Evaluate Your Payment Processing Provider

Posted by: Today's Tip Contributor on September 29, 2010

Separating winners from losers in today’s business environment is determined in part by how earnestly a business thinks about creating value in its operations. As many small business owners know, looking for high benefit (value) and not low cost (commodity) can mean the difference between success and failure. What is often overlooked in this kind of analysis is the importance of choosing a quality, dedicated payment processing platform provider. There are many factors to consider when thinking about a payment processing provider, and it can often be overwhelming for small businesses. Some things to consider when looking for a partner:

1. Choose "cost-plus," or pass-through, pricing models vs. a discount-rate. Discount rates increase the likelihood of fee hikes, raising your total processing costs. They also eliminate transaction-level data that smart businesses use in managing and expanding customer relationships.

2. Choose a platform and processing partner relevant to your business. Don’t choose a point-of-sale payment platform if you’re a single-store retailer with a growing Web presence. As time passes, chances are good you’ll need expertise in so-called card-not-present payment processing (in which customers are not physically presenting cards or payments), so keep this in mind as you look at a processor’s expertise.

3. Think of payments data as business intelligence. Reporting and analytics capabilities from your payments platform are more important than ever, because they show you where you are successful and where you could tighten business operations. Look for a single-lane provider—i.e., a processing partner that settles, reconciles, and reports credit, debit, eCheck, and alternative payments (e.g. PayPal, Bill Me Later) through the same engine so you have a holistic view of your payments performance.

The right payment processing provider should be able to help you increase revenue, streamline operations, and minimize processing and payments costs at a very minimum, so make sure you do your research and ask for referrals, because valuable time and money could be compromised otherwise.

Jason Pavona
Executive vice-president
Litle & Co
Lowell, Mass.

Post a comment

 

About

Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.

To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.

BW Mall - Sponsored Links

Buy a link now!