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Payment Processing Companies: Selecting The Best Partner For Your Business

Charles Bayani

October 24, 2023


When was the last time you reached into your wallet to grab cash?

If you’re like nearly half of American consumers, the answer is “never.” Cash spending is down – way down. In fact, according to a Pew Research Center survey, four in ten Americans say none of their weekly purchases are made using it.

If you’re a business owner, now is the time to make calculated decisions about your payment processing company. Here’s how to select the best partner for your business.

What Do Payment Processing Companies Do?

Payment processing companies act as an intermediary between consumers and businesses. In short, they ensure transactions are securely and efficiently processed. These companies offer services like:

  • Transaction processing
  • Payment method support
  • Provides payment software or hardware
  • Security
  • Currency conversion for international transactions
  • Application programming interface (API) for website and app integration

Payment processing companies also handle recurring payments and offer reporting and analytics tools to ensure business owners meet industry standards and regulations and offer customer support.

There are many payment processing companies to choose from, but before you choose, consider the following.

Integration Options

When choosing a payment processor, it’s important to consider integration options. How smoothly you can connect your systems with the payment processor will directly impact your ability to process payments quickly.

Generally, payment processors offer two options:

  • API integration
  • Hosted solution

But here’s the thing—there’s no one-size-fits-all solution. Before choosing, consider the advantages:

API integration

Increased Control & Customization: API integration allows you to design the payment flow to match your website or application’s look and feel.

Greater Flexibility: APIs are generally easier to set up, especially for businesses with in-house development capabilities.

Reduced friction: Customers don’t need to leave your platform to make payments, which reduces frustration and cart abandonment.

Support for Multiple Devices: APIs often support a variety of devices, which can expand your sales channel.

Integration for e-Commerce Stores: APIs can easily be connected on the backend to connect to your online e-commerce store.

Hosted Solution

Simplified Integration: If you have limited technical resources, hosted solutions require less in-house coding and development expertise.

Reduced PCI Burden: Because the payment processor handles most PCI compliance requirements, business owners alleviate the need for comprehensive security.

Less Security Liability: This goes hand-in-hand with PCI compliance. Payment processors are responsible for platform security and availability; this reduces the risk of security breaches and downtime.

Pricing & Fees

We gave you some cost tips in our previous article, but let’s take a deeper dive into the different pricing models you’re likely to encounter:

Flat Rate: This model charges a flat fee (usually set at a percentage) for every transaction. While this may not be the most cost-effective option, it does offer more predictability and simplicity.

Interchange-Plus: Interchange models give you the flexibility to negotiate fees with payment processors.

Dual Pricing: This pricing program gives you the ability to offset your payment costs by having a cash price and a card price.

Surcharging: You have the ability to apply a payment card surcharge (also known as a checkout fee), which is an additional fee added to a customer's bill when a credit card is used for payment which can be used to cover some or all of your payment processing costs.

Exclusivity: Some processors may lock businesses into contracts with a specific fee structure. Those set rates may seem attractive, but they can limit your ability to negotiate new rates as your business grows or evolves.

Bank Reserves: Some processors may require you to deposit a reserve amount to cover risks.

Additional Monthly or One-Time Fees: Other payment processors may charge extra for setup, cancellation, monthly statements, PCI compliance assistance, and more.

Additional Considerations

Here are a few other factors to consider to consider before settling on a payment processing company:

Data Integration: Regardless of your system, you'd probably like it to integrate with your accounting software. If you rely on Quickbooks, Xero, or any other accounting platform, shop for providers that sync with your processing system. This integration will save you time, money, and stress in the long haul.

Reliability: Many processors make bold claims about low downtimes. Do not accept these claims at face value. Look for service-level agreements that specify guarantee solutions with timelines during downtime.

Fraud Protection: Different processors offer different levels of fraud protection. Assess your business’s fraud protection tools and strategies to see if they align with your needs.

Custom Solutions for Your Custom Payment Processing Needs

At Payment HQ, we specialize in custom-tailored payment solutions. With our extensive network of banks and platforms, we offer versatility to meet your unique processing needs. Discover the difference for yourself—no risk, no commitment. Get a free comparison to see how we stand out from the competition. Contact us today to boost your business success!

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