A successful e-commerce operation relies heavily on a network of partners to presenting products, take payments, and fulfilling orders— all while protecting the business from risk and loss.
Payment processors are core to this as they handle the movement of money from a customer’s credit card or bank account to the merchant’s account. Partnering with the right payment processor is crucial.
Not all processors are the same, so where do you start?
As with many thangs, you get what you pay for. Whilst the focus is rightly on retaining profit, it is important to understand the net impact of the proposition
Processors typically advertise the cheapest rate rather than the range of rates. For this reason it is important to understand their tier pricing.
Processors often advertise the rate charged when a credit card is swiped through a point of sale terminal. If you’re an online merchant, that isn’t you. Other tiers may include loyalty cards that return cash or other bonuses, as well as online transactions.
Tier pricing groups transactions in to buckets and in the case of speciality cards such as Amex can add 1-3% to the advertised rate. These costs are often not clear unless you look for them specifically, or experience them once you are trading.
It might be important to be able to engage with your processor in the event of issues. The cost of unresolvable issues because communication is poor, can quickly outweigh the perceived saving of the lower advertised rates.
There is a huge difference in value between a processor that doesn’t offer 24/7 0800 telephone support and one that does.
It is a common held view that the processor’s website is a clue to their depth of service. It will highlight a dynamic and well resourced business with an up to date blog, learning centre and communications, as well as more obvious easy routes for contact.
Your processor plays an important part in mitigating your risk of fraud and loss, so it is important that they are in line with the latest innovations and consumer preferences. A good indicator is whether they support new payment methods such as Apple Pay, 3D Secure or MasterPass etc as their popularity increases.
Your industry may require a specific view on innovation. For example, if you operate in a high risk industry it may help to seak out processors that specialise in that industry. Such industries bring specific challenges and therefore can be well served by specialist thinking and support.
Whether you are in a specialised industry or not, common hygiene factors play a part in selecting your processor such as a processor that understands your sector and is represented by strong reviews.
Whilst processors aren’t fraud specialists, one that has a positive track record of proactive communication in the area can add considerable value, particularly in having a detached view from what can be an enticing large value online order that is hard to turn away.
Given the potential risk of fraud it is important to supplement your processor with a specialist fraud protection partner.
It is best practice to add a dedicated fraud protection partner to the network of partners that support your business.
Fraud reviews from a payment processor can be valuable but are hard to scale and the payment sector has not invested to the same level in this area as the specialists that offer a range of solutions such as AI to manage potentially fraudulent orders from legitimate ones.
Some providers guarantee their decisions by paying 100 percent of chargebacks and other fraud costs for any approved order that later turns out to be fraud, which adds a level of reliance to your P&L but must be offset by the risk of false positives.
Prepare your own brief.
As we’ve pointed out, it is important to recognise that different processors add value in different ways. To make the best decision it is therefore important to have a clear understanding of your needs and have a solid brief.
Consider the following;
There are plenty of great processors available. Any merchant that understands their own needs clearly can identify one that can be a valuable partner to their business and help drive their success.
To find out more about how we can work with your processor to mitigate your risks from payment disputes and friendly fraud, contact us at https://www.paymenthelp.org/register-interest/