How Do I Choose A Payment Processor?

Payment processors are the companies that process your payments for you, and they can be a great way to save money on fees. But it’s important to know how to select one before signing up, to avoid major problems in the future. 

Our recommendation to get a solid foundation is to also read the article written on how credit card processing actually works. 

After that, here’s what you need to consider when choosing a payment processor:

What Is Your Budget?

The first thing you should do is figure out how much you want to spend on processing fees. Some providers offer free services or low-cost ones, but others charge high rates.

If you don’t have a budget in mind, most of these companies will give you a quote based on your business type and volume. You also may find some providers with special offers, like a discount if you pay upfront.

Which Features Matter To You?

You’ll probably want to look at different types of payment processors, such as those that handle credit cards, debit cards, e-checks, and more.

You’ll also want to make sure your provider has the right tools for your industry. For example, if you sell products online, you might want to look into an eCheck option.

Does The Company Offer Any Other Services?

Some providers only focus on payment processing. Others offer additional services, including customer support, website design, marketing materials, and more.

These extras aren’t always necessary, so it’s worth looking into whether your provider provides them.

Can You Get Started Quickly?

Some providers require a lot of time and effort to set up. This isn’t necessarily bad, but if you’re short on time, you may not want to waste it setting up a new service.

Look for providers that let you start using their services immediately after signing up.

Are There Any Hidden Costs?

Be wary of providers who try to sneak in extra charges. They could include monthly fees, setup fees, or other fees that you weren’t aware of.

It’s best to avoid these kinds of providers because they won’t provide all the services you need.

Is There A Trial Period?

If you plan to use a payment processor for a long time, you should check to see if they offer a trial period.

Many providers allow you to test their services for 30 days without paying anything. Afterward, you can decide if you want to continue using the service.

Will You Receive Training?

If you’re going to work with a payment processor, it’s likely that you’ll need to learn about its systems. The good news is that many providers offer training programs to help you learn everything you need to know.

Make sure you take advantage of this opportunity!

Who Do You Recommend?

There are plenty of payment processors available, which means it’s hard to say which one is best.

However, we can tell you that our top pick is Stripe. We think it’s the best choice for small businesses because it’s easy to integrate, it doesn’t cost much, and it gives you access to tons of useful features.

Plus, it comes with a ton of integrations, making it easier than ever to accept payments from customers.

What Does A Payment Processor Do?

When you open a merchant account, you need to choose a payment processor. A payment processor is a third party that processes electronic transactions for merchants.

In addition to providing a secure way to process card payments, a payment processor helps merchants comply with anti-money laundering laws and other regulations.

Here’s what happens when you open a merchant account:

Your Bank Approves The Application

The first step is to apply for a merchant account through your bank. Once your bank approves your application, you’ll be able to sign up for a payment processor.

You Pay A Fee

Most banks charge a small fee to cover the cost of reviewing your application. Some providers also charge an annual maintenance fee.

You Select A Payment Processor

After you’ve paid the initial fee, you’ll have some options for choosing a payment processor. There are several types of payment processors, each offering unique benefits.

For example, some providers specialize in processing credit cards, while others focus on debit cards.

You Get Started

After you’ve decided a provider, you’ll need some information before you can begin accepting payments. First, you’ll create a username and password.

Then, you’ll upload documents like your business license and tax forms. Finally, you’ll complete your security questionnaire so that your provider can verify your identity.

Fees Associated With Payment Processors

While most providers charge a set fee per month, some charge additional fees based on how much money you make. These rates vary widely depending on the type of transaction you’re processing.

For example, some payment processors charge a flat rate of $0.50 per transaction. Others charge higher rates for certain types of transactions (e.g., international fees).

Some providers may also charge extra fees if they detect fraudulent activity or if they discover errors in your records.

Types Of Payment Processors

Payment processors come in two main flavors: acquirers and gateways. An acquirer provides services such as issuing credit cards and managing customer accounts.

Gateways provide services such as accepting online payments and connecting with ecommerce platforms.

Acquirers

An acquirer issues credit cards and manages customer accounts. Many providers offer both a gateway and an acquirer service.

Acquirers often require more documentation than gateways. They also tend to charge higher monthly fees.

Gateways

A gateway accepts online payments and connects with ecommerce platforms.

Most providers offer only a gateway service. This makes them easier to use because you don’t need to worry about setting up an acquirer. However, many providers limit their offerings to specific industries.

When To Use Which Service

If you want to accept credit cards, then you should consider using an acquirer. The reason is simple: Credit card companies usually charge lower fees than other payment methods.

If you want to sell products online, then you should look into using a gateway. Because it’s easy to integrate with popular shopping carts, a gateway will save you time and energy.

Conclusion

There are lots of factors to consider when deciding which payment processor to use.

In addition to costs, you must think about whether you prefer one service over another. Ultimately, you should choose the payment method that best fits your needs.

 Learn more about payment processing by visiting our merchant processing library.