The Right Tools and the Right Partners

If you want your online business to be successful, you need to choose the right tools for the job and the right partners for your situation. For example, one of the decisions you’re going to need to make early on is how you want to process payments. Unless you’re going to set up a fully-functional merchant account, that means a payment processor.

Payment processors are ideal when you’re first getting started. They give you the flexibility to accept credit card payments without jumping through the technical and financial hoops a merchant account requires. However, if you don’t choose the right payment processor, you’ll wind up with just as many technical hurdles and probably a higher cost, too.

Here are some of the most important things to consider when choosing a payment processor:

1. Start with security.

If you’re going to build a reliable online business over the long haul, you need a secure payment processor. Today’s web customers are security savvy. They’ve been bombarded for years with horror stories of online transactions gone wrong.

There are two areas in which your payment processor needs to address these security needs:

• PCI compliance. PCI compliance is the basic level of security standards required by the credit card companies. Some payment processors implement their own PCI compliance, while others use a trusted source to do so. Either way, make sure your payment processor provides that level of security.
• Fraud prevention. There’s another aspect to payment processing security you need to have. Fraud prevention methods – the two most common being Address Verification System (AVS) and CVV (Card Verification Value) – protect both you and the consumer. These are simply ways to make sure that the person using the card really is who they claim to be.

Poor security on the part of your payment processor means more unhappy customers and more charge-backs.

2. Find payment processors that are compatible with your existing system.

Payment processor choice almost always comes at a later stage of development than shopping cart choice. What this means is that you’re limited from the get-go to choosing a payment processor who offers compatible service with your shopping cart.

While payment processor support isn’t usually a consideration when choosing your shopping cart software, it probably should be. Your choice of payment processor directly affects your bottom line. While it shouldn’t be the sole determining factor in cart choice, it should be in the mix.

3. Look at all of the fees.

Different payment processors charge different fees. It’s easy to get caught up in the per-transaction fee, but you need to look at the big picture. A company with a low set-up fee might seem ideal, but after a couple thousand transactions you’re going to have paid way too much in transaction fees.

Try to build a reasonable sales model, and plug in all of the associated costs of each payment processor over the first six months you’re in business in order to get an accurate comparison.

4. Understand support for multiple cards and currencies.

If the vast majority of your website customers are going to be located in the U.S., you don’t need to worry too much about multi-currency support. On the other hand, if you’re promoting a global product or service, you don’t want currency to be a barrier to entry for your customers. Some payment processors are only able to accept U.S. payments, so find out ahead of time what restrictions exist.

The same holds true for different types of credit cards. If you’re dealing in a high-end product or service, you want to make sure that your processor can handle American Express and probably Discover, as well as MasterCard and Visa.

5. Identify special billing needs.

Depending on your business model, you might have some special billing needs. For example, you might be offering a subscription-based service, and so you’ll need to make sure that your payment processor supports Automated Recurring Billing (ARB).
Alternatively, you might want or need the ability to process customer transactions manually via a virtual terminal. This is useful, for example, if you take telephone orders.

6. Don’t get hung up on pay out details.

Sometimes, you’re anxious to get things up and running and get revenue flowing in. More than one online business has rushed into a contract with an online payment processor because they believed they’d get paid quicker.

Over the long haul, this shouldn’t be a concern. Don’t choose a payment processor just because they make weekly (as opposed to monthly) payouts. If your business is running that close to the edge in terms of cash flow, find other ways to keep things moving, such as increasing investment capital.

Your online business is only as strong as the tools you use. Choose a payment processor that creates a smooth, secure transaction for your customers, opens up your products or services to the largest possible market, and lets you maximize profits.

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Image Credit: Some rights reserved by 2Tales
Author’s Bio:
Sara Schoonover is Vice President of Ticket Kick , a California company that helps drivers get red light tickets and other traffic tickets dismissed by helping drivers through the trial by written declaration process.

Thank you, Sara!

Love learning this stuff!

Be irresistible!
–ME “Liz” Strauss
Work with Liz on your business!!