How do I choose a payment provider for overseas growth?

In going global, our social web platform has experienced a major problem with the payment provider we signed with, as it couldn’t process payment from certain cards. This has caused us a major inconvenience and loss of business. Has anyone else been through something similar – and even though it seems obvious, what due diligence should you carry out on payment providers before signing up with them?

A. Sanjay Sarathy answers:

The process of successfully accepting payments online is part science and part art.  There are numerous considerations to think about when dealing with a payments provider, and I’ve outlined below some questions to ask yourself and your vendor. 

1.  The demographics of your audience will play a large part in determining what types of payments you need to support for your social web platform. You mentioned it is going global. Are you aware of the top three payment methods for the geographies and audiences you care most about, and does your payment provider support these?


2.  Does your payment provider support the Account Updater functionality laid out by the card associations? This allows payment providers to update credit card numbers ‘behind the scenes’ based on geography, and can add between 1% and 2% to the overall successful transaction rate.

3.  How does your payment provider handle chargebacks? These occur when the consumer refutes a credit card transaction that appears on their bill. Does your payment provider manage and fight those on behalf of merchants? Best practices have shown merchants can win between 65% to 70% of legitimately disputed chargebacks.

4.  Digital services are taxed differently in various regions of the world. How does your payment provider handle the calculation of these taxes, and how does it keep up-to-date with constantly changing tax regimes? 

5.  Customer retention is a critical component of your strategy and your payment provider can play a big part in this. What does it do to overcome failed transactions, even beyond Account Updater? Based on best practice techniques, you should be able to add between 8% and 10% to your revenues from previously failed transactions actually going through, on an annualised basis.

6.  If your business model involves subscriptions, how you communicate with customers about upcoming bills plays a large role in optimising customer retention. Different best practices are associated with, for example, how you pre-notify clients on annual subscriptions versus those on a monthly plan. You should ask your payment provider if it understands these issues and whether it can support you in this.

7.  Reporting and reconciliation are critical. What types of reports does your payment provider deliver, and do these map to the critical business metrics you care about? Are you able to work with both pre-canned reports as well as the raw data that you can import into your own analytics engine? How do you reconcile the payments and billing information with your financials system?

8.  Compliance is a critical part of your online business model. The PCI standard governs the security of credit card data. Ask your service provider if it is a Level 1 Services Provider under the PCI DSS standard, and verify that it’s on the Visa website.

Sanjay Sarathy is senior vice president of marketing at on-demand payment and fraud management company Vindicia. Previously, he was chief executive at Above All Software.


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