Serious online businesses need to know they can take payments quickly, conveniently, and securely. They may assume that an \u201cinstant approval\u201d payment processor is the best choice for their business because faster is always better, right? Not necessarily.<\/p>\n
While instant approval payment processors are fast, they also come with some risks. Here\u2019s why many smart online businesses are rethinking \u201cinstant approval\u201d and choosing underwritten merchant accounts instead.<\/p>\n
An instant approval payment processor typically uses a PayFac platform to prioritize immediate approval at signup. This may sound like a good thing at first, but this type of system prioritizes speed over safety and risk reviews. As a result, there may be unpleasant surprises after the initial approval is already granted. It\u2019s not uncommon for accounts to be suddenly put on hold or even closed once the deeper risk review happens. For these reasons, instant approval setups may not be ideal for small business credit card processing<\/a>.<\/p>\n There\u2019s nothing wrong with wanting your payment processor to deliver both quick and reliable results. Unfortunately, instant approval systems tend to put potential risks on the back burner while prioritizing rapid approvals (no matter what). Here are a few reasons speed may not always be the best thing for your business when it comes to online payment processing.<\/p>\n Many instant approval payment processors offer less flexibility than their less risky counterparts. They often impose strict volume limits and may not work for high-ticket or subscription transactions. For these reasons, this type of payment processing solution may not be ideal for scaling businesses.<\/p>\n To cover the increased risks associated with offering such rapid approvals, many instant approval payment processors charge higher transaction fees. Some are also known for charging hidden fees that aren\u2019t clear upon signup. It\u2019s better to go with a provider that has a fair and clear pricing structure to help manage your costs.<\/p>\n With an instant approval setup, risk reviews happen after real transactions are processed. Therefore, there\u2019s an increased risk of sudden account closures or fund holds later on. This can come as an unpleasant surprise to someone who was instantly \u201capproved\u201d but later had that approval unexpectedly revoked.<\/p>\n Instant approval providers offer little to no initial underwriting at the beginning of the approval process. This makes the approval process quicker and can boost customer satisfaction rates. However, it also creates opportunities for fraud and exploitation, which can be devastating in their impact.<\/p>\n Many instant approval providers have earned a reputation for offering subpar customer service. Many of them have very limited support and contact options, which can lead to confusion and frustration. Many businesses find that instant approvals don\u2019t make up for the lack of customer support on the back end.<\/p>\n Now that you\u2019re familiar with some of the drawbacks of instant approval payment processing systems, you may be wondering what type of system is better. Many online businesses are turning to underwritten merchant accounts. Here\u2019s what to look for in an underwritten payment processor.<\/p>\n Unlike instant approval providers, underwritten merchant accounts offer up-front risk assessments. This can add some time to the approval process, but results in fewer surprise reviews or account holds later on. Additionally, many underwritten payment processors still offer fast approvals (within 24-48 hours).<\/p>\n When selecting an underwritten payment processor, it\u2019s wise to choose one that\u2019s known for providing exceptional customer service. Ideally, your provider should be available 24\/7 in case you have any questions or concerns while using their service.<\/p>\n The best payment processors work with multiple banking partners. This makes it easier for you to get matched with the right bank so you can scale faster and optimize your approvals. Payment processors with many banking partners often have a greater ability to cater to customer preferences.<\/p>\nWhy \u2018Instant Approval\u2019 Isn\u2019t Always a Good Thing<\/h2>\n
Strict Volume Limits<\/h3>\n
Higher Transaction Fees<\/h3>\n
Greater Risk of Account Freezes<\/h3>\n
Security Risks<\/h3>\n
Reduced Support and Reliability<\/h3>\n
What to Look for in a Payment Processor<\/h2>\n
Up-Front Risk Assessment<\/h3>\n
Excellent Customer Service<\/h3>\n
Multiple Banking Partners<\/h3>\n
Ability to Accept Mobile Payments<\/h3>\n