The payment processing industry is constantly evolving thanks to the entry of new and improved technologies.
Customers are no longer confined to cash. From mobile apps to debit cards, buyers are starting to expect to be able to pay in many new and different forms.
In order to keep up, you must be sure you are equipped with the latest payment acceptance technology. There are a huge number of options out there. It is vital to pick one that goes well with your particular needs.
Let’s have a look at five things to consider when selecting a credit card processor.
1. How Secure is The Company?
As a business owner, your biggest concern should be the security of your money. Choose a credit card processor that goes the extra mile to protect you against fraud.
For in-store transactions, choose a provider who uses EMV chip cards. They are more secure than magnetic stripes; however, they alone may not be enough. Tokenization and encryption should be in place to further reduce the risk of fraudulent transactions.
For online transactions, choose a company that supports CVV2 verification and SSL certificates. This is the best way to reduce the risk of friendly fraud, which costs businesses over $4 billion in 2017.
Moreover, your processing company should comply with PCI-DSS regulations, which require the payment ecosystem to be fully inventoried, documented, and secured.
2. What are the Total Costs?
The average cost of processing payments for businesses that earn between $10,000 and $250,000 per year is between 2.87% and 4.35% per transaction.
Several factors come into play to determine the amount you may pay including annual fees, chargeback fees, and compliance fees. Additional fees can end up being up to 60% higher than the initially quoted amount, so read your contract carefully.
In addition to this, a business may also have to cover software subscriptions and hardware leases.
Pay special attention to the fee structure. Some providers offer a fixed monthly rate and some offer variable charges based on the number of transactions.
Most companies have a ‘minimum fee’ clause where businesses have to pay a small fee even during off-seasons. It is also important to remember that most companies distinguish between card-not-present and card-present transactions. One option might be more expensive than the other option.
Choose a company that offers transparency. If a clause or condition is not clear, then ask for clarifications.
“Our viewpoint is that having a transparent flat rate is in place to serve the merchant the best,” said Amit Mathradas, a PayPal executive. “The best thing you can give a consumer is choice, but the other side is that you have to remove any barriers for that merchant to accept other forms of payment.”
Read the contract repeatedly to ensure you are fully aware of what you are taking on. Hidden charges can add up and become costly over the long term.
3. What Kind of Customer Service Do They Offer?
It’s common for businesses to have an issue with their internet or questions about their processing solution, and when that happens, you’ll need guidance. Payment processing companies understand the importance of customer support and many offer good support.
“A lot of businesses start off knowing what they want to be but most of them don’t know about payments and processing — they just want them to work,” said PayPal’s Mathradas. “At some point, they want to pick up the phone and talk to someone.”
Statistically, 92% of customers will switch to another company after three bad customer service experiences. No business wants to switch to another company since there are cancelation charges, but sometimes they have no option but to look for an alternative.
To be on the safe side, look for a company that is known to offer excellent support so that all your problems are taken care of quickly.
Go for a company that offers 24/7 support so that you do not have to wait for hours to hear back from a representative.
4. Is the Platform Easy to Use?
Signing up with a credit card processor is not something that you do every day, so it is vital that you choose a company that works for you.
Look for processors that directly connect your processing network to your point of sale system. Also, pay special attention to credit card processors that offer more than just processing. Additional services such as reporting, bookkeeping, and invoicing can make the processing company a one-stop-shop.
In the long run, you might need to connect to a larger and more robust ecosystem that extends way beyond your point of sale. Online businesses may have to integrate platforms like Xero, Intuit, BigCommerce, and Shopify.
Try to find a company that’s going to be there for you in the long run.
5. Do they Cover Different Payment Methods?
Buyers use a variety of payment methods including debit cards, credit cards, Apple Pay, etc. You must be equipped to accept all forms of contactless payments. You would not want to miss out on a sale because you don’t accept the form of payment your customers prefer to use.
Choose a company that covers all popular and growing payment methods so that you do not have to opt for two or more payment processors. Having to deal with multiple providers is a pain that should be avoided.
Choosing a credit card processor can be quite an intimidating process, especially if you are a small business and it is your first time dealing with a credit card processing company.
Lou Honick is the CEO of Host Merchant Services. Prior to founding Host Merchant Services in 2010, Lou has received numerous awards including SBA Young Entrepreneur of the Year, Inc Magazine 30 under 30, and multiple listings on the Inc 500. As a serial entrepreneur, all of his companies have operated on a singular devotion to outstanding customer service and support. Lou is a respected expert on the topics of customer service, payments and fintech, Internet technology, and entrepreneurship.