How To Improve Payments Efficiency and Reduce Expenses
Blog post from Basis Theory
Payment processing involves multiple intermediaries, including gateways, processors, card networks, and banks, creating substantial costs for merchants that can range from roughly 1.5% to 4.5% per transaction, with U.S. credit card fees exceeding $126 billion in 2022. Full-service payment service providers, or aggregators, simplify setup and reduce PCI compliance burdens but often charge relatively high fixed and incidental fees while retaining control of customers’ card data, limiting merchants’ ability to switch providers. Costs can also rise because of cross-border transactions, currency conversion, refunds, chargebacks, and specialized high-risk payment requirements. The proposed path to greater efficiency is payment automation that screens transactions for risk and routes them among multiple providers based on factors such as geography, transaction risk, and volume discounts. Third-party tokenization can support this diversified approach by securely storing payment details outside a single processor’s system, allowing merchants to retain flexibility in choosing providers while reducing compliance exposure.
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