Before You Swipe: What to Look for in a Payment Processor


There are many payment processors that small business owners can choose from to accept credit card payments from customers, but not all offer the same benefits when it comes to ease of use, service, security or cost efficiency.

Here are a few important aspects to consider before you select a payment processor.

Ease of Use

Payment processors are inherently designed to handle specific types of business processing functions. Some mobile payment processors, for example, may be a perfect fit for a small business that wants to avoid purchasing fixed point-of-sale systems. Many mobile payment processors also allow merchants to use their established account to accept secure credit card payments on the web, with provided code that’s easily copied and pasted into the back end of the business’s website.

By contrast, some other payment processors are specifically designed to accommodate a fixed point-of-sale configuration, which may be necessary for businesses to accommodate high-volume transactions. The kind of payment processor that will best fit your business depends on your unique business model and the types and volume of transactions you expect the payment processor to support. Take some time to evaluate your business needs now, along with those you expect in the future as you grow, before searching for a payment processor.

Related Article: Ways to Pay: Credit Card Processing Tools All Small Businesses Should Use

Security

Your business is never too small to fall victim to a security breach. Vulnerabilities in security can be extremely costly, particularly if they lead to identity theft of sensitive financial information. In fact, security firm Kaspersky Lab reports that 75 percent of small business security incidents cost the business at least $8,000.

One of the biggest challenges associated with payment security is keeping pace with the latest tactics data thieves use to intercept sensitive data. While a tough task for a business of any size to manage, this can be an impossible feat for a small business to manage independently. When you choose a payment processor that applies the latest “PCI-compliant” standards before, during and after payment processing, including encrypting customer data before sending it over payment networks for payment authorization, you minimize your business’s exposure to risk.

Cost Efficiency

Research from consulting firm The Hackett Group reveals that while businesses spend as much as $2.2 million a year in credit card processing fees for every $1 billion in credit card revenue, 60 to 85 percent of those costs could be avoided if businesses were more aware of their payment processing options. 

Payment processors vary in how much they charge for services. Some impose a flat fee for a given number of payment transactions processed each month. Some charge a fee for each transaction, and others may require that you commit to a service contract. The pricing option that works for your business is unique to it, but consider the kinds of transactions you’ll process and how the payment processor’s pricing coincides with them. 

Related Article: Seeing Green: 7 Payment Processing Solutions for Small Businesses

The kinds of transactions you process most frequently can impact how much a payment processor costs your business to use, too. Some payment processors may charge additional fees for card-not-present transactions, which can present a greater risk of fraud. Other payment processors may assess fees for card transactions that are swiped or inserted into an EMV (Europay, MasterCard, Visa) chip card terminal, compared to card numbers that are keyed into the payment processor’s app or point-of-sale interface.

Likewise, consider what a payment processor charges for the device(s) you’ll use to process payments. Some mobile payment providers offer courtesy dongles (which plug into the headphone jack of a mobile device) free of charge, and EMV chip card devices for a small fee. If you intend to use a fixed point-of-sale system to process customer payments, confirm that the device you’ll use integrates easily with your payment processor’s system.

Service

The ability to reach your payment processor is critical to your customer service and sales potential especially if your business sells outside of typical business hours, or doesn’t have the help of a full-time IT professional to quickly resolve issues, outages or technical difficulties. Confirm that the payment processors you consider offer real-time access to live technical support representatives in all the time zones your business may need help. 

Payment Schedules

Cash flow is a critical part of your business’s financial health, but payment processors have different schedules and timelines for when they verify transactions and make the cash you’re owed from approved credit card sales available for withdrawal. Consider your business’s current banking habits, and how a payment processor’s policies regarding payment schedules could impact it. While some payment processors transfer cash from credit card sales electronically to your business bank account within 72 hours, others may have longer processing times.

Related Article: 8 Mistakes Freelancers Make When Setting Up Payment Processing

Small businesses are fortunate to have many viable choices when it comes to which payment processor they rely on to accept credit card payments, but different providers offer varying fees, features and benefits. 

Identify your business needs regarding payment processing and how you foresee using such services before beginning your search to ensure you choose a processor that can support the business you have now, and the one you intend to build for the future.

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