Choosing the right payment service provider is key, especially in an increasingly digital world. Here’s what to look out for.
The Federal Reserve’s 2020 Diary of Consumer Payment Choice survey found that over 40 percent of consumers had changed from in-person payments to online or telephone payments. With cash payments on the decline since the pandemic accelerated the need for digital transformation and reduced people’s desire for too much in-person contact, it’s even more important for businesses to offer a seamless payment experience.
And the answer for many is to use a payment service provider, or PSP. While some businesses prefer their bank to handle payments, a traditional bank doesn’t always offer everything you need to make and receive payments in this increasingly digital-led age. PSPs, however, have more to offer.
The Benefits of Choosing the Right Payment Service Provider
Working with the right payment service provider offers countless benefits. Your aim should be to work with a PSP that will partner with your business, not just give you the technology to meet its payment requirements.
A PSP that’s flexible, adaptable, and offers customized payments solutions will be able to support your business in unlocking new revenue, preventing fraud, and giving your customers exactly what they want, a smoother digital experience.
Here are some of the best—and worst—practices when picking a PSP.
Do: Make sure you understand the fees and charges involved
You’ll almost certainly pay a transaction fee—likely a percentage of each transaction—but the exact percentage may vary between providers. There may also be other processing fees, such as set-up costs, monthly fees, and more.
Look for a PSP that’s transparent when it comes to fees. Be wary of hidden charges, and compare fees between providers. While cost shouldn’t be the only consideration, it’s important to find a provider that suits your budget.
Do: Confirm Your PSP offers the most up-to-date payment capabilities
If a PSP doesn’t support the payment types and features that your customers prefer, you can lose business unnecessarily. Today’s consumers require convenient, fast, and cost-effective payment capabilities. To meet those needs you need to offer a variety of online payment methods from credit and debit cards to Electronic Fund Transfers (EFT), and choose the right payment instrument service provider.
Do: Ask plenty of questions
A good PSP will have a team of experts who can answer most if not all of your questions. And if it’s a particularly complex question, they will be happy to go away and find out the answer for you. As with any potential provider or partner, an unwillingness to answer your queries is a red flag. So be wary if you’re not getting straight answers or they try to skirt round the question.
Payments Practices to Avoid
Don’t: Limit yourself to a PSP that isn’t scalable
Growth is crucial to business success, whatever industry you’re in. You may be a small business now, but if you’re like most businesses, you’re planning to grow in the future. You’ll need technology that can scale and grow with you. If the solution you’re looking at is already limited, you may end up having to switch providers in the future at extra expense and hassle. You may not want or need an all-singing, all-dancing solution if your current business doesn’t warrant it. But going for a PSP with a modular payments infrastructure will let you start with just what you need, and scale up in the future. For example, while you might currently only make online sales, in the future you might add a physical location to your business. In that case, a PSP that can provide in-person payment terminals as well as supporting your digital offerings will be key.
Don’t: Disregard potential ‘add-ons’
Make sure you fully understand all the potential functionality a potential PSP has to offer. And even if there’s something that may not fit your business now, that doesn’t mean you should discount it. Card issuing, for example, might not be something that you’d previously considered, but it could have valuable benefits for your business.
Don’t: Skimp on costs and risk missing out
If you’re making your selection purely based on price, you’re likely to end up regretting your choice—unless you’re very lucky! While your budget is extremely important, just going for the cheapest without fully examining everything a PSP has to offer could mean you miss out on features or functions you really need. Plus it will probably end up costing you more in the long run if you have to add extra functionality or go to other providers for the features you’re missing.
For example, is your existing payment system capable of integrating with other core business functions you have? If they are, this adds another manual, time-consuming, and potentially non-compliant process to your plate. Payments integration on the hand, can make your life much easier by speeding up your processes while observing payment card industry (PCI) compliance. Cutting corners can make your life difficult in the long run.
Partner With Payment Specialists
Armed with the right questions and an understanding of what’s essential for your business from a PSP, you’ll be able to make the right choice.
PayFrame offers scalable, customizable design built by specialist payments architects, so you know you’re working with a provider that offers the most valuable support. To find out more about partnering with a payment service provider that works for you, get in touch with our team of specialists.
