A Guide to Selecting the Right Payment Processor for Your Needs
Payment processing is something that’s become an increasingly important responsibility for businesses over the years. As customers have moved away from cash payments and now predominantly pay with plastic or virtual methods like ecash. The need for a fast, secure, and seamless payment process that protects the interests of both buyer and merchant has emerged. Are you giving your business and its customers the support it needs to be successful? Have you been diligent in selecting the right payment processor for your businesses needs?
Why Do Payment Processors Matter?
You obviously need a payment processor in order to be competitive in today’s marketplace, but why is it so important that you select the right one? Don’t they all do the same thing? Well…not exactly.
Here are a few of the benefits that come with investing in an advanced/modern payment processing solution with cutting-edge technology.
- Improved security features. Security plays an integral role in today’s business transactions. Customers need to know that their information is safe, regardless of whether they’re swiping a card at a POS terminal or inputting information in an online checkout form. Today’s advanced payment processors come with a number of built-in security features that are designed to cut down on fraud and make the end user safer and more comfortable. Using an outdated processor puts you (and your customers) at greater risk.
- Automatic currency conversion. With ecommerce, borders have essentially been deconstructed and international commerce has become commonplace. Depending on the products and services you sell, it’s possible that you’re selling to customers in multiple countries. Today’s payment processors have no trouble handling currency conversion and can make sure you get exactly what you’re owed.
- Faster checkout process. Whether it’s in-person or online, nobody likes to wait for a transaction to be processed. With an advanced payment processor, you can streamline the checkout process and ensure your customers are happier with the overall experience.
- Less paperwork. You’ve got enough paperwork in your business – why would you want more? With a modern payment processing solution, you can handle everything online, which makes it easier to organize and access information when you need it.
This is only touching the surface. When you compare today’s modern payment processors to the ones that existed a handful of years ago, you’ll quickly recognize all of the improvements and advantages that come with them. The challenging part is figuring out which platform to use.
5 Helpful Tips for Selecting the Right Payment Processor
There are a number of reputable payment processing platforms and brands on the market today. Choosing the best one often comes down to finding the processor that’s “the right fit” for your business. Here are some helpful tips to get you pointed in the right direction:
Ensure Easy Integration
A payment processor might work well in theory, but how does it function within the context of your business? If you’re running an ecommerce website, you need to make sure the payment processor you’re thinking about using integrates well with the backend shopping cart solution on your site. If they don’t line up well, you’re going to have some major headaches.
Think About Support
“A vital facet of any payment processing software service is how readily available the tech support is,” explains Green Residential, a Houston-based property management company that works with landlords to help them manage everything from tenant screening to rent processing.
If a payment processor doesn’t have quick and reliable support, then it’s going to be a problem. It might not be an issue 95 percent of the time, but that other 5 percent could cause you to lose business or ruin customer relationships. Look for a payment processor that is adept at handling support issues around the clock.
Take Security Seriously
You can’t afford to become the victim of a cyber attack, whether internally or externally. The payment processor you choose will have a major impact on how secure or vulnerable you are. Be sure to choose one that has the latest and greatest PCI-compliant standards in place – including thorough data encryption.
Review Payment Schedules
Cash flow is a very important for most businesses. Even a 24-hour delay of funds can set you back and put your business into a tailspin. Recognizing this, you need to ensure any payment processor you consider has a payment schedule that works with your cash flow needs.
Most of today’s payment processors are fast. Technology has improved in such a way that credit cards generally process right away and the money can be in your hands within a few hours. However, there are some instances where it could take 24 to 72 hours for transactions to process. Be sure you’re aware of little details like this so that you don’t stick yourself behind the eight ball.
Be Wary of Hidden Fees and Charges
Most businesses evaluate payment processors on rates. If a processor has the lowest rate, they’ll probably be considered as a viable option. But you have to be wary of hidden charges and fees that sneak up and get tacked onto these “low rates.”
“The lowest rate you’ll pay is the ‘qualified’ rate, which only applies to certain types of cards physically swiped through a card terminal,” entrepreneur Shawn Hessinger notes. “The highest rate, deemed ‘non-qualified,’ generally applies to online transactions and credit cards that offer customers rewards. These typically are the ones most attractive to your shoppers because they offer givebacks, in airline miles, loyalty points or cash bonuses.”
If you’re predominantly accepting online payments – or other “card not present” transactions – the low “qualified rate” probably doesn’t mean much. Make sure you understand the actual rate you’ll be paying your processor.
Mistakes You’ll Want to Avoid when Starting Processing Online
In order to improve your chances of selecting the right payment processor, there are also some costly mistakes you’ll want to avoid. Let’s take a look at three specific ones
Failing to Read the Fine Print
As previously noted, the lowest rate doesn’t necessarily mean the lowest overall cost. If you don’t read the fine print, you may not be aware of all the other charges that are piled on top of this base rate. (Here’s a good breakdown of some of the different credit card and merchant processing fees you’ll encounter.)
Also tucked away in the fine print could be information on contracts and terms, which may restrict you or lock you into a long-term deal. Any reputable company will be up front about these terms, but you can’t take that for granted. If you sign something and fail to read the fine print, you’re still legally bound to that form. Your laziness or ineptitude isn’t an excuse.
Not Offering Multiple Payment Options
How many payment options are you offering your customers? If you’re only giving them two or three choices, you’re probably hurting your bottom line. Here are some data points from FuturePay that back this claim up:
- The top online retailers offer an average of 6.8 payment options, while some accept as many as 15.
- 40 percent of shoppers say they feel more comfortable when purchasing from a retailer that offers multiple payment methods.
- 1 out of every 4 shoppers will abandon a shopping car if it doesn’t have their preferred payment option.
- 83 percent of consumers feel like retailers should consider adding more payment methods.
- 3 out of 4 shoppers feel like retailers should accept as many payment options as they possibly can.
Clearly, today’s customers want options. The question is, are you giving them these options? Choosing a payment processor that only takes a few payment methods might not seem like a big deal to you, but it matters to your customers. At the very least, make sure you’re accepting the major credit cards and an easy one-click method like PayPal. Some retailers even choose to accept Bitcoin, but that’s an entirely separate conversation.
Trying a DIY Approach
There is no facet of payment processing that you should ever consider doing on your own – especially the responsibility of PCI compliance, which is the industry standard on how you process and store cardholder data.
“Instead of spending your own time and money to build a system that complies with the rules laid out by the PCI Standard, you can simplify your role by partnering with a payment processor that is in compliance and helps reduce your PCI compliance workload,” Hessinger suggests.
Set Your Business Up for Success
Reliable payment processing probably isn’t the first thing that comes to mind when you think about the success factors involved in building a strong and profitable business. That being said, it definitely plays a key role. Give your business the advantage it needs to thrive by selecting the right payment processor for your needs. Just remember that every business has different needs and the payment processor you feel most comfortable with may be different than the one the business next door chooses.