasing; buy instead – Leasing card terminals may sound convenient, but the long-term cost is often much higher. You could pay as much as five times the cost of a terminal if you lease. Purchasing equipment outright usually pays off after just a few months.
    • Ensure PCI compliance to avoid extra charges – Being PCI compliant helps protect your customers’ data and prevents costly non-compliance fees that can be tacked on monthly.
    • Monitor for junk fees or hidden line items – Watch for vague charges labeled as “regulatory fees,” “service add-ons,” or “batch fees” on your statement. They might be unnecessary or inflated.
    • Review monthly statements carefully — Take time to understand your monthly breakdown. If something looks off or unclear, ask your provider to explain or justify the charges.

    Small changes can lead to major savings, especially as your business scales. Aurora Payments helps merchants stay on top of processing rate costs with transparent pricing and proactive support.

    Email us at sales@risewithaurora.com.

  • Get Paid Faster with Payment Links

    Get Paid Faster with Payment Links

    Did you know that businesses using payment links typically get paid 40% faster than those relying on traditional invoices or manual payment collection?

    In a world where customers expect instant, mobile-friendly experiences, payment links offer the speed, flexibility, and simplicity modern businesses need. Whether you’re in the field, at your desk, or on the go, you can accept payments instantly. No special software, apps, or technical skills required.

    In our payments processing platform, Aurora Payments offers payment link options that make getting paid as easy as sending a text.

    What Is a Payment Link?

    A payment link is a secure, shareable URL that allows your customers to pay for a product or service online, with no website or app required. Just generate the link, produce a QR code, or send the link by email, text, or social media—and your customer can click to pay.

    Think of it as a “Pay Now” button you can send anywhere. It takes your customer to a mobile-optimized checkout page where they can pay with a card, wallet (like Apple Pay), or even store their info for faster future payments.

    • Some common ways you can implement payment links include:
    • Adding links to digital invoices and email reminders
    • Sharing online payment links via text messages, direct messages, or QR codes
    • Placing links in Instagram bios or email signatures

    Payment links make it incredibly easy for customers to pay and for you to get paid faster.

    How Do Payment Links Work?

    Using payment links is as easy as 1-2-3 for both you and your customer.

    Here’s how to accept online payments:

    1. You create a link – Using the Aurora Payments dashboard, you can generate a secure payment link in seconds. Add details like amount, description, and whether it’s one-time or recurring.
    2. You share the link – Send it via email, SMS, invoice, or social media—wherever your customers already are.
    3. Your customer can pay instantly – Customers click the link, enter payment info, and receive a confirmation. They can pay by card, digital wallet, or even save their info for future payments.

    One-Time vs Recurring Payments

    Whether you’re charging a customer once or setting up a regular billing cycle, payment links give you the flexibility to handle both with ease. Choose the payment frequency that fits your business model:

    • One-time payments – Perfect for invoices, event tickets, or service payments.
    • Recurring payments – Great for subscriptions, memberships, or ongoing billing.

    Aurora Payments lets you automate the process so no reminders are needed.

    Built-In Security & Compliance

    Our payment links use Level 1 PCI-DSS-compliant infrastructure and tokenization to keep customer data safe. Each link is encrypted and handled through our secure gateway, ensuring protection for both you and your customers. Plus, network tokenization ensures credentials stay current even after reissues or expirations, reducing declines and improving the payment experience without increasing your compliance burden.

    Who Should Use Payment Links?

    Payment links are incredibly versatile and can streamline payments across a wide range of industries. No matter your business type, payment links help you get paid faster and simplify the transaction experience for your customers. Here’s how different sectors benefit from payment links:

    Healthcare

    Easily send secure payment links for bills, co-pays, or appointments remotely. This reduces in-office wait times and accelerates cash flow by allowing patients to pay quickly and conveniently from their phones or computers.

    Service Businesses

    Whether you’re a contractor, cleaner, or consultant, you can email or text payment links immediately after a job is done. This speeds up payments, reduces paperwork, and offers a contactless payment option that clients appreciate.

    Retail & Ecommerce

    Share payment links in social media bios, direct messages, or newsletters to quickly close sales without the need for a full ecommerce site. Customers enjoy flexible payment methods and a mobile-friendly checkout experience.

    Field Sales & Events

    Accept payments on the spot by sending a payment link via text or email from your phone or tablet. Perfect for vendors at farmers markets, trade shows, or mobile sales teams, this removes the need for bulky hardware and speeds up transactions.

    Payment Link Benefits

    Payment links aren’t just convenient—they offer real advantages that can transform how your business handles payments. For example:

    • Get paid faster – Businesses using payment links get paid up to 40% faster, thanks to instant access and simplified checkout.
    • Offer multiple payment methods – Accept credit and debit cards, ACH payments, digital wallets like Apple Pay and Google Pay, and more to give your customers flexibility.
    • Enjoy mobile-friendly, no-app needed payment  – Customers can pay easily on any device without downloading an app or creating an account.
    • Reduce accounting effort – Automated payment tracking and reporting mean fewer manual reconciliations and less back-and-forth with customers.
    • Enhanced customer experience – A seamless, branded payment page with saved payment info options encourages quick, hassle-free payments and reinforces your brand.
    • Track performance and campaigns – Implementing URL parameters and UTM codes allow you to track where customer traffic originated from (such as social media or your website), the marketing method in which customers accessed your payment link (such as an email or text), and the specific campaign tied to the payment link, among others.

    Real-World Online Payment Links In Action 

    As a proud member of the American Gem Society, Aurora Payments understands the unique needs of jewelers, including how critical it is to maintain a seamless, frictionless journey for their customers. Our payment platform is loaded with features built for high-ticket sales and luxury margins. But more importantly, it allows our jeweler clients to offer branded payment options for custom designs or repair services with easily shareable invoices and secure payment links.

    Our Payment Links: What Sets Us Apart

    Aurora Payments goes beyond just offering payment links—we deliver a tailored experience designed to fit your business needs. What sets us apart from other payments processors? Here are just a few examples:

    Custom Branding on Payment Link Pages

    Make every payment feel personal with your logo, colors, and brand identity featured prominently, ensuring a professional and trustworthy checkout experience.

    White-Glove Onboarding

    Our dedicated team guides you through setup and integration, ensuring you’re up and running smoothly without any technical headaches. And if you need our assistance, our U.S.-based customer service team is available 24/7.

    Support for One-Time and Recurring Payments

    Whether you need a simple one-off payment option or ongoing subscription billing, payment links through Aurora Payments handle both with ease and flexibility.

    No Coding Required, But APIs Are Available for ISVs and Developers

    Use our easy, no-code tools to create and share payment links quickly. But ISVs and developers can tap into integrable APIs for deeper customization and automation into existing software.

    Online Payment Link FAQs

    Can I add a payment link to a text message?
    Yes! You can easily include payment links in SMS or MMS messages to get paid quickly on any mobile device.

    Do payment links support subscriptions or recurring billing?
    Absolutely. Our payment links support both one-time and recurring payments, making it simple to manage subscriptions.

    Are online payment links secure?
    Yes. Our payment links use industry-standard PCI compliance and tokenization to protect your customers’ payment information.

    What payment methods do you support?
    We support a wide range of payment methods including credit and debit cards, ACH transfers, Apple Pay, Google Pay, and more.

    Can I see a demo before getting started?
    Definitely. Contact us to schedule a personalized demo and see how solutions from Aurora Payments can work for your business.

    Discover the Benefits of Payment Links For Yourself

    Ready to get paid faster and offer your customers a seamless, modern payment experience? Whether you need a simple way to collect payments or a fully branded solution that fits into your workflow, Aurora Payments makes it easy.

    Email sales@risewithaurora.com. We’re standing by to help you simplify your payments, one link at a time.

  • What Are ACH Payments & How Can These Transfers Help Your Business?

    What Are ACH Payments & How Can These Transfers Help Your Business?

    ACH payments are a type of electronic bank-to-bank payment. The ACH (or Automated Clearing House) network facilitates that transfer of money from one U.S. bank account to another. It is similar to a wire transfer, paper checks, or moving cash between accounts, except bank-to-bank transfers are much faster and less expensive than a wire transfer.

    Which Industries Benefit from ACH Payment Processing?

    ACH payments are widely used across industries for their affordability, reliability, and ease of automation. Here are just a few examples of how different sectors benefit:

    Professional Services

    Attorneys, consultants, and accountants use ACH to collect retainers or invoice clients on a recurring basis.

    Healthcare

    Clinics and private practices accept co-pays or set up automated payment plans for patients via ACH debits.

    Property Management

    Landlords and property managers use ACH to collect monthly rent without processing paper checks.

    Nonprofits

    Charitable organizations simplify donations with recurring or one-time ACH contributions.

    Payroll Providers

    Businesses and payroll platforms rely on ACH for direct deposit of wages to employees, often with same-day or next-day delivery.

    Understanding Direct Deposits, Direct Payments, and ACH Payment Flows

    ACH transactions fall into two primary categories: direct deposits and direct payments, both of which can be processed as either ACH credits or ACH debits. Direct deposits typically involve pushing funds into a recipient’s bank account—employers sending paychecks, government agencies distributing tax refunds or benefits, or businesses disbursing reimbursements are examples. These transactions are almost always initiated by the payer and are an everyday use case for most consumers.

    On the other hand, direct payments are initiated to move money between individuals, businesses, or both, often for things like bill payments, product purchases, or donations. Depending on who initiates the transaction, a direct payment can either be an ACH credit (pushing funds) or an ACH debit (pulling funds with authorization). ACH debits are especially valuable for businesses looking to collect recurring payments, settle overdue balances, or simplify customer billing. Together, these mechanisms make ACH payments a versatile and efficient method for both sending and receiving money in a variety of business and personal contexts.

    How Long Does it Take to Process a Bank-to-Bank Transfer?

    ACH payment timing depends on the type of processing used, and businesses can choose between speed and cost-efficiency based on their needs. While standard ACH transfers are reliable for everyday use, faster options like same-day and instant ACH are available for time-sensitive payments. Here’s how each option works:

    • Standard ACH – Most transactions settle within 1–2 business days after initiation.
    • Same-Day ACH – Available for eligible payments submitted before daily cutoff times. Funds often arrive on the same business day.
    • Instant ACH – Some providers offer near-instant settlement for a premium fee, though availability depends on participating banks.

    How Much Does an ACH Payment Cost?

    ACH payments are known for their affordability, with typical fees ranging between $0.20 and $1.50 per transaction depending on volume, payment provider, and whether the business connects directly or through a third-party processor. In contrast, credit card processing fees typically range from 2.5% to 3.5% of the total transaction amount, making ACH a significantly more cost-effective option, especially for larger or recurring payments.

    While some large enterprises choose to obtain direct access to the ACH network, this route can be complex and expensive due to regulatory overhead, staffing requirements, and technical infrastructure. Most businesses instead opt to work with a third-party payment processor like Aurora Payments, which provides simplified access to low-fee ACH payments, fast onboarding, and transparent pricing, all without the need for extensive internal resources.

    Are ACH Payments Safe?

    Yes, because ACH transfers are built on a secure and regulated system operated by the ACH Network, which is governed by the National Automated Clearing House Association (Nacha). Nacha sets and enforces the rules that every participating financial institution, business, and processor must follow to ensure safe, consistent, and compliant transactions across the U.S.

    While Nacha doesn’t process payments directly, it plays a vital role in maintaining the integrity of the network. Payments move securely between bank accounts using strict protocols, including bank-level encryption, digital authentication, and fraud detection practices. Compared to credit cards, ACH presents lower fraud risk and fewer chargebacks, and all transfers are digitally recorded, providing an auditable trail that supports reconciliation and dispute resolution.

    Why Should You Accept ACH Payments?

    ACH is no longer a niche payment method—it has become a critical component of the U.S. financial system. In 2024, the ACH Network processed over 33.6 billion transactions, totaling more than $86.2 trillion, according to Nacha . This growth reflects rising adoption across industries for use cases like direct deposits, recurring billing, and B2B payments and highlights increasing demand for fast, low-cost alternatives to checks and wire transfers.

    If your business collects payments from customers, clients, or partners, accepting ACH payments can offer significant advantages. ACH is especially beneficial for recurring billing, large transactions, and businesses looking to cut down on processing fees while improving payment reliability. Whether you’re a service provider, subscription business, nonprofit, or property manager, ACH is a flexible and low-cost solution that helps streamline operations and get you paid faster.

    Benefits of accepting ACH payments include:

    • Lower transaction fees compared to credit cards and wire transfers
    • Faster settlement options with same-day or instant ACH
    • Improved cash flow forecasting
    • Ideal for recurring payments, subscriptions, and invoices
    • Reduced manual processing and paperwork
    • Secure, bank-to-bank transfers with digital tracking
    • Easily integrated with accounting and billing systems
    • Helps reduce late or missed payments through automation

    How to Set Up ACH Payments with Aurora

    Aurora Payments makes all types of payment processing easier, including bank-to-bank transfers. And getting started your business set to accept with ACH payments is quick and flexible with us. Our customers enjoy:

    • Fast onboarding – Most businesses are ready to accept ACH transfers within one business day.
    • No-code or integrated tools – Use our standalone portal or connect with your existing systems.
    • Custom branding – We offer a white-labeled ACH experience for clients and customers, helping to reinforce your brand.
    • Flexible billing support – Set up one-time invoices, recurring billing, or payment plans to suit your business model.

    If you have an in-house development team or SaaS platform, Aurora offers API-based ACH integration to streamline your payment workflows. Developers can connect ACH functionality directly into your app or back office system, supporting real-time status updates, recurring billing, and secure bank account tokenization. We also offer no-code options for non-technical teams, ensuring everyone can benefit from ACH without added complexity.

    FAQs About ACH Payments

    Can I accept ACH transfers from customers without a website?
    Yes, Aurora provides no-code portals and invoice links that allow you to collect ACH payments without a website.

    How long do ACH payment returns or chargebacks take?
    ACH returns for insufficient funds (return code R01) typically occur within 2–5 business days. Unauthorized returns (return code R10) may be filed by the customer up to 60 days after settlement.

    Are ACH bank-to-bank transfers reversible?
    Yes, but only under specific conditions. Customers can dispute unauthorized debits, and businesses must follow Nacha guidelines to respond.

    What’s the difference between ACH payments and eChecks?
    An eCheck is essentially a type of ACH debit that uses the customer’s routing and account number. The terms are often used interchangeably.

    Can I use ACH for international payments?
    ACH payments are primarily designed for transactions within the United States and U.S. territories. While it is technically possible to send International ACH Transactions (IATs), they are subject to strict compliance requirements, including screening by the Office of Foreign Assets Control (OFAC). Due to these complexities and slower processing times, most cross-border payments are better handled using wire transfers or international payment rails. However, if you’re working with U.S.-based accounts owned by international entities, ACH may still be a viable and cost-effective option.

    Get Started with ACH Payments

    Ready to reduce fees and get paid faster? Contact Aurora Payments and discover why you should accept ACH payments to lower transaction fees, improve cash flow forecasting, and increase payment processing security for your business.

    Email sales@risewithaurora.com to learn more and schedule a demo.

  • Recurring Payments: How to Get Paid Automatically and On Time

    Recurring Payments: How to Get Paid Automatically and On Time

    80% of subscription-based businesses rely on recurring payments to generate predictable revenue and deliver a seamless customer experience. In today’s fast-paced world, automation isn’t just a luxury, it’s a necessity. That’s where recurring payments come in: an easy way to get paid on time, every time, without lifting a finger.

    Recurring payments are automatic, scheduled transactions that ensure businesses collect revenue without manual intervention. Aurora Payments makes it simple to set up recurring billing for your business, no matter your size or industry.

    What Are Recurring Payments?

    Recurring payments—also known as subscription billing or automatic payments—are transactions that happen on a set schedule. They can be set up to occur on whatever schedule works best for a business and their customers. Customers then authorize a business to charge them automatically using their preferred payment method.

    There are two main types:

    • Fixed recurring payments – The amount is the same each cycle (e.g., $30/month for a subscription service).
    • Variable recurring payments – The amount changes based on usage or services (e.g., utility bills).

    Supported methods include credit/debit cards, bank transfers, ACH debits, and digital wallets like PayPal or Apple Pay.

    How Recurring Billing Works, Step-by-Step

    Here’s a simple breakdown of how recurring billing works from the customer’s perspective. This process ensures a smooth, automated experience that eliminates the need for manual invoicing or payment reminders.

    1. First, a customer subscribes and opts in to the recurring billing option.
    2. They choose a payment method.
    3. The business and customer agree to the amount and frequency of the payments (such as monthly or yearly), as well as the withdrawal date and duration of payments.
    4. The payment is charged automatically to the customer’s account on the agreed upon date. The funds are then transferred directly to the company’s bank account. A merchant services provider such as Aurora Payments facilitates this transaction.
    5. A receipt or confirmation is sent to the customer, usually via email.

    Who Should Use Recurring Payments?

    A wide variety of industries can take advantage of automated payments to save time and improve cash flow. Whether you offer services, memberships, or physical products, recurring charges create a smoother experience for both you and your customers.

    Gyms and Fitness Studios

    Gyms, fitness studios, spas, and other health and wellness clinics can offer unlimited class passes or monthly memberships that renew without customers needing to swipe their card each time.

    Childcare and Education

    From daycares to private tutors, recurring billing helps parents pay on time while providers reduce administrative overhead.

    Professional Services (such as Legal, Coaching, and Design Services)

    Service providers can bill retainers or milestone payments, giving clients flexibility and reducing missed payments.

    Clubs, Associations, and Nonprofits

    These organizations can charge recurring payments for monthly or annual dues effortlessly and improve retention with “set it and forget it” automation.

    Subscription Products (such as Food Boxes, SaaS, and eCommerce)

    Physical goods and digital services can both benefit from recurring payment plans that support customer loyalty and business forecasting.

    It’s important to note that recurring billing can also benefit B2B services and enterprise clients, despite the complex billing they often face. Unlike consumer payments, B2B transactions often involve custom pricing, volume discounts, multi-seat licenses, and invoice-based payments with terms like Net-30. Some clients may require purchase orders, approval chains, or ACH payments instead of cards. Aurora Payments’ platform accommodates these challenges with flexible billing setups and seamless renewals.

    Benefits of Recurring Payments for Businesses

    Recurring charges offer a wide range of advantages that help businesses streamline operations and improve financial health. Here are the key benefits of adopting recurring payments:

    Get Paid on Time, Every Time

    Recurring billing ensures consistent, on-schedule revenue without the delays of manual invoicing. With automatic payments, businesses no longer have to chase down late payments or wait for checks to clear.

    Reduce Manual Follow-Ups and Admin Work

    Automating payments means your team spends less time on billing tasks and more time growing the business. It eliminates the need for monthly reminders, manual data entry, and follow-up emails. This can be especially important if you run your business yourself or have a small team.

    Improve Customer Retention and Satisfaction

    A smooth billing experience builds trust and convenience. Customers are more likely to stay loyal when they don’t have to think about payments or face service interruptions.

    Predictable Cash Flow

    Recurring payments help businesses forecast revenue more accurately. This predictability improves budgeting, planning, and overall financial stability.

    Fewer Missed Payments or Billing Errors

    Automation greatly reduces the chance of human error or missed deadlines. When systems handle charges consistently, payment failures drop, and account reconciliation becomes easier.

    Seamless Customer Experience

    From sign-up to billing confirmation, the recurring model provides a hassle-free journey. Customers enjoy a frictionless payment process with timely receipts and minimal disruption.

    Benefits of Recurring Payments for Customers

    Recurring payments simplify financial planning and give customers freedom from manual bill paying. Below are the main advantages that customers enjoy when they choose automated billing:

    • Set it and forget it – Customers no longer have to track due dates or remember recurring charges, making everyday expenses hassle-free.
    • No missed due dates – Automatic billing eliminates the risk of late fees and service interruptions by ensuring payments are always on time.
    • Easy budget-friendly installments – Breaking costs into predictable, smaller payments helps customers manage their budgets and avoid large one-time expenses.
    • Peace of mind – With payments handled automatically, customers can focus on what matters most without worrying about manual transactions.
    • Secure and transparent – Automated receipts sent via email and tokenized payment methods provide security and clarity with every transaction.

    Recurring Payment Methods We Support

    At Aurora Payments, we support the following recurring payment methods:

    • Credit and debit cards
    • ACH payments and bank debits
    • Wallets (PayPal, Apple Pay, etc.)
    • Custom payment links via email or text message

    How Aurora Payments Makes Recurring Billing Easy

    Aurora Payments streamlines every aspect of recurring charges, from customer onboarding to secure payment processing. Our platform combines flexibility with reliability, so you can focus on growing your business. You’ll enjoy our:

    • Custom-branded payment pages – Create seamless, on-brand checkout experiences that reinforce trust and encourage completion.
    • Easy customer enrollment – Get customers signed up in seconds with intuitive UIs and minimal friction.
    • White-glove setup – Our expert team handles integration, configuration, and testing, so you can hit the ground running. And if you need help at any point, we offer 24/7, U.S.-based customer support.
    • Text-to-pay or invoice integrations – Offer versatile payment options via SMS text links or traditional invoices, adapting to customer preferences.

    Security, Compliance, and Customer Trust

    Security and compliance are at the heart of everything we do at Aurora Payments, ensuring that every transaction meets the highest standards. We implement robust protocols to safeguard your data and foster customer confidence. With our platform, you can rely on our:

    • Level 1 PCI-DSS compliance to ensure secure card processing
    • Tokenization that protects sensitive data and keeps credit card information up to date when it expires or is reissued
    • Email confirmations that reassure your customers with every transaction
    • GDPR-ready solutions for global businesses

    We take customer trust seriously and use secure encryption at every stage.

    Common Use Cases for Recurring Charges

    Recurring payments power everything from fitness memberships to enterprise software licensing by automating billing and ensuring consistent cash flow. Here are a few real-world examples of how businesses leverage recurring billing:

    • A yoga studio charges a monthly recurring payment of $99 for unlimited classes.
    • A wedding planner offers four milestone payments for her services via recurring billing.
    • A software company bills annually for licenses.

    Recurring Payments FAQs

    Do you customers have questions about recurring billing? Below are answers to the most common queries to help you navigate setup, management, and troubleshooting of automated payments.

    Can customers cancel a recurring payment?
    Yes, customers can cancel at any time through their account or by contacting your business.

    How do customers update a credit card?
    Customers can log in and update their payment method securely. But with network tokenization enabled in our platform, network tokens automatically update card details when they expire or are reissued, ensuring stored credentials are always current. That means fewer declines, uninterrupted recurring billing, and a smoother customer experience for all parties.

    Do I need a website to use this?
    No. Aurora Payments offers hosted payment pages and text/email links.

    Are recurring payments secure?
    Absolutely. We are PCI-DSS compliant and use tokenized card storage.

    Can I set up payment plans?
    Yes, you can split payments into installments over time.

    What are some strategies to maximize recurring payments signups?
    Consider psychological pricing to maximize signups. Techniques like anchoring (presenting a high-priced plan first) or offering tiered pricing can subtly influence customer choice and increase average revenue. Flat monthly fees often feel more manageable than large upfront costs, which can help improve sign-up rates.

    Get Started with Recurring Payments Today

    Ready to automate your payments and get paid on time, every time? Aurora Payments makes it simple. Talk to our team and let us tailor a recurring payment solution that benefits your business.

    Contact us today at sales@risewithaurora.com to learn more and schedule a demo.

  • Navigating PCI Compliance in 2025: What Merchants and Payment Providers Need to Know

    Navigating PCI Compliance in 2025: What Merchants and Payment Providers Need to Know

    As our payment technology landscape evolves, so do the tactics of today’s threat actors. For merchants and service providers, protecting consumers from credit card fraud is a moving target. We’re taking a look at the evolution of payment card industry (PCI) compliance standards, including the newest requirements that went into effect in March 2025.

    What is PCI compliance?

    In 2004, with eCommerce and credit card fraud reaching disruptive levels, five major payment card brands – American Express, Discover Financial Services, JCB International, MasterCard and Visa – came together to form the PCI Security Standards Council. They developed the Payment Card Industry Data Security Standard (PCI DSS) with the goal of creating a more secure payment ecosystem. 

    While compliance doesn’t guarantee security, it provides a structured foundation to mitigate risk and protect cardholder data. Today, every business that handles, processes, stores or transmits payment card information must comply with the PCI DSS. 

    There are 12 PCI compliance requirements, organized into six categories:

    Build and maintain a secure network and systems

    1. Install and maintain network security controls.
    2. Apply secure configurations to all system components.

    Protect account data

    1. Protect stored account data.
    2. Protect cardholder data with strong cryptography during transmission over open, public networks.

    Maintain a vulnerability management program

    1. Protect all systems and networks from malicious software.
    2. Develop and maintain secure systems and software.

    Implement strong access control measures

    1. Restrict access to cardholder data by business need-to-know.
    2. Identify users and authenticate access to system components.
    3. Restrict physical access to cardholder data.

    Regularly monitor and test networks

    1. Log and monitor all access to system components and cardholder data.
    2. Test security of systems and networks regularly.

    Maintain an information security policy

    1. Support information security with organizational policies and programs.

    The evolution of PCI standards

    In order to stay relevant, the PCI DSS must continuously evolve. The security council periodically updates the requirements to reflect advancements in both digital payments innovation and the threat landscape. 

    Here’s a timeline of that evolution, from 2004 until today, by the Merchant Risk Council:

    December 2004: PCI DSS 1.0 is released
    September 2006: Version 1.1 adds requirements for web-facing application firewalls and professional code reviews
    October 2008: Version 1.2 introduces new antivirus and wireless network defense requirements
    August 2009: Version 1.2.1 provides clarity and consistency updates
    October 2010: Version 2.0 adds data encryption guidelines and user access restrictions
    November 2013: Version 3.0 addresses emerging security concerns, cloud technologies, and penetration testing
    April 2015: Version 3.1 offers short-term updates for upcoming 3.2 compliance
    April 2016: Version 3.2 introduces multi-factor authentication guidelines and more
    May 2018: Version 3.2.1 provides clarifications and standard requirement changes
    March 2022: Version 4.0 is released with significant updates
    March 2025: Version 4.0 is officially in effect

    Meeting PCI compliance

    Meeting PCI compliance isn’t a one-size-fits-all playbook. Businesses fall into one of four compliance levels based on annual transaction volume:

    • Level 1: More than 6 million transactions per year
    • Level 2: 1 to 6 million transactions per year
    • Level 3: 20,000 to 1 million transactions per year
    • Level 4: Fewer than 20,000 transactions per year

    For level 1-classified businesses to demonstrate compliance with the standards, they must develop an annual Report on Compliance (ROC) performed by a Qualified Security Assessor (QSA), work with an Approved Scanning Vendor (ASV) to conduct quarterly network scans, complete an Attestation of Compliance (AOC) form and perform annual penetration testing and regular internal vulnerability scans.

    Businesses that are levels 2 or 3 must complete an annual Self-Assessment Questionnaire (SAQ), an AOC form and conduct quarterly network scans by an ASV. Level 4 businesses must do the same, except they are exempt from completing the AOC form. 

    Failing to meet PCI standards can be financially devastating. Fines range from $5,000 per month for early offenses to $100,000 per month for persistent non-compliance. And, that doesn’t include the potential costs of data breaches, which also include loss of customer trust and damage to your brand reputation.

    What’s New in PCI DSS 4.0?

    PCI DSS 4.0 was introduced in March 2022, giving merchants and service providers a full two years to familiarize themselves with the changes, update reporting templates and forms and implement changes to comply with the requirements. This version addresses four main objectives – keep pace with the changing payment industry, promote continuous security, provide flexibility in maintaining payment security and improve validation methods and procedures.

    PCI DSS 4.0 marks a shift in how merchants and businesses should view and meet PCI compliance in three significant ways.

    Phased implementation

    Unlike past releases, version 4.0 introduced a phased timeline. Implementing this version’s complex technical changes, especially around encryption, authentication and software development practices, would require some significant resource planning and budgeting.

    The phased approach followed this timeline:

    • March 2024: Implementation of critical security controls
    • June 2024: Role documentation, encryption, software security and authentication controls (Phase 1)
    • September 2024: Asset inventory, TLS implementation, security assessments and logging enhancements (Phase 2)
    • December 2024: System hardening, data retention, key management and vulnerability management (Phase 3)
    • March 2025: All DSS 4.0 requirements fully implemented

    Implementation flexibility

    In years past, there was little room for interpretation in how merchants and businesses could demonstrate compliance to the PCI standards. New in version 4.0, organizations can now develop their own security controls that meet specific requirements, rather than following the prescribed methods exactly as written. 

    While an outcomes-based approach gives businesses more flexibility, it also adds more responsibility and rigor – businesses must provide significantly more documentation in order to justify their compliance to QSAs. 

    Expanded testing requirements

    PCI DSS 4.0 looks at compliance as an ongoing responsibility vs. meeting requirements at a moment in time. Instead of just regular testing at defined calendar dates, businesses must conduct more rigorous and frequent security testing, especially after any significant changes to their environment. 

    Version 4.0 also introduces targeted risk assessments for specific requirements and enhanced penetration testing of both application and network layer security. Overall, the focus is now on measuring effectiveness of measures – not just whether or not they’re in place.

    Embracing the new approach to PCI compliance

    The shift from point-in-time compliance to continuous security monitoring represents a huge change in how businesses must approach payment security. While maintaining compliance in this way may seem overwhelming, the flexibility introduced in version 4.0 acknowledges that security solutions aren’t one-size-fits-all. Aurora has a number of solutions that can help you strengthen your payment security processes.  

    Disclaimer: This guide is for informational purposes and does not constitute legal or PCI QSAC advice.

  • What Is Network Tokenization? How It Works & Why Your Business Needs It

    What Is Network Tokenization? How It Works & Why Your Business Needs It

    Digital payments are now the preferred choice for most consumers.In fact, only 9% of Americans use cash as their everyday, primary payment method. It’s not even an option anymore at half of all U.S. concerts and events, where only digital payments are accepted. What the majority of consumers are using in its place are debit and credit cards, which dominate the transaction landscape. 

    It’s no surprise that as usage increases, credit card fraud does too. From 2019 to 2023, digital transactions increased by 90% – while suspected digital fraud grew by 105%. That threat is even more concerning for online merchants and sellers, who have experienced a 140% increase in credit card fraud attacks over the past three years.

    Fortunately, the evolution of technology is allowing for more robust security solutions. In this post, we’ll explore network tokenization—an innovative approach to payment security that’s reshaping how businesses protect sensitive customer data while improving the overall payment experience. 

    Network tokenization vs. Traditional Tokenization

    What is Traditional Tokenization?

    Traditional tokenization is a security process that securely stores the primary account number (PAN) and other sensitive cardholder information and replaces it with a unique identifier, called a token, when a digital transaction takes place. 

    Tokenization has one very important advantage over encryption, another type of security measure. While tokens are randomly generated characters that hold no intrinsic value, encryption converts data into an unreadable format using algorithms; however, it is possible for that data to be decrypted by sophisticated hackers and stolen.

    That said, traditional tokenization has limitations. Typically, the tokens that merchants or payment processors generate are static, and because they’re static, the same token is used over time, which could create some potential security risks. Second, the tokens only protect sensitive card data within a single merchant or transaction context, so they can’t be used across merchants or companies. And third, when cards expire or are stolen, new tokens must be manually generated.

    What is Network Tokenization?

    Network tokenization varies from traditional tokenization in a few distinct ways.

    • Network tokens are issued by card networks (like Visa or Mastercard) vs. merchants or payment processors
    • Network tokens are automatically refreshed in the case of lost, stolen, or expired cards
    • Network tokens change after each use, dramatically reducing fraud risks
    • A single network token can be used across multiple merchants.

    Benefits of Network Tokenization

    Increased Security

    When compared to traditional online card transactions with PANs, token-based transactions reduce fraud by 30%. In the event of a security breach, tokenization reduces the scope of that breach by 60%. 

    Network tokens, specifically, offer even more security. When tokens are generated dynamically, or created anew for each transaction, they provide 20% more security than static encryption. 

    Reduced Declines

    Payment declines can be devastating to businesses. Consider this example: if a subscription service experiences even a 1% failure rate due to outdated card information, it could lead to significant monthly losses – up to $100,000 for a company with 1 million subscribers.

    The stakes are even higher when you consider consumer behavior. Research shows that 35% of cardholders abandon a merchant completely after experiencing a card decline. Network tokenization helps prevent both of these scenarios by ensuring payment information remains current, and is responsible for increasing approval rates by nearly 5%.

    Cost Savings and Avoidance

    Implementing network tokenization delivers a slew of financial benefits. First, it greatly reduces fraud costs – fewer fraudulent transactions mean fewer chargebacks and associated fees. It can even help to lower interchange rates. Visa’s network token can reduce interchange rates by up to 10 basis points compared to non-tokenized rates. 

    Improved Checkout and User Experience

    All consumers expect fast, seamless transactions. Network tokenization delivers this by eliminating friction points in the payment process. With network tokens, there’s no need to update payment methods or verify cards with CVV/CVC codes. This streamlined experience leads to higher customer satisfaction and increased conversion rates.

    Streamlined Recurring Payments

    For SaaS businesses and subscription-based models, network tokenization offers significant advantages when it comes to processing recurring payments. By automatically updating card information when it changes, businesses gain recurring billing stability and card lifecycle continuity.

    This means fewer interrupted subscriptions, reduced customer service inquiries about failed payments, and more predictable revenue streams.

    Reduced PCI Burden

    Because network tokens hold no intrinsic value, they enable businesses to reduce their PCI DSS compliance scope, effectively lowering both the costs and the security risks. According to one report, 90% of financial institutions consider tokenization a key strategy for compliance. 

    Implementing Network Tokenization

    Implementing network tokenization begins with choosing the right payment platform. Some solutions, like ARISE, come seamlessly integrated with network tokenization capabilities. In the case of ARISE, this can be achieved with minimal disruption. Adoption requires no development work, hardware updates, or operational downtime. 

    For merchants and SaaS companies concerned about payment security, customer experience, and operational efficiency, network tokenization is quickly becoming an essential component of a comprehensive payment strategy.

    Learn more about adopting network tokenization through our ARISE platform by reaching out to our team today. 

  • Chargeback Prevention Strategies: How to Stop Fraud and Protect Your Business

    Chargeback Prevention Strategies: How to Stop Fraud and Protect Your Business

    If you’ve ever had to deal with a chargeback, you know how frustrating, and costly it can be. You’re not just losing a sale. You’re facing fees, lost inventory, and the very real risk of getting labeled as high-risk by your payment processor. It feels unfair, especially when you’ve done everything right.

    Chargebacks were meant to protect customers from fraud, but more and more, they’re being used in ways that hurt businesses like yours. That’s why chargeback prevention is so important. It’s not just about fixing problems after they happen. It’s about setting up smart systems that help you avoid disputes in the first place—so you can focus on growing your business without worrying about lost revenue.

    For businesses, managing and preventing chargebacks is an ongoing challenge, and one that’s only predicted to get worse. A 2025 Davos Insights and Microsoft report projects chargebacks to increase by 24% by 2028, costing North American merchants and online companies $41.6 billion.

    The good news? Many chargebacks are avoidable. Understanding the different types of chargebacks, implementing measures to prevent them, and formalizing a plan to dispute them will help lessen their negative impact on businesses.

    What are Chargebacks?

    A chargeback occurs when a customer successfully disputes a transaction with their bank or credit card company instead of seeking a refund directly from the merchant or online business that provided the product or service. 

    Chargebacks typically fall into one of three categories: criminal fraud, merchant error, and friendly fraud. 

    Criminal Fraud

    The numbers on online fraud are hard to comprehend. In 2024, online scammers stole a record $16.6 billion – up 33% from 2023 – according to the FBI’s 2024 Internet Crime Report. The sharp rise of card-not-present (CNP) transactions is one trend worth noting, with research indicating these transactions made up 73% of all credit card payment fraud in the U.S. last year.

    What does credit card fraud look like? Today’s malicious actors are using sophisticated methods to commit fraud. Here are just a few examples.

    • Account takeover fraud: accounts are compromised and used to make purchases
    • Identity theft: criminals pose as genuine customers
    • Card testing fraud: purchases are made to verify stolen card details 
    • Synthetic identity fraud: purchases are made under new identities created with both fake and real information
    • Clean fraud: stolen cards are used and the transactions are undetected by fraud prevention tools
    • Triangulation fraud: real customers make a purchase from a third-party marketplace, like eBay or Amazon, but the seller purchases the product from another merchant

    These criminal activities lead to legitimate chargebacks when cardholders discover unauthorized charges on their accounts, or, in the case of triangulation fraud, when a fraudulent product arrives.

    Merchant Error

    Chargebacks can result from a myriad of issues within the merchant’s own operations. These can be actual mistakes made by the merchant or business, or practices that lead to customers receiving damaged products or the wrong ones altogether. Here are some of the more common examples of merchant error.

    • Processing duplicate transactions for one order
    • Sending orders to incorrect addresses
    • Processing transactions without proper credit card authorization
    • Charging the wrong amount during payment
    • Shipping delays or tracking mixups
    • Shipping wrong or defective items
    • Publishing inaccurate product descriptions

    These errors are often the most preventable causes of chargebacks.

    Friendly Fraud

    The most challenging chargebacks to prevent occur as a result of friendly fraud, where customers accidentally or intentionally dispute transactions they made. Unfortunately, it’s also the most common – Visa reports that friendly fraud now accounts for up to 75% of all chargebacks.

    Here are some common reasons that lead consumers to dispute charges with their bank or credit card companies vs. directly with merchants.

    • Billing descriptors on statements are unclear
    • Purchases are made by family members without the cardholder’s knowledge
    • Customers forget about a recurring subscription or are unclear about its terms
    • Customers falsely claim dissatisfaction after fully using a product
    • Customers sign up for free trials with no intention of paying for the service
    • Customers use buyer’s remorse as an excuse for a refund

    H4: It’s worth elaborating on return fraud. According to the NRF and Happy Returns 2024 Consumer Returns in the Retail Industry, 13.5% of all returns – worth $101 billion – were cases of return fraud last year.

    Chargeback Prevention Strategies

    The good news is that many chargebacks are preventable with the right approach. Here are some strategies for merchants and businesses to consider.

    Authenticate Customers

    Strong customer authentication methods ensure that the person making the purchase is the legitimate cardholder. Some considerations include 3D Secure 2.0, two-factor authentication, Address Verification Service (AVS) verification, Card Verification Value (CVV) verification, device fingerprinting, and behavioral biometrics. While these methods add layers of security, it’s important to ensure they don’t significantly impact the customer experience. 

    Adopt Technology Tools

    Depending on needs, transaction complexity, and budget, businesses can implement specific tools or a full suite of solutions to provide a layer of protection. Aurora Security’s comprehensive security solutions are an example. These tools can be adopted individually or as needed to provide real-time chargeback alerts, instant refunds to resolve issues before chargebacks are filed, and even digital receipts and financial support in the event of disputes.

    Confirm Orders

    A formal order confirmation process can prevent many chargebacks. This can be as simple as a detailed email that clearly specifies what the customer has purchased and when it’s expected to be delivered and follow up emails with shipping notifications and confirmation of delivery. This communication trail reduces customer confusion – and serves as valuable evidence should a dispute arise.

    Ensure Digital Payment Security

    Adopting the latest card security practices helps prevent unauthorized transactions. One example of this is network tokenization, which replaces sensitive card data with a unique identification token. It’s just one of the security features built into the ARISE Payment platform.  Other measures worth implementing include maintaining strict PCI DSS compliance, utilizing end-to-end encryption, implementing fraud screening rules, and enabling velocity checks to detect unusual patterns, such as multiple purchases in rapid succession from a single account.

    Manage Shipping Expectations

    The more information businesses can provide to customers during the fulfillment process, the better. Best practices include providing realistic delivery timeframes, using tracking numbers to monitor progress, communicating delays, requiring signature confirmation for high-value items, and maintaining accurate inventory management to ensure you’re not selling products that are out of stock. When customers know when to expect their purchase, they’re less likely to file chargebacks out of frustration or confusion about order status.

    Obtain Proof of Receipt

    Documentation is your best defense against friendly fraud as it provides essential evidence in the event of a dispute. Beyond requiring signatures for valuable items, consider photographing packaged items before shipping to document condition and contents, especially for fragile or valuable products. Merchants can also consider using delivery services with proof-of-delivery options.

    Optimize Billing Descriptors

    Confusing or unrecognizable billing descriptors were the leading cause of chargebacks, according to the 2024 Cardholder Dispute Index. Ensure it identifies your business in a recognizable way, matching your store name or website rather than a corporate entity name. Some other best practices include providing contact information to allow customers to inquire about charges, keeping your descriptors consistent across all channels, and including a brief purchase description to help customers recognize the charge.

    Make Your Return, Refund and Cancellation Policies Clear

    Transparent policies help set appropriate customer expectations. Make them easy to understand to eliminate any potential for misunderstanding, and include them prominently on the website and within all order communications. Some merchants also require customers to acknowledge the policies by checking a box during the online checkout process as well. When customers understand your policies before purchasing, it makes it more likely that they initiate a refund directly through approved channels rather than filing chargebacks.

    Be Accessible to Customers

    Don’t underestimate the value of great customer service. Oftentimes customers request refunds from their bank or credit card company only after being unable to get their issue resolved with a merchant or business. Offer multiple contact channels including phone, email, and online chat to accommodate different customer preferences, provide 24/7 online support, and respond to customer inquiries promptly. 

    Cancel Recurring Transactions Promptly

    We’ve all been frustrated at one time or another while trying to cancel a subscription. Making it difficult to do so can force customers’ hands to file chargebacks – and ensure they never buy your product or service again. Subscription-based businesses should process cancellations – and document doing so – immediately upon request, rather than waiting until the end of a billing cycle. This can help preserve your brand reputation and leave the door open to future business.

    Post-Chargeback Action Plan

    Despite all of these prevention efforts, some chargebacks are inevitable. When they occur, merchants and online businesses typically have 7-10 days to respond. To dispute a chargeback effectively, follow this four-step process.

    1. Review the chargeback reason code
    2. Gather relevant evidence specific to that reason code, which might include transaction receipts and invoices, delivery confirmation or proof of service, customer communication records, agreed-upon terms and conditions, and the IP address and device information
    3. Write a rebuttal letter that clearly addresses the specific dispute reason
    4. Submit all documents through your payment processor’s portal before the deadline, as late submissions are often automatically rejected

    Chargebacks represent a significant threat to businesses. Merchants must navigate the complex dispute resolution procedures, potentially face financial penalties, and manage the administrative burden of responding to chargeback claims. However, with a comprehensive prevention strategy and a clear action plan for when disputes arise, merchants can be ready to face the challenge head on. 

  • What Is Cash Discounting? A Complete Guide for Business Owners

    What Is Cash Discounting? A Complete Guide for Business Owners

    If you’re accepting credit or digital payments, you’re likely paying processing fees that can eat into your profits. These fees can reach up to 4 percent per transaction. While card payments are convenient for customers, they come at a cost to your business.

    While going cash-only isn’t realistic for everyone, alternative pricing strategies like cash discounting offer a middle ground – allowing you to offset processing costs while still accommodating customer payment preferences.

    A deeper look at cash discounting

    What is cash discounting?

    Cash discounting is a pricing strategy where businesses offer customers a discount on the posted price of an item if they pay with cash instead of a credit or debit card. The mechanics are straightforward. Businesses pre-adjust their pricing to include credit card processing fees (typically 2-4% of the transaction value). 

    The psychology behind cash discounting is particularly compelling for consumers. The discount is perceived by customers as a benefit – essentially, a reward for paying with cash. And, studies show that getting a discount raises a person’s oxytocin levels, literally making them happier. 

    Real-world savings examples with cash discounting

    Here’s what different businesses can save by implementing cash discounting programs. 

    Business TypeMonthly ProcessingProcessing RateMonthly FeesCash Conversion RateMonthly SavingsAnnual Savings
    Restaurant$50,0002.8%$1,40040%~$560$6,720
    Retail Store$100,0002.5%$2,50030%~$750$9,000
    Plumbing Company$25,0003.2%$80050%~$400$4,800
    Gas Station$200,0002.2%$4,40060%~$2,640$31,680

    Cash Discounting vs. Other Pricing Strategies

    What is the difference between cash discounting and surcharging?

    A surcharge is when you post cash prices and charge an additional fee on top of that price for customers who pay with a card. Essentially, customers pay less than the listed price with cash discounting, and more than the listed price with surcharging. 

    What is the difference between cash discounting and convenience fees?

    A convenience fee is a form of surcharging where you charge a fee when your customers choose to pay in a non-standard payment channel or method, like online or over the phone. Convenience fees can be a flat fee or a percentage of the total amount, while cash discounts are usually percentage-based. 

    What is the difference between cash discounting and dual pricing?

    Dual pricing and cash discounting are often used interchangeably, but they differ in a key way. With dual pricing, both cash and credit prices are posted simultaneously, while cash discounting involves posting only the credit price with a discount applied at checkout for cash payments.

    Payment Strategy Comparison Chart

    FactorCash DiscountingSurchargingConvenience FeesDual Pricing
    Legal statusLegal in all 50 statesProhibited in CT, MA; restricted in othersLegal in all 50 statesLegal in all 50 states
    Price displayCredit price posted, discount at checkoutCash price posted, fee added for cardsBase price posted/fee for alternative channelsBoth prices displayed simultaneously
    Customer perceptionPositive Negative Neutral Transparent
    Business fitLocal businessesEstablished brandsAllThose with robust systems
    Transaction volume$10,000-$100,000/mo$50,000+/moAny$50,000+/mo
    Average ticket$15-$100$50+Any$25+
    Industry fitRestaurants, retail, services, healthcareProfessional services, B2B, luxury goodsUtilities, government, online servicesGas stations, automotive, large retail

    Regulatory considerations for cash discounting

    State-level regulations

    With few exceptions, states have largely remained uninvolved in regulating the practice of cash discounting. In California and Texas, merchants who offer a cash discount must apply for and hold a special license in order to remain compliant. In Wyoming, there is a 5% discount limit imposed on businesses. For all remaining states, it’s fair game.

    Industry-level regulations

    There are few industry-specific regulatory considerations for cash discounting. One example is within retail and e-commerce. Online implementation requires website disclosures and checkout flow modifications to clearly communicate pricing differences.

    In highly regulated industries such as healthcare, additional compliance considerations may apply, particularly regarding billing practices and insurance processing.

    Weighing the decision to implement cash discounting 

    There are a few factors to consider when it comes to whether or not a business should implement cash discounting.

    Do the math on ROI

    It’s important to analyze your current processing fees and transaction patterns. Cash programs are most effective for businesses with average transaction sizes above $25, as smaller transactions (under $10) make it difficult to justify program costs while still offering meaningful customer incentives.

    Assess customers

    Cash discounting is only successful if your customers adopt it at scale. Older customers and those in cash-heavy industries may be more receptive to cash discounting programs. If your customers strongly prefer paying by card, it may be too hard to gain traction.

    Budget implementation costs

    It will be easier for some types of businesses to implement cash discounting programs vs. others. For example, it’s a pretty heavy lift for restaurants and food service companies to update menus, menu boards, and POS systems to reflect changes to the pricing structure. Factoring these implementation costs into your ROI will keep your expectations realistic.

    Consider additional upsides

    Consider the practical side of how cash incentives would shake up your normal operations. One positive example of this is in healthcare. Because the accounting administrative burden is so high, healthcare providers often offer cash discounts to avoid the expenses of billing, mailing statements for unpaid amounts, processing partial payments, not collecting amounts owed, etc.

    Implementation best practices

    In-store implementation

    There are three key things you need to get right when setting up cash discounts in your store.First, you’re required to have specific signage at the store entrance and point of sale, mandated by federal and card network regulations. These signs must clearly state the cash discount percentage, conditions for the discount, and that posted prices are card prices. 

    Second, your POS system must include automatic cash discount features that apply discounts for cash payments, display both prices to customers, and generate compliant receipts showing the discount as a separate line item. Consider using a payment platform like ARISE that can accommodate cash discounting. The ARISE payment terminals can automatically handle the discount calculation at the point of sale.

    Third, all customer-facing materials including menus, price tags, digital displays, and marketing materials need to reflect new card prices. You’ll also need to plan for 2-4 hours of staff training, ensuring they mention the discount option early in customer interactions and frame it as a savings opportunity rather than a card penalty.

    Online implementation

    For those of you who sell online, you will need to implement clear pricing disclosures on product pages and update your terms of service. Most e-commerce platforms require custom development – anywhere from $2,000–$10,000 – or specialized plugins to handle dual pricing effectively.

    Checkout flows will also need to be modified to show payment method options with real-time price calculations while maintaining conversion rates. Enabling your system to process the transactions is only the beginning – you’ll also need to update FAQs, train live chat staff, and standardize responses for the increased volume of pricing questions during the first 30-60 days after implementation.

    When implemented correctly, cash discounting can be a powerful strategy to reduce payment processing costs – potentially saving thousands of dollars each year.  

  • Level 2 and Level 3 Payment Processing: A Simple Guide to Lowering Interchange Fees

    Level 2 and Level 3 Payment Processing: A Simple Guide to Lowering Interchange Fees

    The digital payment environment is increasingly complex. Today, merchants and service providers must accommodate a growing number of payment methods and platforms, as well as navigate PCI DSS compliance amid the fraud risks that come with them.

    There’s also a complicated “cost of doing business” – made up of interchange fees, assessment fees, and processor markup. According to NerdWallet, they can add up to 1.5-3.5% of a transaction’s value. Overwhelmingly, 70-90% of that comes from interchange fees. Today we’re breaking them down to help merchants uncover any potential savings opportunities.

    What are interchange fees?

    Let’s start with a quick definition. An interchange fee is what a merchant’s bank pays to a customer’s card-issuing bank each time a credit or debit card transaction is processed. It essentially serves as compensation for the issuing bank for the risk and cost of providing credit to the cardholder. These costs are passed through to merchants by their banks as part of their overall processing costs.

    This fee is not a specific dollar amount, but rather a percentage of the total value of the transaction. That percentage varies by processing level. Each transaction is processed at one of three levels.

    Level 1 processing

    Level 1 processing applies to most business-to-consumer (B2C) transactions, using personal credit cards – think retail store and restaurant purchases. This level requires businesses to share only a few basic details when processing the card. It has the highest interchange fees. 

    Level 2 processing

    Level 2 processing applies to business-to-business (B2B) and business-to-government (B2G) transactions. This level requires more data to be collected, lowering the risk that the issuing bank is taking on, like costly chargebacks. Due to this, the interchange rate is reduced by up to .5% when compared to Level 1.

    Level 3 processing

    Level 3 processing applies to the higher value and volume of transactions by large B2B and B2G companies. Level 3 processing has much more complicated data requirements (more on that later), but it offers the deepest interchange discounts – often 1% below Level 1 rates.

    What do these interchange fees look like on paper? Let’s take a B2B manufacturing company processing $2 million annually, as an example. Here are the annual cost estimates at each processing level: 

    • Level 1 (~2.75% interchange rate + $0.30 per transaction): $55,000 + transaction fees
    • Level 2 (~2.25% interchange rate + $0.25 per transaction): $45,000 + transaction fees
    • Level 3 (~1.85% interchange rate + $0.20 per transaction): $37,000 + transaction fees

    Qualifying for Level 2 and 3 payment processing

    On paper, it would appear that all merchants and services providers should try to benefit from the cost savings of Level 2 or 3 payment processing. However, businesses must meet certain criteria in order to qualify for a higher processing level. The biggest factors include customer base, transaction value, commercial card percentage of transactions, and system capabilities for data capture.

    Qualification Assessment Chart

    CriteriaLevel 1Level 2Level 3
    Customer BasePure B2CMixed B2B/B2CB2B/B2G
    Transaction Value~$25-$75~$75-$250~$250+
    Commercial Card %Less than 20%20-60%60% or more
    System CapabilityManualSemi-automatedFully automated

    A deeper dive on the critical element of data capture

    Even qualifying businesses can struggle to meet Level 3 data capture requirements. Doing so effectively depends on how advanced their ERP system is and whether they’re actually using all of its features and functionality. Companies without fully automated processes will need to invest additional time, money, and training to capture the detailed transaction data that Level 3 processing requires. 

    It’s important to consider these costs when determining if the ROI is high enough to outweigh the operational and technical costs. That’s why many businesses choose to start with Level 2 processing, given the significant lift required for Level 3.

    Data Requirements by Payment Processing Level

    Data FieldLevel 1Level 2 Level 3 ERP Source
    Card Number✅✅✅Payment processing
    Expiration Date✅✅✅Payment processing
    Transaction Amount✅✅✅Order total
    Merchant ID✅✅✅Payment gateway
    Tax Amount❌✅✅Tax calculation module
    Customer Postal Code❌✅✅Customer master file
    Purchase Order #❌✅✅Order management
    Line Item Details❌❌✅Product catalog/inventory
    Product Codes/SKUs❌❌✅Item master file
    Unit of Measure❌❌✅Inventory management
    Freight/Shipping❌❌✅Order processing
    Discount Amounts❌❌✅Pricing engine

    Considerations for advancing payment processing levels

    Advancing to Level 2 or 3 payment processing can bring significant cost savings from reduced interchange fees – if you have the back end systems and processes to support it. But there are additional benefits, too.

    • More secure transactions from the additional work in validating customer data
    • Streamlined processes through stronger integration with internal procurement and accounting systems
    • Ability to meet compliance requirements for government and corporate purchases
    • Enhanced dispute resolution from better documentation 
    • Improved customer service with more data available to troubleshoot client issues
    • More complete data allows for deeper customer and operational insights to make better business decisions

    Achieving (and maintaining, without penalty) a higher level of payment processing for your transactions takes work. Here are five next steps when evaluating if moving to level 2 or 3 processing is the right move.

    1. Assess card mix. Look at a minimum of three months of transaction data to identify commercial card volume and average ticket sizes.
    2. Audit systems. Inventory what Level 2 and 3 data your current systems capture and identify gaps. Consider the cost/benefits of switching to a platform like ARISE that can provide enhanced security features that support Level 2 and 3 processing.
    3. Start with Level 2. If you’re not capturing enhanced data yet, implement Level 2 requirements first. This will help you start realizing immediate savings while you further prepare your processes and operations for Level 3 processing.
    4. Plan out integration efforts. Work with your payment processor and gateway to map out field requirements and testing procedures.
    5. Continuously optimize. Track qualification rates monthly and address any data issues that prevent transactions from qualifying. In 2024 Visa introduced new penalty rates for incomplete data, stricter validation of product category codes, and enhanced fraud monitoring. These changes make data accuracy and security critical.

    Level 2 and Level 3 processing often require significant system changes and a whole new approach to ongoing data management. However, it can be worth it, as long as businesses are well informed, prepared, and have clear expectations for ROI.