Selecting a payment service provider for your online business is one of the toughest decisions. The online merchants, sellers, and professionals need to rely on a payment provider that is both beneficial to his customers and clients, as well as his business well.
An online business runs all over the internet. The users come from search engines, social media, or any other referring website. They log on to your eCommerce website, browse products, choose and add them to cart. To get the products delivered, they want to pay online as well.
But, what if you don’t have a payment gateway? Will you personally text bank account details to transfer the payment or let them pay on delivery? These are all old-school methods. Today, online buyers are eager to pay right from their mobile device or a digital wallet to streamline the payment and grab the product as soon as possible.
You may find various e-payment solutions that are governed by local and global financial companies. They are somehow similar to collecting money from your customers and then transferring it to your local banks, but all have a different set of rules and regulations. Surely, they were established for addressing a payment solution with specific goals.
Generally, they all may seem to be equal, but their pricing and the way they process transactions differentiate them from one another. They have to abide by the rules and regulations set by the governing bodies from where they operate and enjoy the freedom as well. Like a payment gateway from the USA will has different terms and conditions than that of China. There are numerous factors to consider when selecting a payment provider for your online venture. Some of them are discussed below in this post.
1. Consider the area where you operate
The online payment solution providers have contracts with local and international banks through which they ensure you receive the money without any delay or currency exchange differences. The contracts with banks and financial management organizations often limit their operation in certain regions. Every such company has a long list of countries and states they support.
So, you need to check if the payment service caters to the region where you need to reach out with a storefront that is built exclusively for them with a local language and currency. Select a company that suffices the needs of your business specific requirements within the locality to intend to initiate a business.
For example, if you consider PayPal as a primary payment partner. It will attract a lot of people as the striking feature of this gateway is that it does not require the users to share credit card or bank account details. They top up their PayPal accounts and continue paying online with an email address only. It is good if you are operating a local business, but as soon as you expand and need to reach across the borders, you will come to know that PayPal is not available in most of the Asian countries. So, you will have to add up another payment gateway for those potential buyers.
2. Evaluate the payment methods you need
Among the various payment methods, Visa and MasterCard are highly acclaimed worldwide for online shopping and purchases. Most of the online stores use these two methods by default and compulsory because a great majority of online buyers easily manage to have a debit or credit card from their local banks. With these cards, they can go for hassle-free online purchases.
Though the plastic money is one of the commonly used payment methods, the online stores need to be more flexible in accepting payments. In most of the countries, users may face difficulties in acquiring credit cards for international purchases. So, they might be looking for useful alternatives.
Like, Visa cardholders have the freedom to purchase products online from any corner of the world, but within this card type, some local banking companies do not accompany such a facility. They either require the users to activate a shopping session on their card or apply for a credit card in addition to their existing debit card.
This is a confusing state of mind when the users visit to check out for products, but his or her card lacks the facility. You are all set to make sales, but the only factor is the service provider of your target audience. Though this is not something you shall ask your financial service company, this is a step forward to look into the matters of your target users that how hard or easy it is for them to pay through a system.
3. Be prepared for foreign currency exchange
The online stores that are limited to a state or nation may not need to worry about the expense of currency exchange. They may get the entire revenue to their accounts in a local currency. But, the multi-regional eCommerce websites that are allowing customers to pay across the border in their local currency will have to account for the difference in currency exchange.
The banks and other financial institutes may specify the fee they deduct on the international transaction, but the currency exchange rate is volatile. If you are targeting different regions with multiple currency payment options, then be prepared with the increase and decrease in the exchange rate of global currencies against your standard one.
One pro tip to avoid such differences is to create multiple currency accounts with your local banks to ensure you receive the money as exactly as the buyer has paid. For example, open a Euro currency account to save the cut from converting all the sales proceeds from for European customers to US Dollar to GBP.
4. Prefer Payment Providers who offer an API
Every payment provider has its own terms and conditions. The one that offers API simply means the customers can pay for the products and services right on your website. If you opt for a payment option that is not powered by API, it will redirect your potential customers to their website and require them to fill the details in the form. The additional step of redirecting customers to payment providers’ website is time-consuming and may result in a higher rate of cart abandonment.
The checkout process needs to be flawless and distraction free. If you select a payment method without an API, this tantamount to decreasing the conversion rate of your online store. Nowadays, the users are reluctant to make a payment or share their personal details when they are in doubt about the safety and security of the payment handler.
5. Review the Prices They Charge
In general, most of the payment providers have similar pricing plans. Some of them may charge higher for affiliation with international banking companies. The affiliation empowers them to speedily process transactions across the seas to your local or a centralized account.
Review the tier pricing they have to offer against the time it takes in days for amount clearance. Requesting payout within 24 hours will surely be charged higher than taking 2-5 days. You also need to know if they have additional charges for various events like unsuccessful payments, minimum balance charges, or giving a refund to unhappy customers. Inquire the way they resolve consumer payment issues so that neither yours nor your customers’ money is at stake.
6. Make sure they are PCI DSS Complaint
PCI DSS stands for Payment Card Industry Data Security Standards and it ensures that the payment provider is a secure solution for your business. Find a payment partner who duly complies with the rules and regulations rendered by the PCI. If they are not compliant, don’t proceed with a contract.
In addition to the global digital payment regulations, the payment service providers are also required to meet the standards of a local institution. For instance, companies in the UK have to be in compliance with Financial Services Authority that regulates the industry of financial service providers.
7. Ask existing Customers for a Recommendation
Asking the existing customers of a recommendation is the most effective method of selecting a payment partner for your online business. Log on to the website of each payment provider, navigate to the testimonials page, and select customers for asking recommendations.
Asking every customer is of no use, so select those with whom you have a common industry, business model, and region. Contact them and question them as to what extent they are satisfied with their financial institution. It is like reaching out to know the inner story that is often hidden while signing a contract.
Additionally, you can search a few financial institutes with reverse engineering technique. This requires you to find your top competitors, visit their websites, and get to the know the payment providers they have collaborated with. This is one of the time-saving techniques of narrowing down the list to a few so that you can quickly inquire them about pricing and policies.
Every financial service has an agenda that may make it a better choice for a company, but an adverse for the other. In general, we cannot deduce that a single payment system provider is suitable for every kind of business because it is the regional and cultural difference, local business and corporate law, and the specific business needs that have to be taken care of.
In this post, I have tried to lay down some of the major concerns that have to be considered in general while selecting a payment provider. Majorly, it includes the security of user data and financial details, the familiarity of users with a payment provider and how easier it is for them to checkout with it.
Author Bio: Zeeshan Khalid is a Web Architect, an eCommerce Specialist and an Entrepreneur. He is the CEO and founder of FME Dubai, a leading e-commerce web design and development agency. Over the years, FME Extensions has successfully delivered projects in Magento, WordPress, WooCommerce, Joomla and other CMS/shopping cart platforms. You can find him on the LinkedIn.