The Problem

In today's digital economy, card payments have become ubiquitous. However, this convenience comes at a significant cost to merchants and businesses. From high transaction fees to the risk of chargebacks and account freezes, the current card payment system poses numerous challenges. These issues not only affect profit margins but can also threaten the very survival of small businesses and those operating in high-risk industries. Let's delve into the key problems plaguing the traditional card payment ecosystem:

The Costly Burden of Card Payments:

1. High Transaction Fees

   • Stripe: 2.9% + 30¢ per transaction

   • Square: 2.6-3.5% + 10-30¢ per transaction

   • PayPal Checkout: 3.49% + 49¢ per transaction

     • QR Code Transactions: 2.29% + 9¢ per transaction

2. Account Freezing

   • Sudden account freezes can disrupt cash flow and business operations

   • Often occurs without warning, leaving merchants unable to process payments

   • Can be triggered by suspicious activity or operating in high-risk industries

3. High-Risk Business Challenges

   • Certain industries face higher fees, stricter regulations, and limited options

   • Examples include cannabis, online gaming, and adult entertainment

   • Many struggle to find payment processors willing to work with them

4. Chargebacks and Fraud

   • 75% of eCommerce businesses saw an increase in fraud attempts in 2021

   • Global chargeback costs grew by nearly a third between 2018 and 2021

   • Card-not-present (CNP) fraud losses projected to reach $28.1 billion in 2026, a 40% increase from 2023

   • Chargebacks result in additional fees and can jeopardize merchant accounts

5. Settlement Delays

   • Traditional card payments often take 2-3 business days to settle

   • Delays impact cash flow and complicate financial planning for businesses

These issues highlight the need for alternative payment solutions that can address the shortcomings of the traditional card payment system. As technology evolves, new possibilities are emerging to create more efficient, cost-effective, and inclusive payment ecosystems.

In 2022, US merchants spent $160.70B to process $10.589T in card payments according to the Nilson Report. link