Starting a business carries many risks with it. That’s why it is very important to take all the precautions and carefully examine all of your options when determining certain aspects of your business. Choosing a payment provider is no different. There are many options out there: businesses can use the traditional services of their account issuing bank, or they can use third-party service providers to handle their transactions.
Since the eCommerce business is rapidly growing, so are the risks connected to money laundering and fraud. Therefore, banking rules are changing all the time and becoming a lot stricter. Suspicious PSPs (Payment Service Providers) are using business owners’ confusion about these regulations into signing with them, so it is important to know what indicates a PSP you can trust. In the guide below, I will explain what PSPs are, why choosing the right one is crucial for your business, and what to look for if you want a secure and reliable service.
What is a payment provider?
A payment service provider is a third-party entity that offers businesses services to accept different forms of electronic payments from their customers. They work with payment processors to supervise the entirety of the transaction in which they quickly and efficiently connect all financial parties involved so both the customer and business owner have a smooth payment experience.
PSPs act as a two-way processing party, as they are processing the customer funds through the bank to the business, while also sending the response signal to the customer that their payment has been confirmed. Therefore, they are one of the most essential financial tools retailers need to have for their business needs.
Why is choosing the right payment provider important?
Having the right kind of payment provider can be essential for business owners for two reasons: security and client experience.
It goes without saying that PSPs need to be extremely careful with the sensitive information they are handling. Clients need to feel that their information is being
protected when doing transactions with your business, especially because the recent rise of technological innovation has brought online threats to operational and cyber resilience, the protection of customer funds, and market concentration. A secure PSP successfully protects the data of all parties involved.
Business owners also need to think of their clients when choosing a PSP. The most important thing is for the PSP to be compatible with the means of payment that the clients are using. If it is not supporting the customers’ payment methods, they might become unsatisfied and abandon your business because of the incompatibility.
According to the Power Your Payments research campaign, 27% of the customers surveyed used a different company for their needs when the website did not accept their preferred payment method. Therefore, the type of payment provider used can be detrimental to keeping a loyal and satisfied customer base.
What are the main factors for choosing a payment provider?
There are several things to consider when choosing a payment service provider.
Keeping the following aspects of the provider in mind will result in a secure and reliable choice of PSP.
Reputation and popularity
Your business should ensure that the chosen PSP is available to all parties who wish to have access to the system. This is especially true if the ambition of the business is to go global. Because payment options aren’t available in some regions, eCommerce businesses are unable to complete the majority of international transactions. Knowing
which PSP is popular in which country is going to help your business go global.
Customer compatibility is going to be essential in creating a reputation for a business that has easy payment processes. Therefore, ensuring that the PSP can efficiently process the information is directly going to influence the company’s reputation.
Furthermore, researching the experience of other businesses working with a certain PSP is going to give you a clearer image of which one is going to be perfect for yours.
Usually, each payment provider has a reputation of its own in the business world and the better it is, the more it can be trusted.
PCI certification is the basis of eCommerce for protecting customers and payment gateways. There are certain standards that business owners need to comply with to protect themselves and their clients from fines and lawsuits. Using a certified PSP means that the business owners don’t need to get certified themselves and can rely on them for the secure handling of payment information.
So, how can you know if a PSP is PCI certified? Their website should display logos such as 3DSecure2, PCI DSS, or PSD2 to mark that their product complies with security standards. If not, a business owner can always ask if the PSP is compliant with these regulations. This is one of the biggest indicators of a safe and reliable payment provider.
This metric shows how many transactions have been declined in total. Knowing what is the conversion rate of a PSP is a good indicator of how effective it will be for your customers. There are numerous ways to make an electronic payment today, so business owners need to keep in mind what type of payment methods the PSP is offering to maximize conversions.
As explained above, certain regions offer local payment solutions. Therefore, businesses need to vary in their payment solution options and use a combination of traditional and alternative options to maximize their conversion rate. While it doesn’t come to mind as an essential factor in choosing the right PSP, conversion rates are an important indicator as correct payment methods will increase conversions.
H3: Risk management tools
To avoid fraudulent behavior, suspicious transactions, or other activity that would signal a possible violation of anti-money laundering rules, risk management tools can combine manual and automatic checks with anti-fraud algorithms. These PSP functions are useful because they can lower chargeback rates for business owners and ensure continued relationships with banks and payment processors.
With the help of these tools, retailers may examine their system, identify any operational weaknesses, learn how to adjust to the new standards, and assess how well their
internal policies adhere to the AML regulations. The presence of risk management tools in PSP packages is a good indicator of a reliable provider.
To conclude, choosing a secure payment provider can be tricky if you don’t know what to look for. However, establishing how a certain PSP is rated in each of the factors described above will help you determine its security and reliability and make the right choice for the security of your clients and your business.