Choosing the right payments partners

The payments partners you use can have a big impact on customers. Estimates suggest that almost a half of UK consumers have abandoned an online purchase because of payment issues – for example, because a website does not offer their preferred payment option, or because the payment process is slow or seems insecure.

You also need to ensure that you are working with a payment processor or other partners who can minimise the risk of your business falling victim to fraud.

What payment services do you want?

Start by identifying what types of payment you want to be able to accept:

• in-person payments, for example in retail premises, including contactless payments
• online payments through your website
• different types of credit card such as Mastercard, Visa and American Express
• payments using digital wallets like Apple Pay and Google Pay
• direct payments from the customer’s account to yours
• repeated subscription payments
• international payments and payments in different currencies

Smaller businesses and start-ups may prefer to work with a payment services provider that can handle all their payment needs. Look for a provider that works with your size and type of business: for example, restaurants and retailers can choose a complete point-of-sale (POS) system .

Alternatively, you can build the payment system you need by working with different partners. For example, you can accept card payments using a payment gateway and your own merchant account.

Make sure you understand what security measures any payment provider offers to help protect against payment fraud.

Set up and integration

Make sure you understand what is involved in getting your payment system set up. Again, all-in-one payments systems aimed at smaller businesses are generally the simplest.

If you want to accept payments online, you have two broad choices. Integrating payments directly into your own website provides the best customer experience and allows you to customise how you want your site’s payments to look. But an integration like this can be technically challenging (and therefore expensive).

A ‘hosted’ solution – where the customer is redirected to your payment provider’s website to make payment – is much simpler to set up. However, this approach makes the payment process slower, and means that you cannot control the look and feel of the payments process. Redirection risks deterring customers who do not recognise (and trust) your payment provider.

Other questions to ask include:

• whether and how the payments process can be integrated with your invoicing and bookkeeping systems
• what reporting tools you get, so that you can see information on transactions, payments and fees

Costs

Upfront costs vary dramatically. Many solutions targeted at smaller businesses offer zero initial costs, though you are likely to have to pay if you need any equipment such as a card reader. But initial costs will be much higher if you need any bespoke integrations – whether you are paying the payments provider or your own technical resources.

Ongoing costs can include flat rate payments (eg a monthly service fee) as well as costs per transaction. As these vary for different types of transaction, you need to estimate what payment methods and transaction sizes you expect to get an accurate comparison of different providers’ likely costs.

Simple, small business solutions tend to have slightly higher costs per transaction than more complex payments solutions and businesses with higher transaction volumes.

Payments service details

Ask for a demonstration of any payments system. Go through it in detail, looking at what the customer sees and has to do, and how long the whole process takes. For online purchases, check how the system works with different types of device (eg desktop, tablet and smartphone), operating systems (Windows and Apple) and browsers.

Ask contacts and search online for any information you can find on the provider’s reputation for speed and reliability. Slow transaction processing or payment failures can lose you sales. Check what kinds of support the provider offers – will you be able to speak to someone or are support issues handled by email?

Check the detailed terms of any agreement before committing yourself:

• Are there any restrictions on the payments you can receive? Some providers limit the total value of payments, or the size of individual payments.
• How soon do you get paid? There is typically a delay of up to a week between a customer paying by card and the money being credited to your bank account.
• How will any disputes be handled, for example if a customer queries a card payment? Under what circumstances will any fraudulent payments be charged back against your account?  
• How flexible is the solution if your payments needs change? What will happen if you want to change or terminate the contract?