It was the perfect storm – advances in technology, an exponentially growing social media (going viral and breaking the internet becoming buzzwords) and easier access to VC funding – gave rise to an entrepreneurial culture in which startups started to boom. The startups had a different business model, they were not working out the P&L projections because that is old school. They were looking for acceptance, number of users or subscribers and really focused on views, clicks and downloads.
This led to a strategy called “growth hacking” which basically meant that with limited resources, how could these startups gain exponentially in achieving their goals, which could, by the way also include revenue goals. As it turns out, choosing the right payment processor is a top growth hack for startups.
Focus on your core competencies, leave payment processing to the experts
In an economy where web and mobile have become primary channels of growth, it is important that the startups focus on growing the business and leave the payment processing to the experts, and this could be their best growth hack because a great payments processing partner means you are ready to scale your business. So, what does that mean it terms of looking for a great payments processor. Here are some things to consider as you choose a strategic partner for your payments processing needs.
Understanding the domain
Is your payments processor an advisor and consultant and has a good understanding of the payments domain? Each business has its unique needs and it is important that the processor adapts to these requirements and focuses on providing a solution that is customized to your needs. For example, a startup focused on providing free apps that converts to monthly billing at some point in time has different payments processing needs from an e-commerce site that sells jewelry. Businesses with complex billing models and potentially little or no credit history can benefit from the help of experts who understand payment processing for startups and who can set up a merchant account that will be stable and reliable.
Cost of payments processing
Does the payments processor provide a model that charges you based on your scale and transactions? So, when you are smaller and there may be constraints on funding, are they able to provide affordable options? Will they be able to keep the costs of payments processing affordable as you grow into new regions and countries? Working with a specialized payment processor who understands the needs of startups can save time and money and avoid “bait and switch” situations that end up costing precious resources in the long-term.
Type of transactions
Is the payments processor able to support different types of transactions like the major credit cards, debit cards and ACH payments with quick, secure account verification? Are they able to support alternative payments with no volume caps or surprises? Finding a processor that can accommodate these needs is the best growth hack for startups because you can’t grow if you don’t have access to the right payment processing tools and solutions.
Security and fraud protection
Does the solution that is being provided have an effective fraud protection mechanism? As the number of electronic transactions grow, you need to be able to provide a secure environment for your customers. There could be multiple ways of achieving this. For example, having additional passwords to confirm the customer’s identity, verifying the billing address, etc. If your business falls in a high-risk category, then this factor becomes even more important. Payment processors that are well-versed in the needs of startups and high risk merchants can help navigate the murky waters of chargebacks and help you get a handle on fraud before it spirals out of control.
Multi-currency and multi-location support
In a web economy where customer could be from any country and region, is your payments processor equipped to handle multiple currencies and international transactions in a cost-effective manner. Similarly, if the merchant accounts need to be established in a different country, is your payments partner capable of handling that.
Customer service and responsiveness
Does your payment processor view you as another account number or is there a relationship model which is based on engagement? It is important that your processor is closely monitoring your growth and in turn your processing needs and in that they will be demonstrating whether they are truly strategic partners or just another client-vendor relationship.
In a new age economy, which is increasingly being driven by e-commerce and the growth spurt of smart phones, it becomes important to choose a payments processor that plays the role of a strategic partner – a partner that works with your needs and growth demands. It’s a top growth hack for startups as you are able to differentiate from the competition in terms of pricing as well as the type of transactions you can support.