5 questions to ask when choosing a payment solution
Choosing a payment processor can seem like a daunting experience to merchants. With so many options, it can be hard to know where to start, and how to discern who is the right provider for you. Choosing the right payment processor can be a core driver of success within your business - but it isn’t as simple as finding a partner that enables you to accept payments from customers. You also need to consider your customer’s experience, expectations, logistics and security to name but a few. In this article we have mapped out five questions to ask yourself when selecting a payment processor.
But what is a payment processor?
Before we dive in, let’s establish what a payment processor is. A payment processor is a business that manages the card transaction process - acting as a mediator between the merchant and the bank or financial institution involved. The payment processor will facilitate the transfer of funds, communicating information from the customers card to the merchants bank, and authorising or declining transactions depending on the amount of funds available.
1. Research their risk appetite
First, you need to make sure that you select a partner that has the risk appetite to work with businesses operating in your vertical. Some processors are restricted from operating within certain industries such as gaming, adult content or travel. It is worth investing some time in reviewing this, or you could risk jumping through compliance hoops just to have your application rejected anyway.
Thankfully, most businesses will have a list of industries they are unable to work within readily available - and if not, will be happy to provide you with one. And if you’re still unsure, reach out to the payment processor you’re considering to talk to an advisor or establish if pre-approval is possible.
2. Will they support my business model?
Once you’ve established that the processor is comfortable operating within your vertical, you need to assess if they can support your business model. Remember, just because they may service your vertical, doesn’t mean they can support the set up that you need. For instance, can they support automation at scale to enable the onboarding of thousands of sellers or host merchants? Can they facilitate multi-party payouts as e-commerce transitions from a many-to-one solution, to a more complex marketplace model that requires multi-party and split payments?
Finding a provider with the right technology and infrastructure to support what you and your business’ needs is fundamental to success. Without the right provider, you will likely face more challenges trying to establish work around solutions and struggle to remain competitive.
3. Global reach
As we explored in our previous blog, ‘Local Payment Methods are key to driving international expansion’, e-commerce’s position within the global retail framework is ever growing. In 2021, over 2.14 billion people worldwide are expected to buy goods and services online, up from 1.66 billion global digital buyers in 2016. And with the total market size expected to approach $5 trillion this year, it’s clear that for many businesses, global expansion is the inevitable next step. Your chosen payment processor should be able to support you with this, and enable you to leverage their networks in the regions you are looking to expand into. Be sure to check the currencies and regions your processor can support to make sure they are aligned with your current and future plans.
4. Is it flexible?
While it is important that the payments processor you select can scale with you as you grow - it is equally important that they can provide a flexible solution. One that can support the nuances of your model, whether that be supporting a particular fund flow, risk model or geographic reach. It’s important to ensure that your chosen provider won’t restrict your innovation due to technological limitations.
5. Battle tested
E-commerce, as in any industry, has highs and lows. The lows can put great pressure on your business, as well as your payments provider. So it's important to pick a provider that has not only operated at scale, but has experience of handling major challenges, such as unparalleled refund and chargeback pressure on Travel during the pandemic. Businesses that have demonstrated the ability to not only ride out unprecedented events, but have taken action to provide additional support to merchants at a time when they need it, may help alleviate some of the pressure that comes with navigating uncertainty, leaving you to focus on what matters most to you and your business.
Ultimately, it’s vital that you thoroughly research the payment processor options available. The right partner will enable you to do so much more than facilitate the transfer of funds. They will enable you to optimise your operations, reduce risk and expand globally - all key pillars of success for any business.
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