Debunking 5 Payment Processing Myths: The Truth Revealed!

In this new blog series, "Debunking 5 Payment Processing Myths," we aim to unravel common misconceptions surrounding payment processing in the business world. We begin with Myth 1, which suggests that high processing fees are inevitable regardless of the payment processing platform you choose.

It is true that popular payment processing platforms like Stripe, PayPal, and Square come with preset processing fees that cannot be negotiated. However, it is important to note that merchant processing options provide the flexibility to lower these fees based on various factors.

In fact, for startup owners or business owners looking to eliminate processing fees altogether, there is a program called "cash discount" that can be utilized. This program enables businesses, whether online or retail-based, to save thousands of dollars per month in processing fees. The idea of paying high fees has become a choice rather than an unavoidable burden.

While some argue that high fees are tax deductible, it is crucial to remember that these fees are still revenue that could otherwise be in your pocket rather than recorded as an expense on your balance sheet. The landscape of payment processing has evolved, presenting business owners with the opportunity to take control of their expenses and maximize their profitability.

Upon examining the payment processing industry, it becomes evident that the majority of businesses are burdened with high fees ranging between 4-6% right from the start. Additionally, there are often additional monthly fees or early deposit charges imposed. However, when carefully reviewing the fee structure, it becomes apparent that business owners who process an average of $25,000 per month have the potential to save $15,000 annually in fees.

Similarly, those processing $100,000 per month can achieve savings of up to $60,000 per year in fees. These substantial savings highlight the importance of understanding the true cost of payment processing and exploring options that offer more cost-effective solutions.

We are addressing the misconception propagated by social media influencers and finance industry professionals that businesses should accept every form of payment to cater to their customers. However, when businesses start using a multitude of payment platforms such as Apple Pay, Venmo, CashApp, PayPal, Stripe, Square, Crypto, Zelle, and others, several issues arise.

Firstly, many of these platforms, despite their popularity, lack FDIC approval and offer limited protection against scams or chargebacks. Furthermore, they retain the authority to freeze accounts without notice for various violations of their terms and conditions. This not only creates a risk of losing access to funds but also potentially never recovering them.

Secondly, managing multiple forms of payment becomes an auditing nightmare for businesses. It becomes difficult to accurately track and report earnings, leading to potential compliance issues and tax liabilities.

Lastly, scattering funds across multiple payment platforms can obscure the visibility of strong cash flow. Additionally, classifying these forms of payment as either personal or business revenue can be a complex decision influenced by multiple factors.

Therefore, contrary to popular belief, businesses should carefully select trusted and reliable payment processing options that offer appropriate safeguards, simplify accounting processes, and demonstrate consistent cash flow to support their financial operations.

Unveiling the Benefits of Merchant Accounts

Did you know that your merchant processing setup enables you to accept various forms of payment but all under one system? 

Consider the growing number of stores and restaurants that now accept ApplePay, CashApp, and several other digital options inside their "regular" system.  This is in response to the effects of the pandemic. Moreover, you can integrate a robust system to facilitate these alternative payment methods while safeguarding against chargebacks and other potential issues that may arise.

We will now address the misconception that adding an extra fee to invoices is an effective way to offset the costs of processing fees. We will also explore the legal framework surrounding surcharges and the specific state requirements that dictate what is allowed and what isn't.

Many business owners may assume that by tacking on a surcharge to customer invoices, they can pass along the burden of processing fees. However, it is crucial to understand the laws surrounding surcharges, as they can vary significantly from state to state.

When it comes to surcharges, it's important to note that several states have defined them as illegal. Some of these states include:

1. California
2. Colorado
3. Connecticut
4. Florida
5. Kansas
6. Maine
7. Massachusetts
8. New York
9. Oklahoma
10. Texas

In these states, imposing surcharges on customers' invoices can have legal ramifications, including potential fines and penalties. However, in states where surcharges are legal, there are typically limitations in place. For example, surcharges may not exceed 4% of the transaction amount.

It is crucial for businesses to understand the specific laws and regulations in their state regarding surcharges to ensure compliance and avoid potential legal consequences.

To efficiently navigate processing fees and legally address them through a surcharge, regardless of your state, it is highly recommended to seek assistance from experts specializing in the "cash discount" program. Here at Loan Wolf, we offer this sophisticated setup and a range of other solutions tailored to support startups and businesses.

We tackle the misconception that Stripe and PayPal are the ultimate choices for accepting payments. While these platforms enjoy widespread recognition and trust from customers, many businesses have encountered significant issues when relying solely on them.

A quick search on Google will reveal numerous news reports of business owners suing Stripe and PayPal due to frozen accounts and unrecoverable funds. Despite their quick and easy account approval process, it's important to understand that being approved by these platforms does not guarantee your business aligns with all their requirements.

Stripe and PayPal place the burden of research on the business owner to determine if their business type or products, as well as their sales methods, could potentially trigger account freezes, suspensions, or even closures. Countless business owners have shared horror stories of funds amounting to tens of thousands of dollars being held for extended periods — ranging from 90 to 120 days — with no release back to the rightful owners.

In some instances, these platforms have withdrawn funds from connected accounts to cover refunds or chargebacks, leading to overdrafts and triggering a series of unfortunate financial events. Ultimately, Stripe and PayPal's handling of violations has resulted in the permanent closure of many small businesses in recent years.

It is crucial for entrepreneurs to explore alternative payment processing options and seek guidance to avoid falling victim to the potential pitfalls associated with relying solely on Stripe and PayPal.

Our last myth to debunk in the series of "Debunking 5 Payment Processing Myths" is the misconception that switching to a new payment system and familiarizing oneself with it is a cumbersome process. The reality is that working with the right expert and company makes all the difference in the world.

Many businesses find themselves using a payment system without proper guidance or awareness of the features they may be missing out on. However, when you choose to switch and partner with an expert and reputable company, you gain access to hands-on training, along with pre-recorded troubleshooting videos tailored specifically for business owners.

Unlike payment processing giants like Stripe and PayPal, a good company will prioritize providing support rather than simply redirecting you to an impersonal 800 number. With personalized assistance and ongoing support, you can transition smoothly to a new payment system while maximizing its features and benefits for your business.


When you choose to set up a merchant account with our recommended provider, you can expect personalized assistance to help you with the setup and training process for you and your team. Their support is readily available via phone calls and email whenever you encounter any issues or concerns.

Moreover, their dedicated team is equipped to assist you in dealing with chargebacks, ensuring that you have the necessary support to navigate such challenges effectively.

Quick Recap…

In our comprehensive exploration of payment processing myths, we have successfully debunked five widely believed misconceptions that can potentially hinder businesses from making informed decisions about their payment systems. Let's recap the myths and the truths we have uncovered:

Myth 1: The belief that businesses have to pay high processing fees everywhere has been dispelled. The reality is that payment processing platforms like Stripe, PayPal, and Square offer a range of processing fees to cater to different business needs.

Myth 2: The misconception that businesses should offer every type of payment possible to cater to customers has been debunked. While it may seem beneficial to accept all forms of payment, businesses should carefully evaluate the payment methods that align with their target audience and operational goals.

Myth 3: The belief that adding an extra fee on invoices can offset the cost of processing fees has been clarified. It is essential to understand the state requirements surrounding surcharges, as some states consider them illegal. Even where legal, surcharges should not exceed 4% as per regulations.

Myth 4: The notion that Stripe and PayPal are the best options to accept payments has been challenged. While these platforms are popular, businesses may encounter serious issues and limitations. Exploring alternative payment options and seeking expert advice can empower businesses to make the right choice.

Myth 5: The misconception that switching to a new payment system is a hassle has been addressed. By working with the right expert, businesses can easily navigate the transition and receive personalized assistance in setting up, training, and resolving any issues that may arise.

By busting these myths, we aim to provide businesses with accurate information to make informed decisions about their payment processing systems. Remember, it is crucial to assess individual business needs, consult experts, and stay updated on relevant regulations to optimize payment processing operations and enhance the overall customer experience.