It’s getting harder to ignore the lure of offering customers electronic payment processing: with steady year-over-year growth, e-commerce is expected to become the largest retail sales channel in world within the next few years. But while the convenience of shopping online might be one of the factors fueling the need for electronic payment processing, for merchants, accepting payments remotely can seem anything but.
Electronic payments refer to all non-cash payments that are processed online, including credit cards, debit cards and ACH (Automated Clearing House) transactions. Such payments have a few requirements: you’ll need to be able to securely collect customers’ payment information (as well as to store this information, if the transactions are recurring), a merchant account to initiate transactions and accept funds, and a way of transmitting transaction information to request payment authorization. There are multiple players involved, and these players vary depending on whether the payment is a credit or debit card transaction or an ACH payment.
Because the nature of processing such payments, along with their increased technical and security requirements, is more complex than payments that are processed in person, you might be deterred from offering e-payments, even in spite of their growing popularity among consumers. The following three tips address some of the most common pain points merchants can experience with electronic payment processing, and how to make them less painful.
If your goal in accepting electronic payment processing is to be able to sell goods or services online, you will first need a website that allows customers to browse and select what they want to buy, and then check out. While you can hire a developer to build such a platform for you, there are also hundreds of shopping cart software platforms on the market that don’t require a great deal of technical expertise to get started on. But, to accept payment, you will still need to be able to integrate your shopping cart software with your Merchant Service Provider.
This is easier done for some types of online merchant accounts than others. The best way to ease this pain point is to select a provider that offers ready-to-go integrations with lots of popular shopping cart platforms. This way whatever shopping cart meets your needs, you’ll be able to streamline the setup process and start accepting electronic payments with just a few clicks.
Another way accepting electronic payments can make managing your business more complicated is that there are a greater number of parties involved in processing each transaction. In addition to a merchant account, you’ll need a Payment Gateway and, if applicable, a way to process payments over the ACH network. Each of these parties can mean having to deal with a different provider.
But dealing with more vendors isn’t a necessarily evil of accepting electronic payments: an all-in-one provider can act as your Merchant Service Provider, your Payment Gateway and can enable ACH processing.
Looking for a single provider that can provide all of these services can streamline your business in several ways: it means you only pay one bill for all your backend, equipment and processing needs, it can eliminate some fees charged by standalone providers, and it can simplify support as you’ll only need to contact a single provider – rather than coordinate between multiple parties and determine where in the transaction stage an issue is occurring – should you hit any snags along the way.
The fact that electronic transactions do not allow you to physically verify a customer’s payment details might have you concerned about the risk of fraud – and reasonably so, given that businesses can be on the hook for losses related to fraudulent purchases. However, you can protect yourself from fraud-related costs by seeking out an electronic payment provider that offers added means of purchase verification and that allows you to require additional information beyond a card number to authorize a purchase.
For starters, look for a provider that can verify AVS and CVV information (the address associated with an account and the security code printed on the card), two items a fraudster who only has access to a credit card number would not be able to provide. As an added bonus, this verification can also lower your Interchange rates because it also reduces the riskiness of a transaction.
While signatures were long the standard for brick-and-mortar transactions, there are also some scenarios where you might want to collect them for electronic payments as well. E-signatures hold up just as well legally as pen on paper, and they’re easy to collect electronically. Although signatures are no longer required by credit card companies, they’re still considered your best proof for fighting a chargeback in the event of a purchase dispute. While you may not need to collect a signature on every transaction, if your sales are of high value, you might want to ensure that your electronic payment provider offers a way of collecting signatures remotely.
Does your business accept electronic payments? What has been your biggest pain point so far? How have you solved it? Share your experience in the comments below.