When it comes to payment processors, there are a lot of different options on the market.
So, how do you know which one is right for you? If your business is looking for a payment solution, what should you be looking for in a payment processor?
Payment processor features can be broken down into the following categories:
- Security (PCI DSS, Tokenization, Fraud Detection, 3D Secure)
- Merchant Accounts
- Payments (Global, multi-currency, payment methods, mobile payments, QR codes)
- Integration (Integrated payments, hosted payment page, virtual terminal, shopping cart, API access, Buy Now button)
- Performance (Reliability and Scalability, speed, webhooks, transaction routing)
- CX (transparent fees, 24/7 support, CIM system, reports, invoicing, recurring payments, batch processing)
- High-risk transactions
I spent 15 years in the FinTech sector, the last several working for a large payment processor. I am well-versed in what features payment processors should have and why. Below is my listing of the 35 features that every payment processor should have to satisfy your business!
What are the best features that every payment processor should have?
1.) Secure Payments
Security is the most important feature that payment processors need to have. With all of the data breaches that have happened, businesses must have a processor that takes security seriously and has multiple layers of security. The transaction and cardholder data should be encrypted when paid online. Any payment processor should ensure secure payments so that you, as a merchant, are certain that your customer’s payment information is safe and secure.
2.) Regulated (compliance)
Payment processors should ensure that they are compliant with the pertinent laws and regulations of their respective countries.
3.) PCI DSS Compliance
Payment processors should be PCI compliant, which means that they follow the security standards set by the Payment Card Industry. By adhering to the PCI DSS standards, the processor ensures that they meet minimum levels of security when they store, process, and transmit cardholder data.
Tokenization is a security feature that payment processors should offer. It helps to keep your customer’s information safe by replacing sensitive data with a unique token. The sensitive data is stored in an encrypted vault, while the token is used throughout the system.
5.) Fraud Detection
Fraud detection is the process of identifying fraudulent transactions, either by ordinary methods (checking the signature and name match the card, address verification, or CVC verification) or by more sophisticated methods, using advanced analytics.
6.) 3D Secure
A fraud measure that payment processors should feature is 3D Secure, an additional layer of security that requires customers to complete an extra verification step with the card issuer.
7.) Merchant Account
Payment processors should offer Merchant Accounts to businesses, which is a type of bank account that allows businesses to accept debit card and credit card payments.
8.) Global Payments
With the global economy, payment processors should offer global, or international payments. This would allow businesses to expand their customer base by being able to accept payments from anywhere in the world.
Going together with global payments, multi-currency payments should be accepted (payments that are in a different currency); the payment processor should be able to convert between the different currencies.
10.) Multiple Payments Methods
There are many different payment methods, like credit cards, ACH (eCheck), digital wallets, and mobile payments. Payment processors should offer many alternative payment methods.
11.) Accept Major Payment Types
A good payment processor will accept payments for all of the major payment types: Visa, MasterCard, Discover, American Express, China Union Pay, and JCB.
12.) Multiple Payment Gateways
By offering multiple gateways for payment processing, the processor can provide more options and flexibility for the merchant.
13.) Automatic Payment Processing
Automatic payment processing is a feature that payment processors should have so that businesses can automate their payment processing and save time.
14.) Mobile Payments
Payment processors should offer mobile payment methods, like Google Pay™, Samsung Pay™, and Apple Pay™.
15.) Ease of Integration
It should be straightforward to connect with the payment processor, allowing you to start accepting online payments right away.
16.) Integrated Payment Page
A good processor will offer an integrated payment page, which is a payment page that’s hosted by the processor. This can make it easier to set up and manage your payments, as well as provide a more seamless experience for your customers.
17.) Hosted Payment Page
By having a hosted payment page, the processor allows your business to have a payment page that is customized with your branding. This can create a more seamless experience for your customers, as they will see your brand when they go to make a payment.
18.) Virtual Terminal
Virtual terminals are payment pages that can be accessed from any internet-connected device. This is a great feature for businesses that need to take payments in person, as it gives you the flexibility to accept payments anywhere.
19.) Shopping Cart Integration
Your payment processor should be able to support various shopping carts, like Shopify, WooCommerce, and Magento. This will allow you to take payments through your website and provide a more seamless experience for your customers.
20.) API Access
API access allows your business to connect to the payment processor from your system, giving you more flexibility in what you can offer your customers.
21.) Simple Checkout (Buy Now button)
Payment processors should offer a simple checkout, or Buy Now button, to make it easy for customers to make a payment quickly.
22.) Level III Processing
Level III processing is a feature that allows businesses to process payments by providing specific line-item details when processing the transaction. This is a useful feature as it can save you money if your business accepts many cards that are eligible for Level III processing.
23.) Reliability and Scalability
Payment processors should offer reliable and scalable payment processing. This would allow businesses to grow without having to worry that their payment processor is able to handle the increase in transaction volume.
24.) Fast transaction processing
The faster the payment transaction is processed, the better the experience is for your customer.
25.) Clear Fee Structure
Payment processors should provide a clear and concise fee structure so that you know what you’re paying for. There should be no hidden fees.
26.) 24/7 Support
Payment processors should offer 24/7 customer support to ensure that any problems are addressed promptly and that you can get help when you need it.
27.) Customer Information Management
With a customer information management system, your repeat customers will not need to enter their data on subsequent purchases.
28.) Detailed Reporting
Detailed reports allow you to track multiple streams of data
29.) Invoicing Options
Hassle-free payment processing should include options for invoicing, so you can get paid quickly and easily.
By integrating webhooks into your payment processing system, you can get real-time updates on the status of the transactions as they are processed.
31.) Transaction Routing
Transaction routing allows you to determine which system (payment gateway, aggregator, acquiring bank) you want the transaction to be processed through; this gives you some flexibility which may save you money.
32.) QR Codes
If your payment processor provides QR codes for payment, you can use these codes for in-store or online payments, and they work exactly like a ‘normal’ code except when scanned by the customer, which takes them directly to your payment form. It essentially functions as an electronic POS (point of sales) terminal – customers just need their smartphones.
33.) Recurring Payments
The payment processor should offer the ability to set up recurring payments. Recurring payments allow you to automate your payment processing and save time.
34.) Batch Processing
Batch processing allows your business to have automated jobs that submit large batches of transactions at once to the payment process; this is useful for certain automated processes.
35.) Accept High-Risk Transactions
If your business is in a high-risk industry, you accept high-risk transactions, or your credit is not quite where you want it to be, your processor needs to accept high-risk transactions.
What does a payment processor do?
Whichever payment processor you use will essentially act as the middleman between your business and your customer’s bank. The payment processor will process the payment and then deposit the funds into your merchant account. Your customer’s bank may also hold onto a small portion of the funds (known as a reserve) to protect against any potential chargebacks that may occur.
What are the features of a good payment system?
As the post above lists, every good payment system should provide security, fraud protection, multiple payment methods, different integration methods, the ability to send invoices and accept payments online, and recurring billing options.
What are payment processor examples?
There are many payment processors available, including Square, Stripe, PaymentCloud, Clover POS, and Dharma Merchant Services.
A payment processor is a vital part of any business that accepts payments, and it is important to choose a good one. The payment processor will act as the middleman between your business and your customer’s bank and will process the payment and deposit the funds into your merchant account. When choosing a payment processor for your business, it is important to consider your needs and what features are most important to you.