When you’re first starting out in dropshipping, it can be difficult to know which features and services you actually need and which you can do without. One such service is a payment processor. Payment processors offer a number of valuable features for businesses, such as fraud protection, recurring billing, and the ability to accept multiple types of payments. But are they really necessary for dropshippers? The answer may surprise you. In this blog post, we’ll explore the pros and cons of using a payment processor for your dropshipping business. We’ll also provide some helpful tips on how to choose the right processor for your needs.
What is a Payment Processor?
A payment processor is a company that provides the technology and services necessary to process electronic payments. They are responsible for authorizing credit and debit card transactions, as well as ACH transfers.
Payment processors typically work with merchant account providers to offer their services to businesses. Merchant account providers are banks or other financial institutions that provide businesses with the ability to accept credit and debit card payments.
There are many different types of payment processors, but they all have one thing in common: they make it possible for businesses to accept electronic payments. Whether you’re looking to accept credit cards, debit cards, or ACH transfers, you’ll need a payment processor.
Do I Need a Payment Processor For Dropshipping?
When you’re running a dropshipping business, you need to be able to accept payments from your customers. A payment processor is a service that allows you to do this.
There are a few different ways to accept payments without a payment processor. For example, you could use a service like PayPal or Stripe. However, these services typically charge higher fees than a traditional payment processor.
If you’re just starting out, you may not need a payment processor right away. You can always start with one of the free options and then upgrade to a paid service later on.
Advantages of Using a Payment Processor For Dropshipping
There are several advantages of using a payment processor for dropshipping. Perhaps the most obvious advantage is that it can save you time and money. With a payment processor, you can automate many of the tasks associated with dropshipping, such as invoicing, tracking payments, and issuing refunds.
Another advantage of using a payment processor is that it can help you manage your cash flow more effectively. By using a processor, you can ensure that all payments are made on time and that you have the funds available to cover any refunds or chargebacks. This can help you avoid any disruptions in your business operations.
Finally, using a payment processor can help you build trust with your customers. When customers see that you are using a reputable third-party processor, they will be more likely to trust your business and make future purchases.
Disadvantages of Using a Payment Processor For Dropshipping
There are a few disadvantages of using a payment processor for dropshipping that you should be aware of before making your decision.
First, if you are Dropshipping from AliExpress or another supplier that does not accept PayPal, then you will need to use a payment processor in order to receive payments from your customers. This can add an extra layer of complexity to your business, and may require you to pay additional fees.
Second, using a payment processor can also slow down the process of receiving payments from your customers. This is because the payment processor will need to verify the customer’s information and confirm the payment before it is released to you. This can add a couple of days onto the time it takes to receive payments.
Third, some payment processors may hold funds in reserve in case of chargebacks or refunds. This means that you may not have access to all of the money that you are owed right away, which can cause cash flow problems for your business.
Overall, there are a few disadvantages of using a payment processor for dropshipping that you should be aware of before making your decision. However, if you are Dropshipping from AliExpress or another supplier that does not accept PayPal, then you may need to use a payment processor in order to receive payments from your customers.
Conclusion
Dropshipping is a great way to start an ecommerce business with little upfront investment. In most cases, you won’t need a payment processor when dropshipping since your supplier will handle the payments for you. However, there are some exceptions to this rule. If you’re dropshipping high-ticket items or if you’re using a marketplace like Shopify that requires you to have a payment processor, then you’ll need to choose one that best suits your business needs.
