Online merchants and professionals in the payments industry recognize veracity in the platitude, “The more things change the more they stay the same” — especially when applied to the pace of change.
Changes wrought by the FinTech (or fintech) industry bombard us at a dazzling rate. “FinTech” (the financial technology industry) drives banks, investment companies, and payments processors. All rely on financial software systems and tools. As do ecommerce merchants.
But it’s the rapid change wrought by fintech developments in the 21st century that we’re concerned with. Because that’s affecting payments processing, which both affects and sometimes confuses high risk online merchants.
Which new technologies should interest merchants, and which don’t you need to worry with? After all, affordable payment solutions make the list of things you care about, not just any fintech development.
For example, the EMV standard adopted worldwide forced bricks-and-mortar businesses to buy new POS equipment for chip-enabled payment cards. Without much impact on ecommerce merchants.
Yet FinTech also delivers technologies that are disrupting traditional financial services — and benefitting ecommerce businesses — like mobile payments, digital wallets, and other innovations.
Bob Dylan fans of all ages agree: “The Times They Are A-Changin’”. As Bob said in his iconic song, “If your time to you is worth savin’ then you better start swimmin’ or you’ll sink like a stone…”
So we’ve pulled together resources to help you think through your payments needs. Perhaps they’ll help you swim in the turbulent waters of fintech change — because no one wants you to sink.
What Payments Technologies Do You Really Need?
Of course, the answer depends on your business model and objectives. Assuming your business falls into the high-risk ecommerce merchant category limits the scope to explore. Let’s also assume you’re looking for affordable payment solutions as a startup, or to help you expand.
But don’t be fooled by credit card processing plans that offer “discount rates,” or “no surcharges”. Tempting, but the cheapest plan doesn’t always set you up for success now and in the future. (Check out the sample transactions in that link.)
And you’ll want to avoid the many scams perpetrated by dishonest processors. If something sounds too good to be true, it usually is in the payments arena. Instead, choose a reliable and honest merchant account provider.
The payment option you select should include a robust, secure, PCI-DSS Level 1 compliant online gateway. While you’re at it, why not dream big and ensure the gateway you choose will serve you for processing domestic and international sales as your business grows?
No matter which of the affordable payment solutions you choose, there’s more to think about than simply accepting payments and paying a fee. Fraud prevention and data security must be front-and-center today, in your business processes and payments technologies.
Do the vendors you’re considering include fraud prevention and data protection services like encryption in their offerings? Is there a guarantee of any sort, or an extra fee? Don’t hesitate to scrutinize the details, and never sign anything until your questions are answered.
And don’t overlook the importance of customer service as you consider affordable payment solutions. Not all payment providers are created equal when it comes to servicing their accounts. Will service personnel be reachable on the phone when it matters for your business?
What Costs Should You Expect to Pay?
Payment processing rate structures may seem opaque to merchants. But you can clear the fog and find your way to truly affordable payment solutions.
For example, you’ve heard “interchange” from your banker and from merchant account salesmen. Take a moment to understand the basics and see how rates vary among different types of transactions.
Interchange rates set baseline costs for all payment card transactions. They vary by type of transaction, with card-not-present (CNP) online transactions attracting a higher rate. So do mail order/phone order (MOTO) payments, and certain types of payment cards.
If your business model supports doing business with shoppers in multiple geographic regions around the world, fees will vary.
So a processor who promises “one low rate” for all transactions might deserve extra scrutiny. Because all processors deal with interchange one way or another — some openly, and some with a smokescreen labeled as a “bundled rate.”
In addition to interchange rates, some vendors may charge processing fees. Whether a flat amount per transaction, or a percentage of the sale plus a flat amount, these fees add up quickly. And they may be difficult to understand — much less control — over time.
What other fees might hit your account? One-time fees? Monthly recurring fees? What about fees associated with exiting or modifying a processing agreement? Fees for chargebacks or disputes?
All of which leads to the conclusion that what looks like a good deal right now, often isn’t after a few months of operation.
Do your homework, and don’t hesitate to grill the merchant account salesmen who want your business. Read the fine print, and insist on answers to all of your questions. Don’t sign anything until completely satisfied with an agreement. Your business success may depend on it.
Your quest to find affordable payment solutions may seem both complex and confusing. How DO you know what technological solutions you really need, and which you don’t — when all you care about is getting your business started and/or nurturing its growth?
Enter the payments processor who’s also a strategic partner for your business. Any good partner starts with understanding your business needs and objectives. Only then will he suggest specific payments processing solutions to deliver on both.
Do you need help driving more online and mobile-based sales? He’ll help you exploit the right digital channels while securing your business and customers’ data through PCI-DSS Level 1 compliant technologies.
Interested in expanding your international business footprint? The right processing partner will provide multi-currency and multi-region support too. He’ll be expert in domestic and international payments industry best practices and will help you navigate both.
And he’ll work with you to enable complete fraud prevention, chargeback management and reporting, along with admin tools for enhanced business protection — so you don’t sink, but thrive.
Because he knows that ecommerce business success requires prioritizing much more than affordable payment solutions. Particularly in the fintech driven payments space we live in today where “The times, they are a-changin’.”