What does a small business need to know about its business and market to find the right payment provider? Hany Fam, Founder, and CEO of Markaaz explains
Finding the right payment provider for your small business is a challenging task. For your small business to find the correct payment provider, you must ask yourself a few questions. Number one, what is the volume of transactions you are expecting to have go through your business? Secondly, how do your customers usually pay for your products and services? Do people typically pay online for services? Do they pay in-store with a card? Do they like to pay in cash? Do they offer payment on account? Those questions will determine the suitable payment processor for your small businesses.
“Many payment providers, particularly for new businesses, will want some form of guarantee in place whether that’s a secure deposit, or a balance on hold, etc. Small businesses should check whether their existing banking relationship offers payment provider services. Perhaps their existing banking relationship has an alliance with a payment processor, so the small business doesn’t have to go through the onboarding process and checks as an entirely new business with a new provider,” explained Hany Fam, Founder and CEO of Markaaz.
Once you have answered these questions and found a shortlist of potential payment partners, there are several more checks you must complete.
What should you check for in a payment provider?
Finding the right payment provider depends on your focus as a small business. However, some basic things remain the same regardless of your business. You will always need reliability from your payment provider because a declined transaction is as good as the last sale for your business. You also want payment providers that approve most of their transactions so that you can do business with confidence. Finally, you need to understand your business and what you expect to see in terms of volume.
Here are our top 6 must-haves you need to look for in a payment provider:
- A secure environment: You must look for a secure environment because fraud often happens, particularly with online payments. Many people are afraid to pay for things online because they’re worried about their details being stolen. So you want somebody that is certified and verified. Many payment providers are now being certified and endorsed by networks like MasterCard, Visa, and American Express. Don’t just go with a provider that offers you a low rate, isn’t verified and endorsed, and hasn’t passed all the compliance and security checks.
- Cost of payments: The cost of payments is essential to review. Several providers offer different models and rates based on volume or the number of transactions you complete.
- Settlement times: Check how quickly the payment provider pays you for transactions. They’re not all automatic; some do same-day settlement into your bank account, some do it two days later, etc. Pay attention to that. It matters to your cash flow.
- Types of payments supported: How many different types of payments does your payment processor support? Do they support virtual payments? Do they support cards? Do they support wire transfers? Do they support ACH? You don’t need the one with the most choices. You need the one with the options that are relevant to your business.
- Access to customer service: Being able to access customer service and the ability to speak to somebody is vital. That’s very important. You want to be able to talk to someone when you need help.
- Understand their chargeback rules: Go on their websites and understand the chargeback rules of all the different payment companies. There are differences between American Express and Visa, MasterCard and PayPal, and all the others that are out there.
Once you have reviewed all of these points, it is important to reflect them in your website terms and conditions, store policies, or business policies, particularly how you are prepared to handle chargebacks. Those policies need to be readily available and transparent.
“You want to make sure your store policies reflect how you deal with chargebacks so that you don’t end up in a situation of somebody buying a product, saying they never got it, and charging it back when the product was actually delivered,” noted Fam.
You need to know your business inside out to find the right payment provider. Fam said that you must pay attention to your data, your credit both individually and as a business, and your policies and procedures and how clear and articulate they are. You also must pay attention to your cash flow needs as a business and understand who is providing competitive alternatives to the services that you’re consuming.
The Markaaz Dashboard offers our business members access to payment providers, including our partners Paysafe.
