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Selecting a Payment Processor

jjensen | 13 March, 2006 12:02

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Choosing a payment processor can be a difficult choice as there are numerous factors to consider, such as, pricing, customer service, knowledge of your industry, and integration.

  1. Research: Research your choices before deciding on a processor. Rates, services, and features of processors can greatly vary.
  2. References: Always check references or get a referral of any company you contract to process your payments, as you will be required to give the company access to your checking account. Therefore, it’s important to be sure you find a company you can trust!
  3. Reports: Review the reports that will be provided to you. Usually this is something that is not thought about at the start of a merchant relationship because the focus is on rates and terms. The reality is you have to live with these reports every day. Although your fulfillment house can manage much of this on your behalf, you will still need to be able to balance your bank accounts and understand the status of any transactions or chargebacks. Reports also help you to understand why you are losing sales, such as, why are you getting so many declines. Surveying your report codes and analyzing them are a great source of data.
  4. Customer Service: Find out about the customer service department. No one ever plans on having problems with their account. The fact is, however, that every account will encounter some issue that requires assistance at one point or another. Whether it’s resolving a chargeback or dispute, increasing your limits, or helping you reduce chargebacks. A good payment processor will be able to assist you in all of these areas without billing you for every minute they are working on one of these issues.
  5. Know Your Limits: Research the processing cap limits of your account. If you are in Direct Response, be sure to find a company that is familiar with this industry. Many processors who are unfamiliar with DR will freeze your funds once you start processing beyond the limits of the account because it moves into a possible higher risk category. This can potentially put a company at risk if a freeze like this is unanticipated.
  6. Are Big Banks Better: Don't assume a big bank name is any better, more ethical, has lower costs, or is more efficient. Most big banks outsource all of these services and leave the merchant paying high fees. In addition, getting changes or data can be tough if they are not customer service orientated.
  7. Cancellation Penalties: Be careful of signing a contract too hastily or for a full year. Read the application carefully because many contracts carry a cancellation clause or penalty. There is nothing worse than being stuck with a company that’s not responsive to your needs because they know you won’t take a financial hit to cancel their contract.

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