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The Small Business Owner’s Guide to Choosing a Payment Processing Company

Small business owners have had unique needs and have faced unique challenges since the beginning of time. What used to be bartering goods by the bank of the river has transformed into modern-day online payments. Small business owners in every industry need a way to balance the cost of doing business online with the ease, service, support, and security offered by payment processing companies.

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Small business owners have had unique needs and have faced unique challenges since the beginning of time. What used to be bartering goods by the bank of the river has transformed into modern-day online payments. Small business owners in every industry need a way to balance the cost of doing business online with the ease, service, support, and security offered by payment processing companies.

Online payment processing is a complex ecosystem; trying to master it and make educated decisions often leaves many small business owners frustrated and exasperated. Like many of the worries that come with running a business, understanding the basics of payment processing frees you up to do what you do best: succeed at your core business.

What you need

To accept online payments, you need to integrate with a payment service provider (PSP) that offers payment processing services. The PSP is responsible for managing your online payment activity, including approving or declining transactions, fraud and risk services, providing multiple payment options, and more. The PSP also opens a merchant account in an acquiring bank (or several acquirers, if needed) for you and is responsible for transferring data and funds between the buyer’s bank and yours.

Whether you are in the garment industry, the electronics business, or need a payment processor for a travel business, the first choice you need to make is which PSP to choose.

What to consider

When selecting an online payment processing solution, there are four factors that small businesses should consider:

1. Convenience

Carefully consider your needs when looking for an online payment processor that can serve them. Make sure the processor you select accepts Visa, MasterCard, American Express, as well as debit and prepaid cards and PayPal.

Understand how the processing system will be integrated onto your site and make sure your platform and shopping cart are supported. If a hosted payment page is used, make sure that it can be customized with your own look and feel.

Consider contacting processors’ customers or reading published reviews to understand the pros and cons of each provider.

Weigh the speed of processing and the availability of multiple gateways, as well as technical requirements like APIs and site testing options.

If you sell internationally, consider your global customers’ needs and preferences, like processing in multiple currencies and local debit and prepaid cards. Always test the process from a customer’s perspective. The payment process should be smooth, easy, and seamless.

2. Safety

Make sure you select a PSP that boasts the highest safety and security standards. Look for compliance with the Payment Card Industry’s Data Security Standard (PCI DSS), VeriSign SSL certificates, AVS, and CVV2 verification. You should inquire about the processor’s risk management offering, to find out how safe your business will be from fraudulent transactions and chargebacks if you work with them.

3. Support

Plan for the unpredictable. Choose a provider that offers 24/7 support because your online business is a 24/7 operation.

4. Cost

Providers might structure their costs differently from one another, and it can sometimes be hard to compare. Consider setup fees and monthly fees as well as transaction fees like authorization fees, address verification (AVS) fees, and gateway fees.

Make sure to also consider irregular fees like bounced payment fees, chargeback fees, or cancellation fees for terminating a contract early. Also, some processors have different rates for “qualified” and “non-qualified” transactions and for international transactions.

Choosing the right Online Payment Processor

The rule of thumb is this: small businesses should find a PSP that works well with their kind of business. If you sell internationally, make sure the PSP can handle international payments. If you use a shopping cart, make sure it is supported. If your customers prefer to pay with PayPal, choose a PSP that supports that, too.

Always make sure that security is a priority and do not bind yourself to prolonged contracts.

This chart is an excellent side-by-side comparison of some of the leading providers.

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