One of the biggest impacts of 2020 is that it has dramatically changed the way people shop. More online payments were made in the last year than ever before, with mobile payments in particular increasing. In fact, according to a study by Price Waterhouse Coopers, between 2010 and 2017, the number of consumers making mobile purchases more than doubled, increasing from 7% to 17%. But in 2020 alone that number doubled again, with 45% of consumers reporting making purchases from their mobile devices.
The PWC study concludes that for businesses to be competitive moving forward, they will have to “get the balance right between digitization and the traditional store format.” In other words, businesses should not necessarily close their physical locations, but they do need to offer accessible online stores as well if they want to create shopping experiences that feel easy and safe for consumers.
An essential part of setting up an accessible online store is accepting payments. All online stores rely on payment processing companies, or businesses that provide the technology for online payments to happen. Choosing the right payment processor is an important step in getting your business online. If you’re not sure where to start with online payments, the TracSoft team is here to help. Let’s start by understanding payment processors and what your business needs from them.
Table of Contents
What Are The Benefits Of Accepting Online Payments?
Accepting online payments can be a real game-changer for small businesses. For one thing, it’s a huge time-saver. When customers make purchases online, there’s no need for you or your staff to ring anything up, print receipts or invoices, or deal directly with the customer. And since many online payment processors automatically collect data on sales, assembling reports is a snap.
Another benefit is that customers love the flexibility of making payments online. Whether they purchase merchandise that is then shipped to them or they simply pay in advance and pick up their purchase in person, online payments are convenient for customers.
This might surprise many merchants, but online payments can also be safer than traditional payment methods. Security features like multi-factor authentication, encryption, and tokenization have made mobile wallets and online payment processors even more secure than chip cards. And because your sales data is automatically backed up, your risk of data loss decreases with online sales.
What Is A Payment Processor?
A payment processor handles electronic transactions. When a customer purchases a product on your website, the payment processor communicates between your bank and the customer’s bank or credit card company. It ensures that the transaction is valid and money can be exchanged correctly.
Payment processors work with payment gateways. Gateways securely transfer online payment information, such as debit and credit card numbers, between banks and/or credit card companies so that a purchase can be completed. Often payment gateways are built into payment processors, but they can also exist separately.
What Should I Look For In A Payment Processor?
There are a lot of payment processing companies on the market today. Some cater to broad markets, while some are focused on small niche business sectors. But regardless of the type of market your business operates in, there are a few features you need to understand before you commit to a specific payment processor.
Cost
Like any other subscription software, payment processors cost money. Many of these companies make their money by charging fees on transactions, which can range from 1.7% to 3.5% per transaction. Some payment processors also charge monthly subscription fees, and many charge additional fees for things like refunds or chargebacks. When choosing a payment processing company, it’s important that you are clear about what fees the company charges, how much each of those fees will be, and what your total cost of usage will be each month. A good place to start is by reviewing CreditDonkey’s article “Cheapest Credit Card Processing for Small Business.”
Contract
Many payment processing companies allow small businesses owners to use their services on a month-to-month basis rather than requiring a long contract. Multi-year contracts with early termination fees are usually offered only to large corporations. Still, it’s important to consider any contract requirements carefully before you commit to working with a company.
Payment Gateway
Payment gateways are essential for online payments. The gateway is what protects your customers’ financial data such as their credit card number and CVC. If that data is left vulnerable, you and your clients could suffer identity theft!
Many payment processing companies have built-in payment gateways. This is convenient for merchants, who can work with and pay one company instead of two. However, there are payment processors who require their clients to find their own, third-party payment gateways.
Payment Types
Before committing to a payment processing company, be sure to carefully consider the number and types of payments you will be able to accept by using that company. One 2016 study showed that customers used an average of 3.6 different payment methods each month, but the number of available payment methods has increased dramatically since then, with many consumers now turning to digital wallets and prepaid cards. However they pay, consumers want security and convenience—and they’re willing to change who they do business with if a merchant can’t give them those things.
Alignment Between Physical And Digital Stores
Another important consideration when choosing a payment processor is how well the service aligns with systems in your physical locations. Many payment processors offer support for credit card readers, tablets, and point-of-sale systems as well as remote purchases made in your online store. You may find it easier to work with one company that handles your physical and online stores together, which will make it easier to track data for financial projections, marketing, and so on.
Customer Support
If you are running an online store for the first time, it’s important to know your payment processing company will have your back if something goes wrong. Whether you’re struggling to set up the software or having trouble accessing the information you need, a good payment processing customer should be able to help through live phone support and chat support.
Top Payment Processors Of 2021
There are a number of great payment processing companies out there. As more and more businesses have committed to online sales, the market for online payment processors has increased, leading to better, more competitive options for small businesses. If you’re looking for a great payment processor, here’s a breakdown of some of the best of 2021.
Let Us Help You Get Started
Sometimes it pays to turn to an expert!
If you want to get set up for online sales fast, turn to TracSoft. We have years of experience implementing secure, reliable online payment systems for businesses across a number of industries. As IT and security experts, we understand how important it is that your online tools work right the first time, sync smoothly, and keep running for a long time.
Trust TracSoft to get it right the first time.
