Regardless of the type of business you run (online or offline business), accepting payments is one of the primary daily activities. You set up that business to make money, and making money from your business requires the best payment processors to use.
It’s where many business owners make mistakes. They go online, make a quick google search, and sign up for the available payment processor without giving much thought to the intricacies. Eventually, they get stuck with payment processors that don’t give them the desired results or put up with many disadvantages they didn’t know at first.
Before making that final choice as to what payment processor you would incorporate into your business, this article will provide you with 5 critical factors you must consider to prevent running into unforeseen challenges down the line.
First things first-
What is a payment processor?
Wikipedia defines a payment processor as a transactor for financial calculations; technically, a convertible currency exchange set up by merchants to accept and handle payments from various channels like credit and debit cards. Simply put, payment processors make it possible for business owners (merchants) to receive money from their customers by acting as mediators between all parties involved, including:
- The customer.
- The merchant (or business).
- The customer’s bank or credit card company.
- The payment gateway.
From the definition and explanation above, it is easy to extract one thing. If you want to increase your profits in business by making provisions to accept payments from various sources (online and offline), you need to have a functional payment processor.
Today, there are over 75 internationally recognized Payment Processors in the world. Trying to make an informed decision from this extensive pool of options may create challenges for you. So, these are the critical factors you must consider before choosing a payment processor for your business.
Five factors to consider before selecting a Payment Processor for your business
1. Type of business
The type of business you run will, to a large extent, determine the payment processor you take. When considering it, here are some critical factors to analyze.
A. Is your payment processor needed for physical transactions or online purchases? If you run a physical business (that requires people to make payment on-site for the products/services you sell to them), you need a Payment Processor that comes with a POS machine (Point of Sales machine).
On the other hand, if your business requires customers to pay online, you should go for a Payment Processor that has Payment Gateways. Payment Gateways are software applications used in synergy with your e-commerce platform to allow customers to pay for your products/services online.
A recent survey revealed that the penetration of digital payments reached 78% in 2020; you may be leaving a lot of money on the table by failing to adopt the use of Payment Processors for your business.
B. Do you operate a high-risk business?
Most Payment Processors come with Merchant Accounts (accounts where payments from the customer’s card are kept until they are remitted to your business’ bank account). While setting up your payment processor and merchant account, you’d be required to provide some details to your Payment Processor. They would determine the potential risk associated with the kind of business you do.
Your business is considered high-risk if it is more liable to experience fraudulent charges/chargebacks. High-risk businesses may have challenges getting started with payment processors or have to deal with higher service fees per transaction.
PaymentCloud specializes in providing reliable credit processing solutions for high-risk businesses.
2. Service charges
It’s another crucial factor you must keep in mind while getting started with payment processors. The first thing you must evaluate is the size of your business and the average amount of money you make per transaction. When you have collected this data, compare it against the service charges your desired Payment Processor bills.
On average, most Payment Processors charge monthly, and transaction fees are usually between 2-3% of the entire amount you are receiving. The charges may vary with the service providers. Also, it is important to note that most banks and credit card associations would charge their fees per transaction.
While evaluating the cost of using a payment processor, you must probe a bit further to find if there’s any hidden fee. Many payment processors tend to angle mouthwatering offers to the public to attract new customers, after which hidden charges spring up.
After careful analysis of these, you’ll discover that some payment processors are more affordable than others.
3. The payment features you need
Some factors (like your business model, target audience, and market penetration strategy) may demand you to adopt Payment Processors with advanced features. While most businesses are primarily concerned with accepting payments from multiple sources, figuring out the specific demands of your business will help you make the right choice of the payment processor to use.
For example, if your present customers prefer transacting with digital wallets and ACH transfers, you may want to go with a payment processor that provides such services. Incorporating payment processors that only accept payments from debit or credit cards would cripple your business in this context.
PaymentCloud provides several functionalities, including accepting payments from most credit/debit card issuers, offering robust POS solutions, and processing wireless payments.
4. Customer Support Structure
As a business owner who wants to start using payment processors, the last thing you want is to sign up for a payment processor that doesn’t provide strong customer support. Imagine running into a challenge and having to wait for seven working days before hearing back from the customer support team. Frustrating, right?
Before getting into any Payment Processor, ensure that they have a reliable customer support system with experts who are patient and willing to help when there are challenges.
The easiest way to figure this out is by evaluating reviews from their past users.
5. Global Market Penetration
It applies to you, especially if you have customers from different parts of the world. Usually, as payment processors begin to expand in their market, they want to extend their reach to other countries and markets. They can achieve this by setting up new infrastructure there; or partnering with other payment processors in their new target country.
As a rule of thumb, pitch your tent with Payment Processors that have attained some level of global market penetration. Aside from making it easier for you to start collecting payments from customers in new countries, it is less likely for payment processors with a history of global market penetration to crash at the nick of time and leave you hanging.
Selecting a suitable payment processor for your business isn’t a decision you should make without carefully considering the options and determining how your choice would ultimately affect your business. This article has covered five critical features you must consider before making a final choice.
However, if you need a payment processor that is affordable, suitable for your type of business, provides brilliant customer support, and has built a history of serving businesses across America, PaymentCloud has got you covered.