December 19, 2020 Blog, Toronto, Canada

Evaluating Payment Processors

Now, you’re at the part where you’re assessing payment service processors and gathering quotes left and right from your prospects.

Every sales pitch you’ve heard is tight and sounds perfect for what you’re trying to achieve. Still, it remains a challenge to collate everything and get a clear picture of each prospect so that you can choose the best payment processor for your situation and your particular business.

What now? Where do you go from here? It can seem daunting. We know how it feels being given a wide array of fantastic choices to pick from, but when push comes to shove, how do you determine which questions are pertinent to your goal of choosing the right payment processor for your business?

We at Syncoria know the struggle our clients face – that’s why we’re here to help. We’ve put together a list of the seven most critical questions you should ask potential payment processors. We hope that this guide will help you determine the best fit for your business.

Here is the list as follows:

  1. What hardware is included?
  2. How long does it take to deposit funds?
  3. What kind of customer support does the payment processor provide?
  4. Are there any hidden fees or charges?
  5. How complete is their payment processing solution?
  6. How does the payment processor charge different card types?
  7. How does the payment processor handle PCI compliance?

Without further ado, let’s dive straight into the list.

1. What hardware is included?

Regardless of whether the payment provider sells or leases out their hardware components (or otherwise doesn’t provide any at all), asking this question is necessary.

That’s because the answer you provide will determine how attainable their services are and how to reasonably and realistically make budgetary adjustments as necessary.

Whenever possible, it is always ideal to purchase and therefore own your own hardware assets rather than paying long-term to lease them.

While owning your own hardware and technology infrastructure may cost higher in terms of upfront charges, the fact of the matter is that it will save you more money over the long haul.

In case you make the decision to switch payment processors, owning your hardware that can be used with other payment processing providers means that you won’t have to start from square one in the event that you do make a switch. 

2. How long does it take to deposit funds?

In general, average deposit times for funds transactions is two business days after the date of the transaction.

What this means is that for instance, any transactions that were processed on a Monday, would be completed on Wednesday. Any transactions that were made during the weekends would then be completed on Wednesday.

As we all know in business, time is money. That’s why we at Syncoria suggest that if a prospective payment processor’s average wait time takes longer than two business days, it’s time to look somewhere else.

Do take note, however, that payment processors that feature quick deposit functionalities tend to charge extra fees for their expedited services.

3. What kind of customer support does the payment processor provide?

It goes without saying that if a prospective payment processor’s customer support hours are drastically different from your opening or operating hours, it could open you up to trouble one day.

We have to get serious about your funds. Therefore, there cannot be any room for any compromise for any sort of backlog when it comes to payment processing and support.

Choose to work with payment processors that are able to cover your concerns 24/7/365 or anytime you need help at all.

Also remember to determine how much support will cost you. In an ideal world, 24/7 support should be free of charge.

4. Are there any hidden fees or charges?

Getting a grip on the charges you need to handle can be a frustrating and confusing matter if your prospective payment processor of choice doesn’t impose a single, consistent, and predictable fee for every transaction that is made.

One more important thing to carefully check is to see if the payment processor’s fee structure has any hidden fees or charges.

Looks can be deceiving. What may seem to be a low rate on paper can be calculated entirely differently when push comes to shove, and you just might find that you’re paying a lot more than you bargained for.

One case is tiered pricing. Depending on how your payment processor pitches it to you, you might initially believe you’re getting a deal by signing up for a plan that charges minimal fees on paper.

If a processor says that their transaction fee costs 2% + $0.10, it does sound good on paper. But what you may not know (or what your prospective payment processor won’t tell you) is that a miniscule proportion of your total transactions, if any at all, will fall under the aforementioned pricing tier.

Truth is, the lion’s share of your actual transactions are categorized under the higher, more costly tiers, and the fact of the matter is that payment processors generally do not disclose details on how they categorize transactions. This leads to a lot of “surprises” further down the line, which are deceiving.

Other common fees include:

  • Chargeback fees. This fee is charged to the merchant whenever a customer issues a chargeback against them. Apart from the chargeback amount, this charge is imposed by the issuing bank for administrative and processing purposes. Other processors may dispute chargebacks on your behalf, while some simply pass the charge from the bank straight to the merchant. Therefore, it is important to ask how chargebacks are processed before you dot the i’s and cross the t’s on your contract.
  • PCI non-compliance fees. Certain processors may issue additional charges in the form of fines if you don’t comply with PCI (Payment Card Industry) standards.
  • Address Verification System fee. Fees may be charged by processors for address verification systems (AVS), which are used to cross-reference a credit card holder’s address in order to prevent fraud (particularly for online payments and purchases). 

Remember the saying: the large print giveth and small print taketh away. That’s why you should make sure to read your contract thoroughly and ask about each fee on it so you know exactly what it is you’re paying for, as well as the reasons for doing so in the first place.

5. How complete is their payment processing solution?

The most important question you’ll probably have to ask your prospective payment processor is whether they just offer payment processing services, or if they have more to offer. 

See, not all point of sale providers come with their own payment processing system, and not all payment processors provide their customers with a point of sale solution.

Choosing a payment processor that offers a point of sale is ideal for a host of various reasons.

First, this simplifies your entire process by dealing with just one integrated service provider, so less time and resources will be wasted in trying to integrate two different systems to process transactions.

Furthermore, should you ever need technical assistance (and trust us, you will), you will always be able to get responsive and reliable technical support on time and on target. There is no need to run parallel troubleshooting between two providers to try to see where the payment failed.

Unifying your payment processor and point of sale under one solution simplifies your transactions, settlements, and reports under one centralized system for easier, less cluttered management.

6. How does the payment processor charge different card types?

Credit card charges vary depending on the card being used. For instance, a Visa Infinite and a Visa Classic present slightly varying charges and fees depending on their use, despite both being under the umbrella of Visa. 

Factor in regional variations as well as currency and you will soon find yourself in a tangled mess of costs and charges that may become difficult to predict.

Add in the fact that certain payment processors, to allegedly simplify matters for you, operate with tiered pricing structures.

A word of caution, however: while tiered pricing structures are easier to understand, you have 0 idea as to how the processor categorizes the transactions which might lead to you paying more in return.

7. How does the payment processor handle PCI compliance?

PCI compliance is non-negotiable if you take credit card payments. Both you and your selected payment processors must be compliant with standards imposed by the  Payment Card Industry Security Standard Council (PCI SSC). These standards help prevent and reduce the likelihood of fraud for both merchants and consumers, which are followed by every reputable payment processing provider.

It is therefore important to examine closely what obligations you have to fulfill with every payment processor you put up for consideration. Some payment processors do more of the tedious legwork for you than others, and many will charge fines if you do not comply with PCI standards and practices.

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