Choosing a provider

10 things to consider when adding a new provider

Caroline Bagby Education 0 Comments

There are over 200 PCI certified payment providers in the market, making deciding on which one to use incredibly hard. Adding providers comes with costs and the return from the provider has to be well-worth the investment. The field is difficult to navigate, especially when sales coaxing is thrown at you, but here are 10 important things to keep front of mind when vetting a new provider.

1. Specialization of the provider

Many providers have specific lines of business that they specialize in. It’s important that a processor know your business in order to optimally meet your needs and assist with strategic decisions involving your payment strategy and their capabilities. If you’re wary of their capacity to fulfill what you need, ask to speak with one or some of the provider’s existing customers in the same sector as you for testimonials.

2. Cost

Adding a payment provider typically comes with three waves of costs.

  1. The first is the startup cost, which involves setting up your merchant account and getting the new payment system configured with your pre-existing technology. Some providers waive the startup cost and charge a monthly fee instead, while others, like PayPal, have no startup costs.
  2. The second cost comes with the reserve or hold back some providers require. Think of this as a security deposit when renting an apartment. When renting an apartment, you put the money down to cover potential damages done to the apartment, but with payments, the money is used by a processor to cover chargeback risk. Depending on merchant risk, a provider will ask for a certain amount of money up front or they will deduct a percentage of every sale. If they collect your money up front, they usually hold that money until 6 months after you stop processing with them before returning it. If they’re collecting a percentage of each transaction, they usually hold the money for 6 months from the point of sale and then return it.
  3. The third and everlasting way providers make money is through per-transaction fees. Depending on the provider, fees are collected monthly or daily and either by percentage, flat rate, or both. Some providers may tier fees based on minimum and maximum monthly or annual transaction counts or amounts so be sure to read their terms.

Fee descriptors and account charges can be incredibly vague. It’s completely acceptable for you to ask that fee breakdowns and line items for things like foreign exchange be included in your reports from your provider. Approach the provider with your terms and needs so you’re comfortable with the direction of your relationship.

Of course, there are also hidden costs associated with taking on a new provider. It takes serious effort to learn a new reporting system, integrate new software and close out other accounts. While the costs might not be glaring, it’s your time and your team’s time being sucked up to focus on a smooth integration. Unless you’re a new business just beginning to accept payments, you’ll want to find out how easy it will be to integrate the new provider with your existing systems. Some of the items that fall on the checklist include your:

  • Shopping cart
  • Website
  • Order management system, or any system where you store order information
  • Accounting system

Keep in mind that a great reputation and track record may be well worth the cost of a more expensive provider. When you cut costs simply to take a cheaper route, you may risk other areas of your payment operations, like authorization rates.

3. Customer support

Customer support is paramount, especially when you’re running a global payment operation. The best customer support gives you a dedicated contact who’s knowledgeable about your business that you can rely on for quick responses and sound guidance. If the processor has a support center, but no dedicated personnel, ask if something can be arranged.

You should also figure out if the support provided is for logging minor issues, or for trustworthy guidance. The processor is the keeper of your information, so the more they’re willing to do for you in terms of helping you navigate your data, the easier your job can be.

Geography plays a role here as you’ll want support on your working hours. 24/7 support centers are great, but they don’t compare to one-on-one, dedicated specialists. If you’re setting up a relationship with several people on the support side, you’ll want to make sure your time differences are minimal so you can act quickly on pressing issues, should they arise.

Sometimes, in the long run, the benefits of a more expensive provider with stellar customer support far outweighs a cheaper provider with mediocre support.

4. Underwriting requirements

Before signing on with a provider, the provider will run assessments to determine your risk level. Ask what information will be needed from you to run their assessment and how long they expect the assessment to take.

5. Contract term

Like entering any B2B relationship, processors come with contract terms. Ask for their terms up front as some require a serious commitment. Many processors have 3 year contracts and some are month-to-month. Read up on the repercussions of leaving the processor before the contract period is through to make yourself aware of potential termination costs down the line.

6. Time to settle

Settlement windows vary from provider to provider. Some have a 24-48 hour window while others pick specific days. Consider your reconciliation preferences as well as the settlement times of any other providers you’re working with. The smaller the settlement window, the faster you’ll get your money.

7. PCI compliance / Security

Some merchants assume that if a provider is PCI compliant, the merchant is relieved of having to take risk and security measures. Providers are not responsible for your internal security systems, but they should offer to assist you in completing a Self-Assessment Questionnaire, or SAQ, which determines if you’re storing data in a protected manner. After verifying your compliance, providers can also be a helpful resource in guiding you toward increased protection.

If you work with third party vendors that require access to your provider data, you’ll want to check what information providers include in reports. Solid encryption processes should be in place for sensitive data, like customers’ names and card information. Ask if you can dictate what’s included in all reports to ensure their security measures meet your standards.

8. Currency and payment type acceptance

Processing a debit card transaction can be completely different from processing a credit card transaction. To provide flexibility and a seamless customer experience, make certain that the processor can handle both well – that’s a bare minimum. With the continuous rise of alternative payments, being able to process those transactions is an important feature of a good processor. If there are any forms of payments your company is considering taking in the near future, ask the processor about their plans to integrate that payment form.

For global merchants, a well-rounded and strong core processor is incredibly important. Check on all payment methods and currencies accepted by the potential provider to figure out where you’ll have to seek local acquirers.

9. Chargeback management

Chargebacks are something every merchant wants to avoid; however, facing the issue is easier with the help of a responsive processor. A chargeback happens when a customer refuses to accept responsibility for a transaction, and you can be notified of that via fax, physical mail, online notification or an automated system.

If chargebacks are something you deal with often, you’ll want a provider that has tools that handle chargebacks efficiently. Some processors can automatically re-present chargebacks based on reason code, making the lift on your end much smaller.

10. Reporting

Each processor handles reporting differently. Reports often come in expansive Excel sheets, leaving it up to you to dig through to reconcile payments and surface any potential problems in operations that week or month. However, some processors go or will go the extra mile and break things down for you. This is where good customer support comes in as well. Even if the processor doesn’t, on a mass level, break down reports, dedicated support teams can be incredibly instrumental in helping you make sense of the data.

Some of the things you may want to report on include:

  • Authorizations with thorough decline reasoning
  • Chargebacks with reason codes
  • Fee breakdowns
  • Cash flows
  • Details on transactions by specific currencies and payment methods

Ask the prospective provider if they have thorough reporting for any of the above. You likely won’t be able to cover all bases, but the ones that are important to you should be addressed.

Keeping these 10 pointers in mind when seeking a provider will help you navigate the proposals coming your way. Ultimately, you want an easy-to-use and effective system that boosts your business along the way.

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