How to choose a payment processor?
If you want to sell a product online, you most probably need to consider processing credit card transactions. There are 2 ways you can do that: (1) by having a merchant account, or (2) by using a third party payment processor. If you are small and you have a limited budget and revenue, you better choose a third party payment processor. Before choosing a payment processor, there are some terms you need to investigate:
1. Set up fee
Some companies require an upfront amount for registration with their services. Others have no set up or registration fee.
2. Transaction fee
Almost all payment processors charge a certain amount for processing each payment that is made through them from your website. This is usually a percentage of the total transaction amount and can range from as low as 2% to as high as 20%.
3. Other Fees
Some payment processing companies also collect other fees that may not be stated quite visibly. For example, there might be fees for bounced checks or charge backs from the customer.
4. Countries Accepted
Some payment processing companies accept clients only from the US. Others have list of specific countries from which they accepts customers or have no restrictions.
5. Products Accepted
Some companies let you sell only physical products or only intangible products, which can be downloaded or emailed and don't need to be shipped. Others have no restriction on what you can sell through them.
6. Payment transfer
Different payment processing companies have different methods of transferring payments to its clients, and charge varying fees for this service. You can get a check mailed to you, or you can request an ACH transfer to your bank. If you are international client, some companies will also arrange for an international wire transfer.
7. Payment Frequency
The payment frequency for all companies is also different. Some pay as soon as the customer makes the payment, others may make weekly, bi monthly or monthly payments to their clients. Also, you can put a minimum amount that you wish to be transferred to you, which means you will get your money less often, but might save some of the transaction costs.
8. Customer Service
It is essential for a payment processing company to respond promptly to inquiries and to be customer friendly and reliable. The company should preferably have a reliable support system in place and respond to inquiries within 24 hours.
