Payment service providers (PSP's) are companies which help you accept payments from consumers purchasing goods on your website and pass the funds onto your bank. Without a PSP you will not be able to make your online shop transactional.
Because their role is so crucial to your e-commerce business, you should be very careful when choosing which one to work with. There are several issues you will need to look at when selecting your PSP.
1. Security - Your payment service provider must be Level 1 PCI DSS Compliant. You should also find out whether they are able to securely host the cardholder details of your shoppers for you - this will take a lot of hassle out of your business becoming compliant. Fraud is a huge issue for all online businesses, which is why security should really be your priority.
2. Merchant account - This is another essential feature for you to be able to trade online. If you have not obtained one from your bank or if the rates it offers you are not low enough, then a PSP may be able to set all up for you and get you a better agreement. It is worth calling several providers up in order to find out exactly what each of them can offer you in this department. They will want to find out what you sell and at what volume to give you a quote.
3. Integration - Depending on how your online store is set up a PSP will provide you with an appropriate gateway solution. Not all payment service providers can integrate with all the shopping carts. Check their website or call to find out if they can work with you.
4. Payment methods - The more payment options a PSP can offer you, the better. Various customers will want to use different means of completing payments. You want to be able to process all major debit and credit card payments as well as PayPal, MoneyBookers, etc. Once again, do your research and compare providers. You may also need access to a virtual terminal to process mail and telephone payments.
5. Ongoing support - Find out what level of support you will receive from prospective PSP's without additional charges. There may be times when things go wrong and you should have full confidence that your PSP will be there to help you.
You can switch payment service providers once your initial agreement has run out but you can save yourself the hassle by making the right choice first time.
If you are a start-up you may not be offered the best rates at first, but you will be able to renegotiate in future, once you have gained some trading history and your sales volumes have risen.
Finance may be a major issue for new businesses, but often the cheapest option is not the most suitable. Make sure that you look at all the above aspects before choosing your payment service provider.
Follow Eva Grzybek on Twitter: www.twitter.com/paypointdotnet