Payment gateways can often look more or less the same. While there may be minor differences in the fee structure, most options appear, at a glance, to be very similar.
Appearances, however, can be deceiving. Without the right know-how, you can wind up with a product that is a bad fit—or worse yet, a big financial drain.
It’s all about knowing the ropes. With the right set of knowledge, you can accept payments online while avoiding hefty transaction fees, and treating your customers to a seamless experience rich with features like mobile payments, the ability to use the payment method of their choice, and more.
It’s all about knowing what (and what not) to do.
Things to think about before accepting payments online
Making just a small number of extra consideration can make online payment acceptance a better experience for both your business and your customers.
Do: Find a payment gateway that helps you save money.
Finding a good payment gateway is the first, and perhaps most important step for businesses that need to accept payments online. There are certain features you should make sure any payment gateway you are considering has.
- Automated Clearing House: Automated Clearing House (ACH) is a low-fee variety of payment valued for its While it may not suit everyone—payments come in a little slower than from a credit card and it’s only available for U.S.-based customers—it can help your business save a surprising amount of money. And fewer fees mean more revenue back on your bottom line.
- Diverse Payment Methods: The more payment methods you can accept, the more diverse your potential customer base may be. Naturally, to accept payments online, you need to be able to handle credit card and debit card transactions. These days, however, card processing is just the tip of the iceberg.
- Credit and Debit Fee Transparency: A subscription or eCommerce business is sure to encounter a high volume of card payments. The average payment gateway extracts a small fee (usually 1.5-3.5%) every time credit card payments are made. This is a standard feature of pretty much any payment processing software solution. Unfortunately, many payment gateway merchants are deliberately vague in how they structure their fees. In addition to paying per transaction, they may also charge mysterious penalties and vague line items that quickly add up. Read the fine print carefully, and be sure to ask your payment gateway provider questions any time you are unsure what you are being charged for.
A good recurring billing software may feature built-in payment gateway integration tools that will allow you to accept payments online with total transparency.
Do: Integrate your payment processor with the rest of your fintech stack.
Tech integration is key to maximizing operational efficiency—which is always one of the core goals of any technological adoption. Integration gives you:
- Good, Clean, Data: Without integration, data entry is left in human hands. And as charming as those hands surely are, they are also accident-prone. The average American employee makes 118 mistakes a year. You can be sure that some of them happen during data entry.
- Better Customer Experience: Customers who are locked in for recurring payments get monthly invoices. The problem with handling this by hand is that it can be very difficult to bill with any consistency. One month you might send it out on the first. The next, the eighth. Not only does this make it hard to determine when you will get paid, but it can also be hard for the customer to follow. Automated billing software pairs with your other fintech to provide consistent, accurate invoices that your customers can depend on.
- Easier Revenue Recognition: A robust, fully integrated fintech tool belt also makes it significantly easier to properly recognize revenue. As subscription businesses know, payment for a monthly invoice is not actually earned as revenue at the point of sale. To properly adhere to IRS standards, you have to wait until the completion of the service period. While this is difficult to do by hand, an integrated fintech stack can create ledgers to automatically monitor revenue. About 60% of fraud causes concern improperly recognized revenue, so you must get this right.
Do: Consider level II online payment processing where possible.
Some of the fees your gateway provider charges are actually passed along from credit card companies. Usually, they’re small, but over many transactions, they can add up to the tune of thousands of dollars every month.
Credit card providers will give you fee relief if you can supply them with enough information to show the transaction is legitimate. Data such as:
- Billing total
- Check-out date
- Merchant category code (MCC)
- Store name
- Sales tax amount
- Customer code / PO number
- Merchant zip code
If you can provide your payment gateway software providers with this information, you earn your way into level II or even level III transactions, each qualifying you for more savings on fees.
The system exists to reduce the potential for fraud. The more information online payments produce, the more trustworthy they are deemed. You, in turn, are rewarded through a lower online payments transaction fee.
Accepting payments online? Avoid these no-nos.
And, of course, there’s a flipside. Some things can absolutely ruin the online payment experience for your customers.
Don’t: Skimp on security features.
As anyone who has ever been a victim of credit card fraud knows, online payments can carry a degree of danger and uncertainty. To safely accept payments online, make sure you don’t skimp on the security features.
PCI—or Payment Card Industry—compliance is a requisite part of handling mobile or online transactions safely.
For a subscription business, it’s a non-negotiable to accept payments online, but the stakes are higher for doing so safely. When customers create an account, they leave behind a wealth of personal information that you usually have to store long-term. Often, they pay through automated invoicing. Payments are withdrawn from the card they keep on file. Convenient though this is, it makes your business a big target for potential bad actors.
To handle online payments safely, make sure that your business is PCI certified. To get certified, an online store must:
- Build and maintain a secure network to accept payments
- Protect cardholder data
- Update your antivirus services regularly
- Develop a comprehensive online payment security protocol system
Fortunately, meeting these requirements can be easier than you might at first think. By working with a PCI compliant fintech stack you can offload many of the requirements, fulfilling them without lifting a finger.
While PCI compliance is not legally mandatory, it is an important aspect of building trust when handling payment online. If you are going to accept credit cards as a form of payment, customers also expect you to accept the responsibility that comes with handling their data.
Not only does PCI compliance inspire public trust but it also actively makes sure your transaction process is secure.
Don’t: Forget to enhance the experience for international customers.
Half of all buyers won’t even consider a product if it is listed in a currency other than their own.
Many gateway payment providers support multi-currency payments. Couple this with an automated billing platform that supports hosted registration pages and you can create a localized experience for international customers and effortlessly start accepting payments in foreign currency. You get more money in your bank account and the customer gets to pay the way they prefer to at checkout.
It’s also worth noting that there are significant financial advantages that come from opening yourself up to foreign markets. Nearly 70% of businesses with international customers say they have experienced revenue growth.
(In fact, Stax Bill integrates with Digital River to help subscription businesses expand abroad easily and successfully!)
The bottom line: Accepting payments online isn’t as simple as it seems
It’s true: accepting payments online can be more complicated than it seems. It’s also a fundamental aspect of doing business.
Often payments online are mostly thought about in terms of the fee. But while fee literacy is important, it’s just one part of the story.
The way you handle your online payments is a customer-facing consideration that can have ramifications—positive or negative—for the rest of your business. To survive and thrive, you’ve got to get it right.
Quick FAQs about Accepting Payments Online
Q: What are the key considerations when choosing a payment gateway for a SaaS business?
A good payment gateway for a SaaS business should offer features like Automated Clearing House (ACH), diverse payment methods, and fee transparency. It should also integrate seamlessly with your tech infrastructure for efficient operation, data accuracy, improved customer experience, and easier revenue recognition.
Q: How can a SaaS business save on transaction fees with payment gateways?
A SaaS business can save on transaction fees by using the Automated Clearing House (ACH) for payments. Additionally, providing your payment gateway with sufficient information to prove the legitimacy of transactions can qualify you for fee relief from credit card providers.
Q: Why is PCI compliance important for a SaaS business accepting online payments?
PCI compliance is crucial for a SaaS business because it ensures the secure handling of card transactions. It builds trust in customers who expect businesses to responsibly handle their data. Moreover, it fortifies the transaction process against potential security threats.
Q: How can a SaaS business improve the online payment experience for its customers?
A SaaS business can improve the online payment experience for its customers by offering diverse payment methods, consistent and accurate invoicing, and multi-currency support. It can also ensure a secure transaction process by being PCI certified and maintaining a robust online payment security protocol system.
Q: What are the benefits of integrating a payment gateway with other fintech tools for a SaaS business?
Integrating a payment gateway with other fintech tools reduces human error in data entry, provides consistent and accurate billing, makes revenue recognition easier, and enhances overall operational efficiency. It also helps in maintaining PCI compliance by automating many of the requirements.
Q: What are some of the best payment gateways for SaaS businesses?
Some of the best payment gateways for SaaS businesses include Stripe, Braintree, Chargify, Chargebee, and Recurly, among others. These gateways offer features that can cater to the specific needs of SaaS businesses, such as subscription management and diverse payment options.
Q: Why is it important for a SaaS business to support multi-currency payments?
Supporting multi-currency payments is important for a SaaS business because it allows the business to cater to international customers, thereby expanding its potential customer base and revenue. It also enhances the customer experience by allowing customers to pay in their preferred currency.
Q: What are the potential consequences of not handling online payments properly in a SaaS business?
Improper handling of online payments can lead to a poor customer experience, security breaches, and potential loss of revenue. It can also lead to non-compliance with PCI standards and may result in penalties and a loss of customer trust.
Q: What is the role of a payment gateway in a SaaS business?
In a SaaS business, a payment gateway plays a crucial role in accepting and processing payments from customers. It allows merchants to accept debit or credit card payments and sometimes even other payment methods, such as ACH. It also ensures the secure and efficient processing of these transactions.
Q: What is the importance of fee transparency in a payment gateway for a SaaS business?
Fee transparency is important because it allows a SaaS business to understand exactly what they are being charged for each transaction. This helps to avoid unexpected costs and ensures that the business can budget accurately for payment processing costs.
