angle graphic

September 15, 2022

How to Choose a Payment Processing Platform in 2022

Jarett Theberge

Written by:

Jarett Theberge

How to Choose a Payment Processing Platform in 2022

Choosing a payment processor is one of several items you’ll need to check off your list when opening up a business, such as getting your small business loan, registering your business, and conducting market research. 

You’ll want to ensure that you choose a payment processing platform that is the right fit for your business, and there’s a lot to consider. 

Are you getting a good deal from the processor you choose? Is there a monthly minimum revenue requirement? What other services might your payment processor offer that would benefit you?

Choosing a less than ideal payment processor would end up costing you money, or worse, termination of processing services that will leave your customers with fewer ways to pay for your products.

But no need to fear - Electronic Merchant Systems is here to set the record straight. 

We’ve been a leading provider of merchant services since 1988 by helping small business owners like yourself with solutions that work and providing the information needed to help you succeed. 

By the end of this article, you should have a better idea of how to choose a payment processor by looking at cost, available payment options, your type of industry, security standards, customer service, and additional merchant services. 

Let’s get started! 

Contents

  1. What’s The Cost Of Payment Processing?
  2. Do They Offer Multiple Payment Options?
  3. What Industry Are You In?
  4. What Are The Security Standards?
  5. Do They Offer Customer Service?
  6. What's Their Reputation?
  7. Other Merchant Services?
  8. What’s Next?

What’s the Cost of Payment Processing? 

The payment processing cost might be your decision's most important aspect. You can read all about the cost of payment processing here, but in general, you’ll need to pay attention to fees and pricing models. 

Fees

Several variables will affect the price of payment processing fees. This includes the type of card used, where the card is used, the size of the business, the industry that you’re in, and the transaction type. 

The two main fees you should be concerned about are interchange fees and assessment fees.

Interchange Fees

These are the fees charged by the card issuer. Interchange fees will be the most expensive, typically costing 1.15% to 3.25% of the transaction total.

Assessment Fees

Also referred to as “swipe fees” are the fees charged by the card networks. This charge is also proportional to the transaction total but smaller than the interchange fee. Rates for assessment fees vary but expect to pay between 0.10% to 0.15%.

 

Pricing Models

The three most common pricing models are interchange plus, flat rate, and tiered. Remember that each model will work best for a particular type of business, so it is best to review each model carefully.  

Interchange Plus

This model sees the interchange fee and a mark-up fee set by the MSP per transaction.

For example, if the interchange fee from the card issuers is 5.0% and the mark-up fee is $0.05, the interchange plus fee is represented as 5.0% + $0.05.  This model works for most businesses. 

Flat Rate

All transactions, big or small, will have the same flat-rate fee.  Unlike the interchange plus, where the mark-up is added from the processor separately, the flat rate price includes the interchange and other acceptance costs.

This model is the most predictable but can become costly with more transactions. It best serves smaller merchants with low sales volume or if you take in more cash than card sales. 

Tiered

This processor fee concerns three main tiers: qualified, mid-qualified, and non-qualified. The type of card used will determine the rank in the tier.

So, debit cards are considered eligible and cheaper than high-reward credit cards that are non-qualified. This model is best for those businesses that can count on qualified payment methods. Otherwise, it can become costly. 

Remember, some processors require monthly minimum revenue, so you’ll need to check if your choice of processor is compatible with the size of your business. 

 

Do They Offer Multiple Payment Options?

Your payment processor should be able to process multiple forms of payment. Credit and debit cards are the most popular ways consumers pay, but new advancements in the payment industry have opened the doors for more convenient payment options that give you more ways to do business. 

Cards 

Your standard credit and debit cards. The payment processor should be able to process cards from all the extensive card networks (Visa®, Mastercard®, Discover®, American Express®)

Payment Gateways 

Payment gateways allow your website’s shopping cart to receive payments for online shopping securely. It also provides a web-based virtual terminal allowing users to run card-not-present transactions manually. 

Mobile Wallets

Considered a contactless payment method, consumers can tap their phone on a compatible point of sale system to pay via NFC technology.

QR Codes

Another contactless payment is QR code payments.  This allows consumers to scan a QR code with their smartphone to pay for goods and services.

SMS

Also known as text-to-pay, this contactless option is as quick and straightforward as possible.  A merchant can text a link to the customer that includes an invoice with a secure UR where they can enter payment information.

Email Invoicing 

The same concept as SMS payments but uses email to communicate the secure payment link.

 

What Industry Are You In?

The industry you operate your business in could determine how much you pay for payment processing and the ease of finding a payment processor altogether.

The word “risk” here describes the likelihood of financial failure, chargebacks, or fraud. Generally, any given industry can be categorized as high-risk or low-risk. Let’s go over the difference between the two.

Low-Risk

As the name implies, low-risk industries have a lesser risk of failure, chargebacks, and fraud. Examples of low-risk industries would be bookstores, pet supply depots, and parking garages, to name a few.

Low-risk industries should have an easier time finding a payment processing partner.

High-Risk

Some card-not-present industries considered high-risk could be pretty lucrative, but that doesn’t change the risk of fraud or chargebacks. Examples include nutraceuticals, cryptocurrencies, and adult entertainment.

These industries tend to be harder to find payment processing for. And when you do find a processor, you’ll be hit with higher fees.

But some companies, like Payment Cloud, specialize in finding affordable processing for high-risk industries.

 

What Are The Security Standards?

You’ll want to ensure that you receive payments as securely as possible. The standard way payment processors achieve this is by being PCI compliant.

The terminology for PCI is Payment Card Industry Data Security Standard (PCI DSS). It’s invariably the most popular way payment processors safeguard their information, your information, and the card holders’ information.

Any credible payment process requires that their customers become PCI compliant, and most have an easy-to-use online tool that will provide your business a PCI Certification. 

Just know that you’ll be susceptible to fraud losses, fines, penalties, and loss of customer trust if their information falls into the wrong hands. If that happens, you might be liable if your customers pursue legal action.

Check out the PCI Reference Guide for more information.

 

Do They Provide Customer Service?

Here’s a scenario:

You’re operating your bookstore like any other day, but suddenly, there’s an issue with your point of sale terminal. It won’t process any payments even though your internet connection is strong.  You’re forced to take cash and checks until the problem is resolved.

What do you do?

This is where your payment processor’s customer service comes into play. Having a team of knowledgeable customer support specialists on standby, ready to help you, is crucial to the success of your business.

When looking for payment processors, ask about their customer support. Are they outsourced? Do they provide support 24/7/365? Check their Google Reviews to see what their customers are saying. This provides peace of mind if your payment processing solution goes south.

 

What's Their Reputation? 

This can often be the easiest item to check off your list when searching for a payment processor or any business for that matter.

What are people saying about them? How many people are talking about them?

There are two great ways to check for this; Google Reviews and Better Business Bureau (BBB).

To find Google Reviews, search for the processor's name on Google followed by "reviews," and you should get a webpage with reviews from customers and partners.

Remember that a 5-star out of 5-star review can be misleading. Pay attention to how many reviews there are for the business. This indicates how long they've been in business and how vast their network is. You can look at Electronic Merchant Systems on Google Reviews here.

BBB is another fantastic resource for finding a processor's reputation. BBB is a non-profit organization that judges participating businesses based on specific standards. It hosts one of the most comprehensive databases of businesses' reputations with profiles for 5.4million businesses.

 

Other Merchant Services?

Another name for payment processors is merchant services providers. This is an umbrella term for all the services a payment processor can provide in addition to payment processing.

Ask if they host gift cards and loyalty programs when shopping around for payment processors. If you need a website for your business, see if they can provide a web design service for you instead of hiring someone yourself.

Some merchant service providers even offer an industry-specific point of sale system when you sign up for an account. 

A partnership with a merchant services provider should make your work life easier with additional services.

 

What’s Next? 

Hopefully, you now have a better understanding of what to look out for when choosing a payment processor. All the topics we discussed will come into play when you begin a payment partnership, so it’s best to ensure that all your business's needs will be met.

If you’d like to ensure that no stone gets left unturned, we invite you to download our free Choosing A Payment Processor checklist. The checklist will reflect the article above and should help decide on a payment processor. 

 

Click to Download Our Free Checklist

 

However, if you're ready to talk about a payment processing platform for your business, so is Electronic Merchant Systems. 

Since 1988, Electronic Merchant Systems has been a leading provider of merchant services and payment processing for merchants like you.

Our 24/7/365 customer support line, competitive industry rates, and a full suite of payment processing solutions are designed to give your business the leg up you deserve. 

Click below to see what Electronic Merchant Services can do for you. 

 

Request a Consultation Today
 

For more information on payment processing platforms, visit our articles on The Difference Between Front-End and Back-End Processing, How to Recognize a Merchant Services Scam, and How to Accept Payments on Your Phone.

 

angle graphic