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In the world of online payment processing, there’s no way to get anywhere without passing through a payment gateway. These are the merchant services that authorize credit card payments to your merchant account and securely process them; although, as noted by IT World, your payment processor will often be different from your payment gateway, this is also assigned by your merchant service provider and can be seen as one of the many features under the merchant service umbrella.

In order to do business online — or with credit cards at all—you need to have an active merchant ID with your payment gateway service of choice, but that means making the choice to start with.

What makes one payment gateway better or worse than another, and how do you tell which one works best for you? In this case, it’s all about fees and features. The first thing any entrepreneur wants to know when investing in a new piece of equipment or new service is how much it costs, and the first thing every entrepreneur needs to know is whether or not the investment will work with their business. So what aspects of payment gateways vary from service to service? Find out before you make your choice.

See Also: PayPal heading deep into the market with its new hardware called beacon!

Protection and Payment Options

All payment gateways offer protection features, but you can be on the lookout specifically for features to prevent fraud. Always check for reviews and news about your favored merchant service company and make sure that they’re generally well-received and appreciated by their clientele.

You can also use this research time to look for alternate payment options. When it comes to online payment services, credit cards are definitely king—but they’re not the only game in town. According to CommerceGateway.info, if you choose the right payment gateway you can also accept eChecks, which provides shoppers an alternative to using a credit card. Until fairly recently this was the preferred option for subscription services, so depending on your target demographic you may want to look into this option.
Also, make sure that your payment gateway can accept all major credit cards, and any other option that may arise with your clientele such as debit and dinner cards.

Sales Volume

Before you choose a merchant services plan, you need to have a projected sales volume. Do research into your industry, figure out the average final price for an order and keep that in mind when you go to find a plan that works for you. Remember that most online businesses start off a bit slow, and ramp up over time with diligence in marketing via social media and other online venues, so don’t worry if you’re not reaching your projections from day one.

Likewise, if you find yourself consistently outdoing your daily projections, be prepared to contact your merchant service provider and see about upgrading your plan—fees, both monthly and per transaction, vary depending on how much you actually sell in a given period. Keep an eye on your sales and your projections to find your true average, and round up to find your monthly projection. You’ll also need to build yourself a “safety net” in that estimate, for high-volume seasons; this will help you avoid penalties and extra processing fees.

Fee for Services

Speaking of fees, all payment gateways charge something. Whether it’s a percentage off each sale, a monthly fee or both, factor that into your budget. Establish how much you’re comfortable paying to be able to sell your project, and look for a provider that fits your needs close to your limit.

One common mistake, especially in sole proprietors, is to choose the payment gateway with the lowest overall fees. This may seem like a good idea when you’re first starting out, but you may find yourself with limited features and growth opportunities if you always opt for the cheapest option. Fees should definitely be a deciding factor in choosing your merchant services, but it should never be the only factor. Again, do the research and make sure the service you’re looking at does everything you need it to, and does it all the time.

Best Options

Some of the favorite payment gateways and merchant services available for online businesses include Authorize.net, PayPal and Verisign—but that’s not the end of it by far. While TopTenReviews.com ranks Flagship Merchant Services as their number one merchant service provider, this isn’t a one size fits all solution. Many online retail services have a list of preferred payment gateways, so if you intend to go live through a service like Shopify, make sure your chosen gateway is on the list before you buy in for a year of service.
Understanding your needs may be a bit difficult at the outset, especially when it comes to sales estimates for a business that isn’t open yet, but merchant service providers are usually happy to provide assistance in choosing the right plan for your business. The worst that happens is you outdo your projections in sales and have to upgrade your plan!

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