Payment Processor Tips
Table of Contents
- Processors should be attentive to their merchants' needs
- Processors should inspect merchant statements
- Processors should team up with the right partners
- Processors should offer the services modern merchants are looking for
- Building trust and loyalty with merchants
- What does a payment processor do?
- Are payment processors the same as credit card networks?
- Does payment processed mean “paid”?
Merchants, banks, and card networks may dominate discussions about chargebacks and other challenges within the payments industry, but we should never overlook the other players in this ecosystem who make instantaneous global eCommerce possible
Payment processing companies perform the essential work of authorizing and settling transactions for merchants, handling all of the lightning-fast checks and communications that allow you to enter in payment credentials and see the “approved” message pop up within a matter of seconds. This is vital work, but in today’s competitive environment, it sometimes goes unrecognized.
How can payment processors set themselves apart from the pack and strengthen their relationships with the merchants they serve?
The reality for payment processors is that the competition is fierce and plentiful — there are over 10,000 payment processing companies operating within the United States alone. So much competition means that profit margins are razor-thin for most processors, since there’s always another company willing to undercut you by a few fractional cents.
Merchants who don’t have a strong relationship with their payment processors — or any reason they can point to for staying with one company over another — will often change providers to get a better deal.
Worse yet, many banks are offering payment processing services to merchants, and the scale at which they’re operating makes it even easier for them to offer the same services at a much lower markup.
The answer isn’t to race to the bottom, streamlining to the point where you can price out your competitors but have little else left as a selling point. Instead, payment processors should focus on creating positive relationships with the merchants they serve.
Many merchants and payment processors don’t even realize how they can benefit each other by communicating more often, providing individualized service, and forming mutually advantageous strategic partnerships. When merchants know their payment processor will keep them informed, treat them well, and help them when they need help, they're likely to stick with that processor long-term, even if others offer lower prices.
We have three simple but powerful tips for payment processors to help them build stronger, closer relationships with their merchants.
Processors should be attentive to their merchants' needs
What happens when you see a beautiful houseplant at a nursery, buy it and take it home, and then proceed to forget all about it? It dries up, withers, and dies. Too many payment processors treat their clients like forgotten houseplants: They’re excited to acquire them, but they don’t take the time to give them the care and attention they need, and the client doesn’t stick around.
Just as houseplants need sunlight and water, you have to keep nurturing your relationships with clients or you won’t get to keep them for very long.
What does that mean in actual practice? We’ve found that it can be very effective to simply reach out to your merchants at least once a month, and ideally try to set up a regularly scheduled meeting to check in and discuss any concerns or issues they might have.
Are they planning on expanding soon? Are they dealing with any new payment-related pain points? These are things that their payment processor ought to be aware of in order to provide them with the highest quality of service.
Remember, keeping clients you already have is cheaper than going out and finding new ones. Ongoing communication is the key to growing lasting relationships with merchants.
Payment processors should also strive to be available whenever a merchant has a problem or question they want to address. Merchants with 9-5 business hours are largely a thing of the past, and larger eCommerce merchants in particular are often doing business at all hours of the night. If a merchant runs into a problem and you're not there to help, it can lead to some serious frustration, even if they don't blame you for being unavailable.
In contrast, if your merchants know they have someone to call at 3 a.m. on a Sunday if something goes wrong, that's a compelling reason to stick with you over other processors.
Processors should inspect merchant statements
Most eCommerce merchants are busy people. They’re working hard to succeed in a highly competitive, fast-moving industry, and it can be all too easy to overlook the small details that can snowball into big problems if you aren’t paying attention. As a payment processor, you have a window of visibility into one of the most important aspects of their operations, the revenue going in and out of their merchant account.
Merchant account statements tell a story about what happened with the merchant’s business that month. By reviewing them, you can learn about many of the big changes and daily ups and downs that they’re facing.
Are they growing? Declining? Falling victim to fraud? Issuing lots of refunds? Getting hit with a lot of chargebacks? Merchants don’t always review these statements closely, and sometimes they don’t even know when they’re losing money to chargebacks or refunds.
If you’re evaluating your merchants’ statements and maintaining close communication with them, you can point out the early warning signs of a rising chargeback rate or a vulnerability to fraud and offer them possible solutions before the problem grows out of hand.
Not only does this help your merchants stay in business, thereby preventing you from losing a client, it also engenders significant loyalty when you help a merchant address a problem that may have been draining their revenue without their knowledge.
Processors should team up with the right partners
As a payment processor, you might be able to see problems on the horizon for your merchants, but you don’t always have the resources to solve them. Getting a spiraling chargeback problem under control isn’t necessarily in a payment processor’s wheelhouse, so while you might be able to see a merchant’s problem clearly, you might not know what you can actually do to help them.
In these situations, you can make yourself indispensable to your merchants by forming strategic partnerships with the right third-party providers.
Say you’ve identified a problem with a merchant’s chargeback rate and have brought it to their attention. Well, now what? If you’ve partnered with an experienced chargeback management firm, you can immediately offer to bring them in to start working on the problem. The merchant will soon see positive ROI and have even more reason to trust you and maintain their business relationship with you.
The key here is to choose experienced, reliable partners you can count on to deliver quality work and professionalism. Pointing your merchants to a cut-rate business that's only looking to extract as much money from its customers as possible will likely hurt you rather than help you. If you offer to introduce your merchants to an industry-leading partner, on the other hand, not only will your merchants have expert help solving the issues they're facing, but you'll also improve your own reputation in their eyes.
Processors should offer the services modern merchants are looking for
These days, most technology-conscious merchants are looking for the latest in payment processing software and services, and any processor looking to expand should be sure to offer these solutions.
One of the main things merchants are looking for these days is integrated payment solutions that can automatically send data to their CRM or any other tool their business uses. Processors who both offer this kind of software and assist in its integration will have an edge in attracting new merchants and an easier time keeping their current clients.
Payment processors should also offer mobile services alongside traditional ones, taking advantage of security features like 3-D Secure 2.0 and mobile-specific tools like biometric authentication. If current trends continue, it won't be long until smartphones are the primary device customers are using to make online purchases, and while not all merchants have caught on just yet, any processor would do well to prepare for the future of eCommerce.
Building trust and loyalty with merchants
Following these four tips should go a long way towards easing worries that you’re going to lose your clients to cheaper payment processors. Even though the competition will remain tough, your clients will want to stick with you because you’re actively looking out for their best interests, keeping in touch with frequent communication, and providing them with value that not every processor will even think to offer.
These four tips build on each other: By maintaining regular contact, you’re in a good position to alert your clients to problems that you’ve identified by evaluating their statements, and your strategic partnerships will be there to offer immediate and effective solutions, which can often be integrated into the modern systems you already offer.
If you want to thrive as a payment processor, you can’t just leave your clients to their own devices and hope they’ll keep generating residual commissions. Be proactive and nurture your relationships, and you might be surprised at how loyal your merchants can be.
FAQ
What does a payment processor do?
Are payment processors the same as credit card networks?
Does payment processed mean “paid”?
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