One of the more momentous milestones in the launch or expansion of an online enterprise is determining how payments will be processed. You know you've come a long way when it's finally time to start accepting payments from customers, or when your ecommerce business has grown to the point where you need to scale to a larger payment platform.
Understandably, this process is not to be taken lightly or considered hastily, as ill-advised decisions at this stage typically require a lot of time and money to correct. For the sake of this article, we are assuming the reader has already weighed the pros and cons specific to their business with regard to processing payments through a merchant aggregator such as PayPal, Square and Stripe as opposed to through a traditional merchant account services provider, and opted for the latter. Below, then, is our suggested five-step process to selecting the right merchant account provider for your business.
1. Research Pricing and Avoid Hidden Costs How much you decide to pay a provider for your merchant-account services will depend on several factors including the type and volume of business you do, but a general rule is that if a vendor is unwilling or unable to provide you with a transparent rate structure in your first meeting, the likely result will be unwanted (and avoidable) hidden fees such as monthly minimum and early termination fees. An example of a transparent pricing model is called "interchange-plus-pricing," which means the processor is sharing with you its own fees that will occur on top of the mandatory interchange and assessment fees paid to the banks and credit card companies.
Multi-tiered pricing models, on the other hand, tend to be less transparent and can lend themselves more to hidden fees. Bundled pricing models are another option, although they can run a little higher than interchange-plus-pricing packages. The tradeoff is often a good one for lower-volume or newer businesses that are willing to put a little higher premium on a simpler, hassle-free solution.
2. Predetermine Setup & Turnaround Times Setting up your company's new payment-processing platform may seem like a long and complicated process to the uninitiated merchant, but it needn't be. Certain businesses are naturally better suited to handling some of the more technical issues in-house, but generally speaking, any reputable merchant account services provider should be able to get you from ground zero to up and running in a relatively short period of time. Request firm setup schedules and delivery dates from all of your prospects and compare their answers and, of course, steer clear of vendors who make promises they cannot keep. Also be sure that setup and delivery dates are addressed in any written agreement.
As for turnaround time, this refers to the amount of time between when a sale is recorded and the funds are deposited into your enterprise's account. Make this a point of comparison among your potential partners as well, but turnaround times generally should not exceed 72 hours unless there are special circumstances surrounding the transactions.
3. Understand Your Risk Level for Fraud Fraud, unfortunately, is something every online merchant has to deal with at some point or other. And no matter how hard we in the ecommerce industry continue to work to eradicate it, the criminals are working every bit as hard to sustain it. While fraudulent payments and chargebacks are inevitable for any digital business, it is important to know before entering any agreement how your account services provider will handle these occurrences. Be sure to seek a vendor that will act as a true partner and work with you to rectify the situation, rather than one whose reaction might be to impose penalties, suspend or even terminate your account unjustly.
This is particularly important for businesses with frequent exposure to high-risk transactions, such as those in the online gaming, gambling, dating and adult entertainment industries. A common misperception is that merchants working in these spaces have few options with regard to account services providers, but the fact is that there are several highly regarded payments processors that specialize in high-risk merchant accounts.
4. Place a Premium on Customer Support While everything on this list is as important as the next, it's not unusual that something so important as customer service gets overlooked until there's a real need for it - which, for an ecommerce merchant, is usually after the damage is done. Particularly in the fast-paced, real-time world of payments, it is essential that you have unlimited access to courteous and respectful professionals who can troubleshoot your issue to avoid or at the very least minimize any downtime that could result in lost sales.
In today's age of live chat, FAQ sections and user forums, having the ability to address concerns quickly and painlessly should be near the top of your wish list when researching potential merchant account providers. You will undoubtedly find multiple prospects that claim to offer superior customer service, in which case online user reviews should provide sufficient help in making your decision.
5. Identify & Address Any Customized Needs for Your Business The importance of this step cannot be understated. Many merchants view their businesses as unique extensions of their own visions and ideologies, yet when it comes time to implementing a payments platform they treat the process like it's a one-size-fits-all. Nothing could be farther from the truth, and there are plenty of exceptional account providers in the space that are equipped to handle even the most specialized businesses with very specific needs.
There are personalized tools available for any merchant's needs, whether they are designed for online, mobile, wireless, point-of-sale or another method of processing payments. As a merchant, it's your job to identify those needs and establish a set of goals you would like to achieve through this new partnership with an account provider. The right one for your business is out there, it's just a matter of making an informed decision.
About the Author Jared Ronski is co-founder of
MerchACT and works with merchants globally to ensure they are paired with the right merchant account for their specific business needs. He has worked closely with higher risk business models and has provided companies of all sizes with payment processing solutions.