As a business owner, the number of executive decisions that need to be made on a day-to-day basis can be intimidating at times. Hunting for a payment processor provider for your business shouldn’t be one of those things. When digging through payment processing solutions, finding the right tools is a priority—but it’s not everything.
Knowing what to look for and what to avoid can help take the anxiety out of finding the right payment processor.
We’ve put together a list of options to consider when looking for the right payment processor.
TL;DR
- Selecting your new payment processor takes a few steps, from understanding your business’s needs to going through product demos.
- Understand the difficulties you may face with a processor’s pricing or support.
7 steps to select the best payment processor for your small business
1. Identify your business needs
The first step in selecting a payment processor is to understand the specific needs of your business. A general checklist of factors, features, and more to consider:
- Determine the type of payments you plan to accept (online, in-person, mobile, etc.)
- Consider the average transaction size and volume your business handles, as some processors are better suited for larger transactions, while others are ideal for high-frequency, low-amount payments.
- Does your business model include recurring billing? Do you need to send invoices or only take payments at a point of sale? Are you operating internationally?
2. Compare pricing structures
Payment processors offer various pricing models, such as flat-rate, interchange-plus, or tiered pricing. (Read the complete guide on these pricing models here.)
It’s essential to evaluate these structures to find one that fits your transaction patterns and business model. Keep an eye out for hidden fees that may not be immediately apparent, like setup fees, monthly maintenance fees, PCI compliance fees, or chargeback fees.
3. Request product demos and trials
Before committing to a payment processor, it’s crucial to request a demo or a free trial period. This hands-on experience allows you to explore the platform’s interface, understand its features, and assess its compatibility with your business systems and daily operations. The demo and trial stages are valuable opportunities to engage directly with the product and its support team, providing insight into whether the solution aligns with your needs.
Key actions during the demo and trial:
- Test core features, such as the ease of processing transactions, managing refunds, issuing invoices, and handling recurring billing, if applicable. Make sure these processes are straightforward and efficient, aligning with your operational workflow.
- Explore reporting capabilities. Ensure that the processor offers robust reporting options that can be tailored to your specific business needs.
- Involve your technical team. Their expertise is invaluable for assessing the technical compatibility of the payment processor with your systems, especially if custom integrations or API usage is required.
- Is the platform intuitive and user-friendly? A simple, easy-to-navigate platform will minimize employee training time and reduce the likelihood of errors during transactions, which is especially important in high-volume environments.
- Ask about the training resources and onboarding support the processor provides. Some companies offer in-depth training sessions, webinars, or live, real-time customer support to assist in onboarding, which can be critical in getting your team up to speed quickly and efficiently.
- If the trial period includes live transaction processing, test the platform’s performance. Evaluate the speed of transactions, any potential downtime, and how quickly funds are settled. Real-world testing during the trial period will give you a better understanding of how the processor will perform under typical business conditions.
4. Check for tech stack compatibility
Compatibility is key when integrating a payment processor into your business systems. Ensure that the processor you choose can work seamlessly with your existing point-of-sale (POS) system, ecommerce platform, or accounting software. This integration may be pre-built by the payment processor or may be available for your team to build on an API.
Additionally, look for a processor that offers flexibility in accepting various payment methods, such as credit and debit cards, mobile wallets like Apple Pay and Google Pay, and ACH transfers, to accommodate customer preferences and provide a convenient payment experience.
5. Evaluate security measures
Security is a critical factor in selecting a payment processor. Verify that the provider is PCI-DSS compliant to ensure that your customers’ data is protected according to industry standards.
Beyond compliance, look for processors that offer advanced security features like tokenization and encryption, which add layers of protection to payment information. Fraud detection tools are also valuable, as they help minimize the risk of fraudulent transactions and safeguard your business and customers against data breaches.
6. Examine customer support and reliability
A reliable payment processor should offer robust customer support options, as any issues with payment processing can significantly impact your business operations. Research the provider’s customer support availability and the modes of support offered, like live chat, phone, or email.
During the sales process, engage with the support team to assess their responsiveness and knowledge. This initial interaction can provide valuable insight into the level of service you can expect once you become a customer.
7. Consider flexibility and scalability
As your business grows, your payment processing needs may evolve, so it’s important to choose a provider that offers flexibility and scalability. Look for options that support:
- Multi-currency processing
- International payments
- Advanced reporting features
- Offer an open API
Such capabilities can be invaluable as your business expands into new markets or scales up operations. Also, ensure that the contract terms are not overly restrictive; a flexible agreement will allow you to upgrade or switch providers without incurring significant penalties or fees.
8. Read user reviews and seek recommendations
To gain insights into the performance and reliability of payment processors, read user reviews and testimonials from other small business owners. This feedback can provide valuable information on the pros and cons of each provider.
One area that reviews can be particularly enlightening is for customer service. Reviews will often provide insight on how responsive and effective their support team is in resolving issues, providing you a chance to examine the processor’s track record for reliability, including uptime and processing speed, to ensure that you won’t face any interruptions in service.
Additionally, seek recommendations from your professional network or industry groups to discover options that have a proven track record within similar business types.
Make sure payment processor technology is modern and up-to-date
A payment processor is only as good as their customer service and their payment technology. If the terminals and tools they are offering provide more problems than solutions, it’s time to find a better processing services provider. Standard payment solutions nowadays must include mobile and touch-free options.
Create seamless solutions with a unified payment processor experience
As the ecommerce market continues to expand and customers have multiple choices regarding how, where, and when to shop, providing additional payment becomes a must.
That said, finding a simple way for your business to increasingly expand its payment offerings to support new customers is an ongoing challenge. Implementing a unified payments platform is a future-proof solution that provides access to multiple payment methods through a single streamlined integration.
Stax’s integrated payment platform sets a new standard in payment technology. We offer the most streamlined payment platform experience, revolutionizing online payments to support small to medium-sized businesses all across the U.S. Our all-in-one API allows you to accept card-present and card-not-present transactions, and you’ll have access to the best apps and tools in our app marketplace. Most importantly, because all of the payment methods run through a single platform, all of your data is accessible in a single place, making it easy to quickly understand the health of your business.
Hidden payment processor fees are a nightmare
When you’re trying to grow your business, the last thing you need is an endless stream of extra payment processing fees killing your revenue generation. Don’t let hidden payment processing fees be the death of you.
One way to make sure you’re not being price gouged is by shopping around for the best rates and making sure you ask specifically about extra fees not included in the base rates. Many processors bundle and hide fees within other charges, including everything from PCI compliance to setting up your account. Note that average credit card processing fees range from 1.7% for swiped card payments up to 3.5% for keyed-in transactions.
Interchange-plus pricing
Interchange-plus is a small fixed fee (between $0.10 and $0.50), plus a percentage of each purchase (between 1% and 3%) on top of the interchange fees charged by the card issuers.
Tiered pricing
A tiered model puts credit card transactions into several categories—qualified, mid-qualified, and non-qualified. Qualified rates come from when a customer meets a processor’s criteria for the easiest, most secure transaction (swiping/inserting a card in-person). The other tiers come from having to key in the card’s details or when a customer pays online (CNP). Tiers can also vary by card type, making this the most confusing and least transparent pricing structure.
Flat-rate
Each card type has the same rate, typically 2.9% plus a transaction fee between 10 and 30 cents. While this seems like it may be the most straightforward at face value, it can be a very expensive pricing structure, as you will pay the same rate to accept a debit card as a premium rewards credit card. The actual cost to accept a regulated debit card is significantly lower, often less than 1%, whereas a premium rewards credit card can easily be 2.5%, but in a flat-rate structure, you’ll pay the same (typically 2.9%) for both, resulting in a significant markup on many card types. So, while it may be simple, it typically results in higher overall processing costs for most established businesses.
Subscription
This model uses a monthly membership fee, which then provides the business access to the direct wholesale cost of credit processing from Visa and Mastercard. After the monthly membership, the business only pays the wholesale cost (interchange) set by the card issuers so that the business is never overpaying for processing. This is the pricing structure that we use at Stax. Businesses that process over $7,000 per month typically see significant savings compared to the other traditional pricing structures. This model is great for scaling businesses.
Payment processor fees to watch out for:
- Credit card terminal fees
- Setup fees
- Early termination fees
- Reprogramming fees
- PCI compliance fees
- Address verification fees
- Chargeback and retrieval fees
- Payment gateway fees
- Statement fees
- Batch fees
Security and compliance
There can be a lot of risks involved when accepting payments today. Providing the highest level of security with complete encryption and various layers of fraud prevention tools provides an additional layer of comfort to your customers. At Stax, card information is encrypted on all of our processing devices and never stored after the transaction is completed. Stax’s state-of-the-art cloud architecture is constantly tested for vulnerabilities to ensure the safety and security of that sensitive data.
Active customer service
Talking to a physical person when you have an issue or a question is slowly disappearing due to the implementation of automated systems in the early 1980s. When issues arise, the last thing you want is to fumble through automated options hoping to get in touch with someone who can actually help you. Time is money, especially in this case.
Stax offers in-house customer service. When you call during business hours, you will speak with someone who knows our product and is always happy to help. From training to troubleshooting, we are the company to choose if you appreciate a human touch to your customer service needs.
You might also like: What is ACH Payment Processing?
Process payments with Stax
With top-rated customer support, optimized payment technology, and the highest level of PCI compliance, Stax takes the anxiety out of finding the right payment processing solution. We offer you subscription-based credit card processing at a direct cost. This means zero markups, zero hidden fees, and no contract.
To learn more about Stax payment processing services, reach out to a payment consultant for a consultation today. We will be glad to answer any questions you may have and help you make use of our state-of-the-art integrated payment solutions right away.
Quick FAQs about Payment Processor
Q: What is a payment processor and why is it important for small businesses?
A payment processor is a company that handles transactions between merchants and customers. It is crucial for small businesses to have a reliable payment processor as it ensures secure, efficient, and seamless handling of transactions, which can enhance customer satisfaction and business growth.
Q: What factors should small businesses consider when choosing a payment processor?
Small businesses should consider factors such as transaction fees, pricing structures, security measures, customer support, and compatibility with existing systems. Understanding specific business needs and conducting product demos can also provide insights into the best choice.
Q: How do pricing models differ among payment processors?
Payment processors offer various pricing models including flat-rate, interchange-plus, tiered pricing, and subscription models. Each model has different cost implications, so businesses should evaluate which aligns best with their transaction patterns to avoid unnecessary expenses.
Q: Why is security a critical consideration when selecting a payment processor?
Ensuring the security of customer data is vital to maintain trust and prevent fraud. Payment processors should be PCI-DSS compliant and offer advanced security features like encryption and tokenization to protect sensitive information.
Q: What role does customer support play in the selection of a payment processor?
Reliable customer support is essential for resolving issues quickly and minimizing operational disruptions. Businesses should look for processors that offer live, real-time customer support and various contact options like live chat, phone, or email.
Q: How can small businesses ensure they are not overpaying on processing fees?
To avoid overpaying, businesses should scrutinize payment processors for hidden fees such as setup, maintenance, or PCI compliance fees. Comparing different providers and understanding their fee structures can help in selecting a cost-effective option.
Q: What is the benefit of a unified payment processing platform for small businesses?
A unified payment processing platform offers a single integration point for multiple payment methods, simplifying the payment process and providing comprehensive data insights. This can streamline operations and enhance customer experience.
Q: How can reading user reviews help in choosing a payment processor?
User reviews provide real-world insights into the performance, reliability, and customer service quality of payment processors. They can highlight potential issues and confirm a provider’s reputation, helping businesses make informed decisions.
