After months of brainstorming, planning and working, your online business is finally ready to sell its product, or services. But before you take on the world, there is a question you need to answer: How will you accept payments from your customers? As an enterprise, you should receive payments easily to earn revenue.
What you need to know about online payments
When it comes to accepting online payments, there are three entities involved: the merchant account, the payment gateway and the payment processor. The merchant account is a type of bank account that receives the revenue you’ve earned from payments made by credit or debit cards online. It stores the money you’ve accepted online, and transfers it to your regular bank account on either a daily or a weekly basis.
Meanwhile, a payment gateway communicates with Visa or MasterCard, and with the customer’s issuing bank to check if there are sufficient funds in the customer’s account to make a transaction. If there are sufficient funds, the transaction goes through; otherwise, it is denied. Think of the payment gateway as a virtual version of a point-of-sale (POS) terminal that you usually see in brick-and-mortar stores.
A payment processor facilitates the communication between the payment gateway and the acquiring and issuing banks. It is responsible for crediting the funds from the customer’s issuing bank to your bank account. Payment processors also manage risk, as well as the personal and financial information of customers.
These three used to be provided by different vendors, but some companies have begun to offer full-stack, payment processing services, such as Paymentwall. These service providers have partnered with banks and other financial institutions to offer a complete payment solution. For newly-established businesses, these companies make it easier for them to begin accepting payments online.
How to pick the best payment processor
Nowadays, there are a lot of full-stack, payment processors out there. Since there are many fish in the sea, we would like to help you pick out the best with these tips:
Security comes first
You should consider security as your top priority in selecting a payment processor since you are dealing with your customers’ hard-earned money. The payment processor should be compliant with the Payment Card Industry Data Security Standard (PCI DSS). This requires entities that accept card payments to employ several security measures to protect cardholder data, such as firewall configuration, encryption and restricted access to card information. Additionally, your payment processor should be able to block fraudulent transactions to reduce risk for your business.
Consider your coverage
Another thing you should take into account when selecting a payment processor is the scope of your business itself. What is your target market? Where do your customers come from? The scope of your business should include the following:
Countries – Which countries do your business serve? Do you want to cater to the U.S. only, or Saudi Arabia or countries in Asia? The culture and practices regarding online payments vary in each country, and you need to consider these in selecting a payment processor.
Currencies – When you do business in different countries, you would accept payments in various currencies. You should ensure that the payment processor you select would be able to accept payments in different currencies.
Payment Methods – The use of credit cards and other alternative payment methods vary in each country. When choosing a payment processor, you should review the credit card brands that are accepted, as well as the supported alternative payment methods.
Define your product type
The product or the service that you provide should also be one of the criteria when it comes to selecting a payment processor. Do you offer goods and services on a subscription basis, or for one-time payments only? If you are providing subscriptions, the payment processor you ought to choose should be able to support recurring billing; which automatically sends an invoice to your clients on a weekly, monthly or a yearly basis.
Look for a reasonable pricing
Using a payment processing service for your business can come with fees. Some payment processors have signup fees, as well as monthly fees for the use of their services. Others may not charge fees for their services, but may operate on revenue sharing. Assess the pricing structure of payment processors before choosing one to make sure it fits well with your budget for the operational expenses of your business.
Ensure 24/7 customer support
Glitches and other problems can occur anytime of the day when you’re accepting payments online. These concerns may come from you or from your customer, hence it is important to choose a payment processor that provides 24/7 support. Your payment processor should be available around-the-clock to ensure fast resolution of issues, improved customer experience and efficient operation of your online business.
Study the checkout process
Some payment processors place a payment form directly on your website, while others divert users to their own website to accept the payment there. You need to take note of the checkout process of different payment providers as it can affect user experience, and your site’s conversion rates. An onsite checkout page is more likely to boost sales for your business because it provides an easier payment process for your customers. It is also more likely to improve customer experience, which can make your website a better option for your customers than those in the marketplace.
Learn the timeframe of settlement
Though your business is online, you still need to be able to manage your cash flow properly. Hence, you should learn how long does it take for the processor to transmit funds you have earned to your own bank account. Some transfer funds on a monthly basis, while others can do it daily. Review the timeframe of payment processors when it comes to settlement, and assess which one suits the needs of your business. You should know when will you be able to receive the money to compute your revenue against your expenses and see if you were able to gain a profit.
When choosing a payment processor, it’s best to know your options to ensure that your online business will become successful. These processors accept payments from your customers on your behalf, and they can make or break your business – depending on their performance. Those that introduce a seamless, payment process can attract more customers to your website, and expand your market. Payment processors that allow you to accept different currencies can help take your business global. By being careful in selecting a payment processor, you are helping to secure the future of your online business.
Want to learn more about growing your online business? Check out our blog for tips and more.