Just a decade ago, many small businesses were operating on a cash-only basis. Now, it’s uncommon to visit a store or restaurant that doesn’t take a card. Recent studies revealed that about 30% of Americans make no purchases with cash in a typical week, and the number of those who do use cash is on the decline.
With fewer Americans carrying around physical currency, it’s crucial that small businesses take the forms of payment that their customers prefer— like debit cards, credit cards, and digital payments. Though setting up your business to receive electronic payments can feel intimidating, enlisting the help of a payment service provider can give you the tools and systems needed to get up and running.
Not all payment service providers are the same, however. We’ve rounded up the seven things you should look for when choosing a payment service provider.
What does a payment service provider do, exactly?
At their core, payment service providers work to connect merchants with their customers. Typically, this is done by providing businesses with things like:
- POS systems
- Credit card terminals and other payment hardware
- Support for multiple payment methods
- Security services
Payment service providers offer these services in exchange for a set percentage of or a fixed charge for each transaction that your business makes.
Do payment service providers give you a separate merchant account?
One of the nice things about payment service providers is that you can still use your normal business checking account to receive payments—you won’t be given a separate merchant account. When a PSP receives a payment from one of your customers, they aggregate it into a large account with other businesses they service and then distribute the money into each business’s account.
What’s the difference between payment service providers and merchant account providers?
Merchant account providers (MAP) charge significantly more up front for their services; you can expect a one-time setup fee, monthly maintenance charges, fees for hardware and tools, and transaction fees. Setting up a merchant account is a relatively involved application and setup process. The service charges associated are much higher than payment service providers, but in return they offer lower merchant processing fees. A large volume of transactions is needed to balance out the overall cost of service (think grocery store chain).
Most small businesses have a much lower volume of transactions, which means that a merchant account is a bigger expense than it’s worth. Payment service providers are best suited to provide a POS for a small business with smaller transaction volumes.
7 Things to Consider When Finding a Payment Service Provider
With so many payment service provider options out there, choosing the right one can be hard. The following are seven things to look for to find the right provider for your business.
1. Their Reputation
The first thing you should consider is the payment service provider’s reputation. If everyone in your industry has had a nightmare experience with a PSP, you’ll probably want to steer clear of them— even if they offer the best prices out there. Search online for companies that have good reviews and stellar testimonials. Ask your peers and fellow business owners who they use and their experiences with PSPs.
2. Prices and Fees
Prices and fees are another big consideration. Find a PSP that is within your budget and has a payment structure that makes sense for the volume and average price of your transactions. Make sure to read the fine print for any additional fees or charges that you may face. Small amounts can add up quickly!
It’s important to keep your customer’s—and your own— data safe. Hacks and data breaches can spell disaster for small businesses and cause loyal customers to lose trust in your brand. One of the perks of working with a PSP is the security that they offer you and whoever walks through your doors.
Getting the answers to the following questions can help you assess the level of security that they provide:
- What security measures does the PSP offer its customers?
- How will they help your business stay compliant with relevant rules and regulations?
- Do they offer education, training, or resources on security topics?
- How are they preparing for security threats of the future?
Knowing these answers can help you decide whether or not your customer’s private information would be in good hands.
4. Customer Support Capabilities
Even if you have the best payment service provider, things can still go wrong. That’s why you want to ensure that someone will be there to take your questions or walk you through troubleshooting if an issue ever arises.
Get an understanding of what customer support may cost, who will help you, and when the help is available. Reputable PSPs should offer comprehensive support at no cost.
5. Software and Hardware Offerings
The last thing you want is to get set up with a PSP only to discover that you can’t accept some of the most popular payment methods used today. Fiserv ran a study that showed 69% of consumers feel that multiple payment options have a positive impact on their satisfaction with a business.
Make sure that the credit card and debit card terminal(s) that you receive are equipped with EMV chip readers and other software that may be required to take the payment methods that you want to offer your clients.
6. Easy-to-Understand Contracts and Terms
You want a PSP that is transparent in everything they do. Don’t find yourself in a situation where you’re caught off guard because of hidden terms and fees your PSP wasn’t upfront about.
Easy-to-understand contracts and terms signal that a payment service provider has your best interest in mind. Make sure you fully understand how long your contract lasts, additional fees that you might incur, and what services are mandatory or optional.
7. Value-Added Services
Lastly, check if the PSP offers any additional value-added services that your business can take advantage of. Some companies offer things like:
- Additional fraud-prevention solutions
- Transaction insights
- Marketing resources
- Loyalty and gift card programs
All of these can be used to help your business grow and succeed.
Finding a Payment Service Provider That Works for You
If you can’t accept payments from your customers, your business will come to a screeching halt. Finding a payment service provider that you can trust is key to running a small business smoothly and efficiently. By looking for these seven qualities, you can ensure that you work with a PSP that is transparent, trustworthy, and can help you run your business smoothly.
Here at Amplify, we’ve partnered with Fiserv and Clover to provide our business members with exceptional small business payment services. Contact us today to find out how your small business can benefit.