Choosing the best credit card payment processor

Whenever I have that first briefing meeting with a client to set up their ecommerce website, one of the questions that crops up as we talk through the process is “Which is the best card payment processor to use”. The payment processor is the provider that takes payment for you and puts it in to your bank account.

There is obviously no definite answer as to who is the best processor to use because it depends on your business and what suits your needs best. The first thought of most clients is, which is the cheapest payment processor. That is obviously a factor and costs are changing all the time so you do need to research that when looking in to a good partner but there are some other really important issues to consider aside from cost which could make or break your business and which people don’t think about. I thought it worth listing out all the things I would look for when choosing a payment processor:

1) Ease of usability for your customers
If this is bad it will affect your sales, people will drop out of the payment process and the sale will be lost, something which is completely counter-productive to what you’re trying to achieve in the first place!

2) Setup fees, approval time and setup time
Some payment processors will take payment from you as part of your application and then if you are not accepted they will not refund that money. Watch out for that.

3) Rate of acceptability
ie. how many of the applications which they receive do they actually accept – normally they’ll tell you this if you ask. It will help you make a decision on whether it’s worth it or not to apply if, as mentioned above, they do take non-refundable upfront application fees.

4) Cost per transaction
This is not just the fees charged for processing credit cards, which are normally a percentage of the total transaction, but also the usually fixed cost charged per debit card transaction. Ask them if these costs will reduce as you do more business?

5) Do you have to meet a minimum spend per month?
If you do and you don’t make that spend each month, how much will they charge you as a penalty?

6) The length of time they hold on to your money before depositing it in your bank account
Accessibility to your money is one that most people forget. The assumption is that a payment processor will take payment and then deposit it straight in to your account. This is not always the case and I’ve known a situation where a payment processor held on to money for 6 weeks!!! This can cripple your business if you rely on steady cash flow and don’t have a large cash buffer to cover that lead time between taking payment and receiving the payment. I find it unbelievable that some payment processors think that this is reasonable when providing a service to support ecommerce businesses. Watch out for it and give those companies a wide berth!!

7) Fraud detection toolsOnline fraud is sadly on the up and if you make a sale and take payment from a customer who is using a stolen / fraudulent credit card then when this is discovered, the payment processor will reverse the transaction so that the individual whose card was stolen (or the bank who had been duped) is not out of pocket and fully compensated, but there will be no compensation for you as the merchant. These are called chargebacks and the chargeback is to you. You lose out whilst the thief is well away with your goods.

8) Ease of setup for your developer and suitability for your website and hosting infrastructure I have known a payment processor whereby integration with them required you to have a dedicated server because they insisted on you having a specific server extension installed which was not normally found on a shared hosting system. Hosts wouldn’t install it as it would affect everyone else on that server so the only solution was to have a dedicated server. That’s not only costly but also a big upheaval if you’re all settled on your current hosting system.

9) Support
How quickly do they come back to you when there’s a problem (check reviews for this as customer support is one of the first things people will complain about if it’s not good). Do they have a support helpline or is it an online ticket system. Support and good integration documentation is particularly important for your developer when setting the integration up for you so please always bear that in mind to help them.

10) Are there any benefits for using a particular payment processor because of who you already bank with
The high street banks and their online payment processing systems were often considered the most expensive but this is now not always the case, especially if you already bank with them and as a result they’ll do you a good deal.

This is not an exhaustive list of items to check but it’s the ones which I would always look for when choosing a payment processor to work with. The main thing is to do your research, read reviews and recommendations wherever possible but keep an open mind too regarding the balance of good reviews versus bad reviews as no company can be 100% perfect. There is no perfect system, you need to choose the one that best suits you, your team, your cashflow and your website.

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