Considerations When Choosing a Payment Processor

March 12, 2023 | Merchants | Dustin

The size of the global payment processing solutions market will reach USD 62,245.3 million by 2024. It’s a shocking statistic that proves how popular payment processors are getting around the world. Indeed, the number of merchant services companies has been on the rise over the years.

But why are online credit card processing services so popular?

Well, the right payment processors can help you save time. They can also diversify your ability to collect payments. In the long run, such an online payment processor will enhance your ability to generate more revenue.

Choose a Credit Card Processor that Fits Your Company

That said, it’s essential to have a good grasp of how to choose a credit card processing company that’s best suited to your needs. Choosing the wrong online credit card processing company can confuse your clients. It can also make you pay higher fees, and force you to wait for hours to get service from a customer service representative .

It’s the reason you need to compare merchant services before making your final decision. So how do you know what to look for?

In this friendly guide, we’ve compiled a list of everything that makes a reliable payment processor. Keep reading to learn more.

Merchant Services Companies Should Be PCI Compliant

For an online credit card processing company to impart confidence in clients, they have to do their best to follow the regulations of the relevant quality management body. Since the company has chosen to be taking payments from clients, it must comply with the PCI Data Security Standard that the PCI Security Council creates and updates annually.

The duty of the Council is to provide a practical framework for creating a trustworthy process for card data safety. This includes averting, detecting, and appropriately reacting to any security incidents. Inquire from the merchant whether they’ve taken the steps required to be PCI DSS compliant before entrusting them with your business.

Only PCI compliant processors can assure you that they’ve taken the necessary measures to achieve robust data security.

The Presence of Fraud Tools

Don’t let the fact that your business only accepts payments online fool you into thinking that you have no business with EMV. Fraudsters have come up with many avenues for online theft. They know how to use channels that are less secure to attack.

Try using Address Verification among other techniques to boost security. Even better, find an online credit card processor who can provide advanced fraud management tools. These tools assist in detecting fraud much quicker and keeping your business safe.

The best fraud tools make it possible for you to set measures that prevent criminals from accessing your accounts and testing cards there. The tools also prevent fraudsters from making financial transactions from countries that you’ve already blocked. Moreover, they prevent criminals from attempting to charge more money than you usually charge for your products and services.

Whether the Merchant offers ACH Payments

ACH payments work just like the usual process of paper checks. They transmit a client’s checking account number or bank routing number via the ACH system. This allows you to do a quicker transfer.

Many companies utilize this approach of payment processing to allow such options as direct deposit for staff. Other options include direct payment on rent, loans, mortgage, and other bills. ACH payment processing also simplifies b-to-b transactions.

Your business can save money and improve customer service. You also save more time and cut the expenses associated with conventional check payments. The result is more profits.

Fewer Days Sales Outstanding

Consider the amount of time it takes for your business to receive money after you’ve made a sale. Does your mail include invoices? Then that could mean between 30 and 90 days before a client sends a check to you, and the bank clears it.

By allowing ACH payments and credit cards, your business can start to collect right away. Doing so reduces your Days Sales Outstanding and increases your cash flow. You can then start to reinvest the cash flow back into the business as soon as possible.

Reconciliation

Some companies allow payments through a single channel, while others do so through many. Regardless of how many channels your company uses, it’s essential to have a robust and detailed reporting in a centralized location.

Unfortunately, very few online payment processors allow you to keep track of your transactions from the point of interception to settlement. Typically, these payment processors are both the gateway provider and the processor in one. The payment gateway sends credit card transactions for processing by the credit card payment networks.

An online payment processor that provides reporting APIs can let you see any information that goes through on a transaction. Besides, it can be custom-built to suit the specific needs of your business.

Europay, MasterCard, Visa (EMV)

As of October 2015 , the Europay, MasterCard, Visa liability shift went into effect within the U.S. That shift would determine which party between the merchant and card issuer would be liable for the financial losses that resulted from lost, counterfeit, or stolen card-present transactions. EMV is a chip technology that’s been proven to have significantly less fraudulent card-present transactions.

Together with a signature or a PIN, the EMV chip interacts with a merchant’s point-of-sale system to validate the user of the card. The chip dramatically improves security and is impossible to duplicate.

While comparing merchant services, opt for the one who can provide EMV transaction processing and chip-enabled equipment. This way, you’ll be able to benefit from enhanced security and protection from fraud besides strengthening customer confidence. Moreover, you’ll minimize the risk of excessive financial losses in case there’s ever a data breach in your company.

Integrated Payments

What kind of software system do you use in your company when managing your business? As you compare credit card processing solutions, choose one that offers plugins that make it easy to integrate your payment processing to the software you use.

But why is integration essential? Well, by processing payments from a single interface, your business saves not only time but also money. Moreover, you get to keep double-data entry mistakes at a minimum and make the process of reconciliation much simpler.

Transaction Charges

The transaction fee is one of the top aspects a business considers when assessing online credit card processing options. Generally, you want to work with a merchant who provides the most affordable fees for your business.

That said, be wary of online payment processors who charge low rates. Take the time to inquire about any extra fees or hidden charges.

Some processors even have a processing minimum where you must meet a certain volume of transactions per month. Failure to meet that volume of transactions may attract a penalty. Before making your final decision, it’s thus advisable to ask for a complete breakdown of the transaction and incidental expenses so you have a clear picture of what you’ll be paying every month.

Approval Rating

The approval rating of an online payment processor is an indication of the percentage of applications the processor approves. The higher the approval rating, the higher the percentage of approved applicants. That typically translates to lower application fees and a higher processing speed.

Where the processor has a low approval rating, it could mean that the application fees are higher and the processing speed slow.

The Features on Offer

Many online payment processors provide a wide variety of terminal options. These options include online payment forms, virtual terminals, and swipers. Your business, however, may need much more functionality than one simple gateway to process payments.

For instance, it could be that you want to store client information for repeat business. You could also be planning to set up recurring billing so that you bill credit cards regularly. Or it might be that you need a specific type of reporting to track your cash flow.

You may also be on the lookout for a mobile app that can process credit cards on-the-go.

You need a merchant account that includes all the features that your business needs. If the account does not have every single feature you desire, make sure it is compatible. Otherwise, you may have to settle for complicated or expensive integrations by different software providers.

The Start-Up and Cancellation Cost

The vast majority of online credit card processing services will charge you a fee if you want to set up an account. Many of these services also charge a fee when you want to cancel your account.

Before you commit yourself to a service provider, take the time to find out the setup cost. The good news is that this cost can often be negotiated.

Find out whether there’s a cancellation fee as well so you don’t end up being locked into a contract that comes with a hefty cancellation fee.

Set-Up Time

Different online payment processors have different set-up times. Some providers will have you set up in just a day, while others will take weeks. The amount of time it takes to get you set up depends on different factors, including the size and nature of your business.

Generally, you want to work with a provider who has the systems to get you set up as quickly as possible. You don’t want to be left hanging when one of your clients needs to pay you.

Security Levels

As payment technology advances, people now have the freedom to make payments anywhere, at any time, and using any device. But that freedom comes with consequences for high-risk businesses . These include a higher responsibility to protect your clients’ confidential business information.

To safeguard you from fraudulent activity, you need the necessary security technology. Some leading online payment processors opt for tokenization technology. This is where a client’s Primary Account Number is substituted with information that’s useless to a hacker.

Other providers use Point-to-Point Encryption (P2PE). This is a way to send data from one party to another while protecting information obtained and sent on electronic transactions.

With P2PE, the encryption of data starts from the moment the client swipes the card to the time payment is authorized. This way, the merchant’s system never gets to see or touch any sensitive Primary Account Number data.

Together, tokenization and P2PE drastically improve security.

Supported Payment Methods

Which market does your company operate in specifically? That will most likely dictate the payment methods you should support.

Generally, different regions prefer different payment methods. Often, even different demographics in an international market may opt for one method or platform instead of another. Older customers may feel more comfortable using traditional payment means such as bank transfers.

The millennials, on the other hand, prefer the immediacy and convenience of mobile payment apps.

As a company, you need a payment processor that can support the various payment methods that your clients will want to use. Common payment methods include bank transfers, mobile payments, digital wallets, online banking, and cash. The more options a payment processor can offer, the better for you.

For companies that have an international footprint, there are more considerations to think about. Such businesses must research the countries where they have a presence to identify the most preferred methods of payments. The payment processors these companies choose must have the ability to support those payment platforms and deliver payment pages in languages that clients in those countries can understand.

Customer Support

Even if you’re lucky enough to partner with the best processor in the world, problems are bound to come up at some point. When that happens, you need to be able to reach your service provider as quickly as possible.

For most issues, sending an email should be enough to get the problem resolved. However, being able to talk to a live person through chat or phone whenever you have a problem is much more preferable.

Choose a Payment Processor That’s Your Best Fit

While there are many merchant services companies out there, choosing the ideal one for your business is easier said than done. What you need to do is carefully assess its features and service and determine how well a payment processor will fit with your business in the long run.

Research the options at your disposal and send them through the checklist above. In no time, you’ll be processing credit cards with no hassles.

Would you like to read more great content on online payment processing solutions? Keep visiting our blog.

Having the best payment gateway makes paying on a website for products and services a simple process. Learn here about choosing a payment gateway for Ecommerce.