How To Choose The Right Payment Processor For Your Startup

As a startup owner, you’re already well aware of all of the decisions and responsibilities that you face with your business on a daily basis. From taking care of the marketing and product/service improvement to ensuring that your customer service is in top gear, it is an overwhelming endeavor.

You are also likely well aware of the difficulty of getting consumers to the payment page of your website or to the checkout line of your storefront business. And when you get them there, you certainly can’t afford to have any problems.

For this reason, it is imperative that you take the necessary steps in the beginning to ensure that you are choosing the right payment processor. Making a mistake in this area can cost you thousands of dollars in revenue while putting a lot of stress on you and your employees.

To help ensure that you don’t make this mistake, let’s take a deeper look into the steps you should take to put yourself in a position to choose the right payment processor for your startup.

Step #1 – Narrow Down Potential Options

The first step you’ll need to take is to narrow down the potential options. Your best bet is to create an initial list of 3-5 payment processors. Here is a quick list of some of the more popular options used by modern startups:

• PayPal
• PayAnywhere
• net
• Stripe
• Amazon Payments

There are obvious pros and cons to each option, and you’ll need to do your own reconnaissance to determine which ones offer advantages that meet your unique needs. Overall, however, you should focus on options that allow you to accept major credit cards like Visa, MasterCard, American Express, and PayPal, as this will ensure that you can satisfy your consumers’ needs.

Step #2 – Discover What Fees Work Best Based On Your Business’ Monthly Revenue

One of the biggest differences in the many payment processors that are out there are the fees that come with their service. Most payment processor companies require an interchange fee, while some will also require a monthly, setup, and/or gateway access fee.

Being that that the interchange market is one that brings in over $50 billion per year, a lot of companies that require large monthly or startup fees are being avoided by small businesses and startups. Because of this huge market that is getting bigger every year, you shouldn’t have much trouble finding a free credit card reader for your business.

In the end, your decision is likely going to come down to the interchange fee percentage being taken out, which will depend on the monthly revenue generated by your business. Most processing companies will take out a lower percentage for higher volume sales.

For instance, a startup in the initial growing stages with a monthly revenue of $8,000 will likely pay a higher interchange fee than one that generates $50,000/month. Negotiating a favorable interchange fee is also an option with many payment processing companies, so don’t be afraid to try this.

It should be noted that, if your business’ credit card sales are below $5,000 monthly, you will also likely have to pay a monthly minimum volume fee.

Step #3 – Determine That They’re a Secure Option

With the huge amount of money that is transferred from consumers to businesses through payment processors, security is always a major concern. If a consumer does not feel that their transaction will be secure, they’re not likely to purchase from you.

And, if they do purchase from you and a security issue occurs, you’ll have a tough time convincing them to buy from you again. With this in mind, it is essential that the payment processor you go with is proven to be secure.

While choosing the right payment processor will be a vital decision to your initial success as a startup, it is one that shouldn’t be that difficult if you follow the steps outlined above. Take your time, make the right decision for your business, and reap the rewards that come with it.