How to Choose a Third Party Payment Processor for Your Business Website

    March 18, 2004

If you are trying to sell a product or service on your business website, you would need a way of accepting payments on it. The most popular mode of payment on the web is credit cards. Credit cards can be accepted in two ways on a website. You can have your own merchant account, or you can use a third party payment processor.

If you are just starting out, and operating on a limited budget, it is better to choose a third party payment processor. This is because merchant accounts require high upfront and regular charges. Before choosing a payment processor, it is important to investigate their terms of service.

Following are some of the terms you should be aware of before choosing a processor:

1. Set up fee

Some companies require an upfront amount for registration with their service. Others have no set up or registration fee.

2. Per 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 levy other fees that may not be obvious at first glance. For example, there might be fees for bounced checks or charge backs from the customer.

4. Merchants Accepted

Some payment processing companies accept clients only from the US. Others have list of specific countries from which they accepts customers. Yet others accept clients from all over the world with no restriction on region.

5. Products Accepted

Some companies only let you sell intangible products, which can be downloaded or emailed and don’t need to be shipped. Others have no restriction on what can be sold through them. Some specialize in selling only physical products.

6. Payment Method

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.

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.

Review the service terms of your payment processing company carefully to ensure that you are getting a god deal and would have no problems in the future.

Here is a list of some popular payment processors:

  • Cavyl Stewart is the author of “135 Hot Tech Tips for Small
    Business Owners.” To Download your free copy, just visit: