Payment processing- an industry surrounded by mystery, regulation, and misconception.
The market is flooded with hundreds of processors looking to open merchant accounts for any merchant that will have them from large banks to Independent Sales Organizations or even agile fintech companies. Like most competitive industries, processors find themselves in a price war with a mandate to offer the lowest-cost solution possible. It may seem like a win for merchants, but when a competitive advantage relies on low-cost models, solid customer support and technical innovation get left behind.
Juggling the importance of keeping costs low, finding a reputable provider, and receiving top notch support services is a critical balancing act that can seem daunting for any merchant. In order to select the best option, iQmetrix Payments has broken down common pain points that merchants experience when it comes to their processor.
Pricing is a primary factor for merchants when choosing a processor, but if a merchant isn’t careful they will select a processor whose fees end up being much steeper than originally promised. It is critical that a merchant look not only at processing rates but also the structure of the pricing model. Structures such as interchange plus, flat fee, and tiered pricing offer various pros and cons for businesses. These considerations are typically based on factors such as the industry, the number of transactions being conducted each month and the average ticket value of each transaction. Merchants must be aware of the types of fees and amount of fees associated with each model. For more information on how to choose the right cost structure for your business, read our blog post here where we dispel the myths of pricing models.
The word transparency is thrown around a lot in the world of payment processing. From transparent pricing to “the most transparent solution on the market,” the term can become more than a little worn. The biggest problem for merchants who are looking for a “transparent” solution is helping them understand what that means. Many merchants view the word transparent as synonymous with simple, and although this may be true in some cases, in others it means the exact opposite.
One such example brings us back to pricing models. A flat fee pricing model promotes simplicity by offering a flat rate percentage on each transaction. Merchants can expect to see one fee listed on their statement, which to some, is more transparent when understanding their fee structure. This is a misconception, as a flat fee pricing model is built to hide additional fees within its single rate. Flat rate is actually the least transparent and often most costly pricing structure available to merchants.
ApplePay, AndroidPay, EMV credit and debit, AMEX- the list goes on and on for the various types of payment acceptance that a processor facilitates. With so many ways to accept electronic payment, it can be difficult to determine which method a merchant should be taking. Although a processor can equip merchants with all forms of payment acceptance, they often forget to mention how costly a robust system is to setup and pay the high fees associated with premium credit cards and mobile wallets.
We recommend that a merchant first understands how their customers want to pay before they decide to accept everything available to them. For more information on mobile wallet adoption and usage, read our post here.
Hardware procurement is an area where we find the most support issues. Processors can board any business to their merchant services program, without having to specialize in a particular industry. Without understanding the intricacies associated with a merchant’s business, generic hardware packages often fall short of expectations. It is typical that a merchant receive the wrong software injected into a payment device or are missing cables and cords to connect terminals to their point of sale. Time delays and large costs to update device firmware throughout its lifespan also plague merchants who choose processors based on a price. Without understanding industry needs or business objectives, generic hardware solutions lack flexibility and often become costly to replace, update or fix.
Payment processing is a vast industry with numerous players, moving parts, and empty promises along the way. Merchants must be conscious of processor differences and look for selection criteria beyond price to find the right solution for their business.
iQmetrix Merchant Services is one such solution that seeks to provide comprehensive service and unique industry expertise to help our merchants streamline their payment decisions. Combining a customer first approach with a transparent interchange plus pricing model, iQmetrix Merchant Services is a compelling program customized for our merchants to help guide their business growth.
Learn more about iQmetrix Merchant Services today!