If you’re a business owner, it’s only natural to maximize your cash flow. One of the things you can do is figure out how your shoppers nowadays pay for their purchases most of the time. You’ll be surprised that most of them turn to online payments because it’s fast and easy. Not to mention that you don’t need to go to the actual store anymore just to pay for your stuff.
It’s a huge demographic so not giving your customers the option to pay online is a huge loss to your business. That said, if you want to accommodate this demographic, the most important thing you have to do is to pick an online payment processor. There is a list of all credit card processors in the market nowadays, but not all of them are created equally.
However, sellers often make one mistake by accepting the cheapest choice. While it’s a good decision economically, it can quickly become a huge loss for your business. But before we tackle the most common mistakes that sellers make when it comes to picking a payment processor, let’s first discuss what a payment processor is.
What is a Payment Processor?
A payment processor is a vendor used by the seller to take care of online and in-store credit card payments. It shuttles the customer’s card data to their payment networks like Visa, Mastercard, American Express, etc., and into your merchant account.
There are a lot of companies that offer this service, like Payment Depot, Square, etc. So how does it work?
First, the customer will give the merchant their card information. It can be done by inputting the card details online; if they are in the store, they can swipe it into a payment gateway. Then, the data will be sent to the card network like Visa or Mastercard for approval. And then, the card network will inform the payment processor if the request is approved.
After this, the merchant can then finish the transaction. Finally, the payment processor will signal the card network to send funds to the merchant’s bank after the transaction is complete. Now that we know how a payment processor works, there are several mistakes that you need to avoid when it comes to picking a payment processor. Here are some of them.
Not Watching Out for Hidden Fees
Of course, an attractive payment processor would be the one that has the lowest rate. The only problem is that it often specifies that this rate is only applicable on several factors like the type of credit card that your customer used or which process the transaction used, whether it’s through a payment gateway or online.
Most of the time, this low rate is only applicable through a payment gateway. That said, any transaction not done through this process is deemed non-qualified, which means that the rate won’t be applied, and it would be higher. Also, you have to take note that payment processors often charge special fees during certain actions like withdrawals, cancellations, batch processing, etc.
Picking a Processor That is Only Offering One or Two Options
When choosing a payment processor, sellers need to pick one where their customers can have a plethora of options to choose from when it comes to payment. Of course, these choices depend on the processor you picked. There are processors that include most payment options available in the market. However, as mentioned earlier, not all payment processors are created equal, and some of them only have a few options available.
That said, there are options that you have to take note of, like credit and debit cards. They are the most common form of payment online, so it should be necessary. Another option you should consider is payment. There are a lot of forms of electronic payments online, and they are increasing in popularity, so make sure your payment processor has this.
Lastly, digital wallets like PayPal and Due are also increasing in popularity nowadays, so make sure it is included in your payment processor.
Ignores Undervalued Support
Excellent transaction handling is one of the main things you should look for in a payment processor. That said, another factor that you should look for in a processor is its support. When picking a payment processor, a merchant should always know that their payment processor has great support programs for problems.
Let’s take PCI compliance, for example. PCI compliance is a set of rules and regulations on how a merchant should handle their customers’ credit card information. Failure to abide by these rules and regulations will result in a fine and can even completely close down your business. That said, a payment processor can guide and support you in following regulations like PCI compliance.
A payment processor is essential now that e-commerce is becoming more and more of a basic option for shopping. Without it, your business will suffer a big loss because of the lack of access to this demographic. That said, picking the right one for your business is a must.