How Electronic Check Payment Processing Works

There are more payment processing options than ever before and many of them are designed for very specific niches. This is a good thing, given the sheer diversity of payment preferences – especially across age groups, business types and technologies. Yet with so many options, it can be challenging to find the right payment processing solution for your own business how to start a payment processing company. Keep reading on to learn about things to look out for in finding the best remote payment solution for your business.

It is quite important that you pick a payment provider that offers secure data processing. If you accept credit and debit cards, this means selecting a provider that is PCI-compliant. You should choose a processor that can safeguard your customers’ payments using the latest in data security. This means taking advantage of technologies like tokenization, point-to-point encryption and other fraud management tools.

Many payment providers offer tiered pricing based on transaction frequencies and amounts. You should choose a package that fits your current needs in the here and now. After all, if you miss or exceed these transaction limits, you’ll end up paying more than necessary.

Ultimately, you want a payment provider that can quickly adjust to your needs as your business continues to expand. Ideally, you should be able to switch review your pricing with a dedicated account manager on a quarterly basis to determine any cost-saving changes. This will help you choose the best payment processor company.

Getting started with your payment provider should be as easy as possible. This includes enrollment applications, hardware and software upgrades, and training. These steps – if difficult – become “hidden” costs that should factor into your decision-making. The same is true of maintenance. If you have to constantly troubleshoot your payment environment, you may be better off choosing a different provider. Every second spent on a buggy interface is time taken away from your core business.

Obviously, you want to keep all processing fees as low as possible. The more money you have to pay, the lower your profits become. Therefore, it pays to shop around for providers that offer the most attractive rates but be careful. Nominal processing fees are not the only way that payment providers make money.

There are also hidden charges that can affect your bottom line. These additional charges aren’t necessarily bad. The important thing is to be aware of them before committing to any provider. Though keep in mind that it sometimes makes sense to pay a premium if the processor can guarantee certain benefits – like data security and fraud protection.

Most successfully businesses use one or more 3rd party payment processing services to process their credit card orders on Internet, since this doesn’t require to obtain a direct merchant account or to setup expensive ssl certificates. The 3rd party payment processing services handles payment by credit card (and usually can handle checks and other forms of payment as well), and sends the seller a monthly (typically) check or wire transfer, minus various processing fees, which vary from service to service.

unfortunattely every payment processing service deliberately holds the payment for an amount of time that varies between a few days up to several months. They do not send the payment immediately after the payment cycle has ended, but instead they hold the payment for the specified payment holding time. They say this is to protect them against fraud, chargebacks, and it also helps them with increasing their profit ( by holding the money in bank for an interest ). For example, for a monthly payment cycle and a payment holding time of 15 days, the money resulting from orders during October will be sent to you on or after 15th November. This is not a big issue if the payment holding time is not long, but some services have a payment holding time of 2 months or more, and you will receive your payment for October sales in January the next year.

Some payment processing services have additional fees, such as product download fee ( for virtual goods ), monthly fee, statement fee, refund fee, wire transfer fee, contract canceling fee. You need to ask them about all these fees, because most services do not clearly specify it on the website nor in easy to find documentation; and you might have unpleasant surprises later if you do not. Especially with the payment holding time, it’s disappointing to expect to receive the first payment just to find out that it will be sent to you months later.

It is a good practice to read the TOS ( terms of services ) and the contract before signing up, as many payment processing services state they reserve the right to terminate or suspend their services to any customer, for any and no reason at all, without notice, and they also state that the last payment will be held 6 months, for chargeback protection.