Electronic Payments: 5 Things to Consider When Evaluating Your Options
Accepting electronic payments can make it easier for customers to pay you. However, since there are so many payment processing platform providers, how do you pick the right one for your business?
One solution is MasterCard’s Simplify Commerce, a platform that makes it easy for your business to accept payments securely — online, in app, and in person.
Here are five points you will want to consider as you’re evaluating payment processing solutions for your small business.
Ensure pricing is apples to apples
When certain components of the overall pricing are bundled together, it’s hard to make an apples to apples comparison.
Katya Siddall, co-founder of Syndio explains, “When you’re processing a card, you’re paying interchange (the fee to run the card that goes to the card provider) plus the fee your processor is charging for their services. Interchange is the same for EVERY processor and only varies based on customer card type. You can negotiate with your processor on their fee for interchange-plus pricing. If they charge you a flat rate, you won’t see these separated out. Try to get interchange-plus pricing so you can to compare apples to apples and increase transparency.”
Shop around for more than just rate
Everybody thinks about rates, but it’s the whole solution – software, processing fees, and support – that makes the difference for your small business.
Siddall says, “Some of the best processors for brick and mortar businesses don’t have good technology or support for online payments, and vice versa. Make sure to ask about support hours, dedicated contact person, implementation or equipment fees, and compatibility with your current systems (Quickbooks, point of sale, ecommerce shopping cart, etc.) based on the needs of your type of business.”
Determine the data you need
What data do you currently collect about your customers and what data would you like to collect going forward?
Holly Glowaty and Kristen Thiry are the co-founders of K+H Connection, a payment technology consulting firm. Glowaty and Thiry caution, “Some payment providers collect and retain different information from the customer during the checkout process. It will be important to know what your ideal scenario is and if/how it may integrate into your CRM of choice.”
Glowaty and Thiry also advise clients that if they have a gift card or loyalty program currently (or would like to eventually), the online provider needs to integrate with the current system or be enabled for future use.
Know your merchant account risk
If you have a certain type of business or follow certain accounting practices, you may be required to keep specific types of data and will need to factor this into your decision making.
Glowaty and Thiry clarify, “If you fall in any of the following, you are seen as risky and need to budget a little extra time to find the best cost structure for your business: Auctions, Tours, Lodging, Gaming, Events/Ticketing, Telemarketing, Electronics, and Virtual Currency. If you use any of the following billing methods, you will also be seen as risky: Annual Billing, Retainers/Account Credit, and Aggregation. Merchants who check any of these boxes may be required to collect additional data elements for online transactions and certain payment providers are better at handling this.”
Consider online first.
If you’re planning to sell products or services online (and most businesses are these days), you might want to consider that first and not as an afterthought.
As the owner of MantyWeb, a web development firm, Jill Manty believes, “Small business owners MUST be aware of how their choice of processor may affect their ability to sell online. In an ideal world, if I knew a small business owner was going to want to sell online, I would have them set up that first. Many business owners find that they are limited in their shopping cart because of their gateway, which is limited because of their processor.
Manty stresses the importance of knowing what the end goal is, saying, “Small business owners should decide all the different ways that they might want to make sales and make sure they’re choosing a processor with the technology to support all of those strategies.”
Choosing the right payment processor is a critical business decision and one that will affect your business for years to come. It’s important to take your time and make the best decision you can.