Choosing your payment provider is a critical step before launching your service, to avoid potential disruptions to your business down the road. Migrating will be a challenge, especially if you are not storing the cards in a vendor-neutral vault (i.e. tokenize the credit cards with a different provider than your main payment processor). That’s why you need to shop around before committing to a provider, and ask yourself the types of features your business will need one, two or five years down the line.
Pricing is definitively one of the key factors to take into consideration. Flat-free or tiered pricing can be appealing because of its simplicity, but pass-through pricing (where the exact costs from the networks are passed down to you) can be cheaper. These fees depend on your region, industry and the type of cards you will process (see Visa and MasterCard rates for more details). Run the numbers with your projected sales and compare which model makes more sense to you.
But beyond pricing, you need to make sure the gateway will actually support some advanced features which you might need:
- Account updater: If you are storing the credit cards with the vendor, make sure they support the ability to automatically update the information (number, expiration date, etc.) as they expire or get stolen (this is especially important if you are running a subscription service, to minimize churn)
- Level 2 and Level 3 processing: When doing B2B transactions, you can lower your costs by sending extra information about the payment (namely level 2 or level 3 data). Does the provider support passing this data to the networks?
- CNP vs CP: Will you need to process Card Present transactions? If so, does the provider supports EMV? Apple Pay?
- Fraud: What type of fraud detection system does the provider offer? Can you configure the thresholds to avoid false positives in certain markets?
- Card verification tools: Does the API support verification of AVS and CVV? Are 3-D Secure and SecureCode supported (the latter required for Maestro transactions for example)?
- Type of cards: Supporting Visa and MasterCard is a no brainer, but do you also need to support American Express, Diners Club International or JCB? What about connecting to the dozens of banks in China issuing their own debit cards?
- Alternative payment methods: In niche markets, do you need to support cash-based payment methods (e.g. Boleto)? Does the provider support them?
- Level of support: While technical support is essential, your account manager needs to provide business support to help you maximize your acceptance rate. He needs to understand the industry you’re in
As you can see, there is a lot to think about before choosing your gateway, and the list above is only the tip of the iceberg. As you grow, it might even make sense to work with several providers, and decide in real-time, on a per transaction basis, which provider to use to minimize your costs. Luckily, the space is over-crowded, so shop around, and if you need more guidance, contact us!