How to choose the right merchant gateway for your online store
The following is a guest post (contributed article) by John Rampton, founder and CEO, Due.
Now that you have your online store ready to open its doors to all the opportunity that’s out there when you reach out to consumers or businesses on what is their favorite place to shop, you’ll need to do one more thing: get a secure payment gateway to assist with online payment processing.
The only problem is trying to determine which merchant gateway will work for your ecommerce business, especially since there are so many providers now available to meet the demand. Your choice should be shaped by certain factors that directly relate to your specific business needs. Here are the factors that will help you decide which merchant gateway is right for you:
E-commerce Platform Integration
One of the first things you need to figure out is if your e-commerce platform and a particular payment gateway are compatible. You will save time, money, and frustration by going with a payment gateway that already has a plugin or extension for the e-commerce platform you have built your ecommerce store around. When researching various payment gateways, each one will typically list what platforms they can integrate with or you can always contact them if you are not sure.
It’s important to consider your budget and profitability goals before you sign up with any payment gateway. That’s because there are all types of fees attached to online payment processing that you have to assess, including transactional fees, flat fees, and incidental fees all of which could add up very quickly and take a huge chunk out of your profits. While it may take some time, it’s a good idea to compare fees across various merchant gateways to see what each one charges. When you narrow down your choices to just a few gateways, remember that it pays to contact them and see which fees they will reduce or even eliminate.
Many merchant gateway providers want you to sign a contract and some of them insist on a lengthy agreement of more than a couple of years. These types of terms can be problematic for you, especially if you find six months down the line you are not pleased with the service or value they claimed to have offered. It may be wise to seek out one of the many gateway companies that offer a month-to-month agreement so you won’t have to pay any early termination fees should you want to get out of a contract. However, if you do opt to go with a company that has you sign a contract, be sure you understand what you are getting yourself into.
Because online payment processing comes with so many compliance and regulatory issues and you are handling other people’s data that you become liable for, you want to make sure that the payment gateway has a reputation for reliability, security, speed, support and service. Plus, you want to know that the gateway will always work because you don’t want to tell customers the system is down. As you know, this lowers confidence in your company and they will go elsewhere to buy from someone who has a payment provider with no reputation for outages. You can read online review sites, get recommendations from colleagues, and check with organizations like the Better Business Bureau to assess a company’s reputation.
Consider the functionality that is included with the gateway that can help you operate more efficiently as well as add extra layers of protection to each transaction. Some areas to consider that may or may not apply to your particular e-commerce business include features like recurring payments or a marketplace model where payments are taken on behalf of sellers on your store site. If you are planning eventual expansion to sell internationally, does the payment gateway handle currency exchange and country-specific transactions? Also, you may want to accept particular payment methods beyond just credit and debit cards, so make sure these other payment options are features that are included with a particular merchant gateway.
When it comes to security features, this is a critical area to spend considerable time investigating. Look for a merchant gateway provider that is Level 1 compliant with the Payment Card Industry Data Security Standard (PCI-DSS) because this is the highest level of card data protection available. Other security features to ask about include tokenization, fraud prevention tools, and any other solutions that are designed to protect card payments.
Finally, your e-commerce business may face specific challenges like being considered high risk to some merchant gateways so, if this is the case, you’ll need to identify one that is willing to work with you and still deliver competitive pricing. You may fit this high-risk category because you are a new business, you have poor credit, or you operate in a sector that is considered high risk due to prevalent fraud or concerns over what is being sold, such as gambling, debt collection, travel, adult products, pharmaceuticals and similar business sectors. When you conduct a search for a merchant gateway, you will have to look for ones that note they specialize in high-risk e-commerce businesses.
About the Author
John Rampton is an entrepreneur, investor, online marketing guru, and startup enthusiast. He is the founder of the online invoicing company Due. John is best-known as an entrepreneur and connector. He was recently named #2 on Top 50 Online Influencers in the World by Entrepreneur Magazine and a Blogging Expert by Time. He currently advises several companies in the San Francisco Bay area.