Recently, we advised merchants about the myths surrounding payment providers’ services, such as hidden charges and misleading claims about which features are included. Now, we’re back again with more myths payment providers love to propagate.
Merchants and marketers need to see through the hype to understand what they are giving up if they are only focused on single point payment transactions. As marketers, we understand it’s important to build long-term relationships and ongoing recurring revenue streams.
As more digital marketers manage the Commerce channel, it helps to understand what’s lying ahead. Online commerce, on mobile or social, is where every brand wants to have a presence and to serve their customers, but this is more complex than it appears at first glance.
Commerce means more than just managing payment transactions, it is also about billing, customer support, distribution, merchandising and marketing. Marketers need to keep a close eye on what payment platforms are capable of because poor customer feedback in any of these links to the chain will inevitably lead to brand damage.
So, here are some more myths you need to care about...
Myth One: “Customers can pay any way they like”
Payment providers often claim they seamlessly support over 200 payment methods which sounds like more than you could ever need. But under close inspection, we can reveal some inconsistencies among those hundreds of methods. To make their offerings look more impressive to the market, many payment providers will count every type of credit card, including debit cards, payment gateways, individual bank automated clearing house (ACH) and bank-specific wire transfers as separate payment methods. That is, being able to wire money to HSBC, Nationwide or Lloyds will be counted as three separate payment methods, when they are all just wire transfers within the UK.
This can make payment providers appear more impressive, but it doesn’t actually increase payment options for customers. Instead of solving roblems, the lack of real options create more issues for customers and could lead to poor feedback.
Myth Two: “Onboarding is easy”
Contrary to their name, most payment “processors” do not actually process payments. Rather, they simply provide a payments gateway authorizes credit card transactions.
This leaves it up to you as the merchant to locate a front-end payments “acquirer” which actually handles the exchange of money. The selection of a front-end solution involves completing a lengthy risk evaluation process before you can accept payments. This creates a large barrier between the merchant and new income. Avoid this issue by ensuring your payment providers can truly handle the full payment process, right from the start. If your provider doesn’t measure up, you may want to look into alternative options which actually process payments all the way from the customer to the bank.
Myth Three: “You can scale easily”
Just as with chargebacks and refunds, scaling your payment activity to a wider global market often requires you to invest in various essential add-ons to the basic service. This typically means you’ll need to implement a separate offering which requires a new contract and additional service fees. This can increasingly gobble up chunks of time and revenue as your business expands. While you may be doing more business, running disparate commerce systems can end up costing you dearly.
Do make sure you truly understand what will happen when your payment volume and target markets grow.
Myth Four: “Our pricing is transparent”
Pricing strategy is key to any product marketing campaign. Typically, claims of pricing “transparency” covers the disclosure of gateway fees only. While most payment providers make gateway fees very clear, as they’re required to, there are other hidden fees merchants need to be aware of.
These hidden fees may include chargeback and refund fees, cross-border fees. API call fees, which can run up quickly when three or four API calls are needed to process a payment. The combination of these fees can increase the gateway fees of 2 to 3 percent, so make sure you understand the full list of fees assessed for your transactions.
Myth Five: “We can help anyone sell online”
Payment providers may help you sell online, but their services alone are typically not enough to get you up and running in your target markets. That’s because, as noted, most payment providers offer only a payment gateway, requiring individual merchants to set up their own merchant accounts in each country where they accept payments.
Setting up these accounts is not only laborious and time-consuming, but it involves credit checks, risk evaluations, and lots of bureaucracy. Merchants should not waste time setting up new accounts but instead be focused on creating0 marketing collateral to hit sales prospects with. Always keep this in mind when selecting a payment provider and ensure you get a partner who can truly help you sell everywhere you need to.
We hope these five myths are useful reminders for merchants when seeking a new payment solution. By giving customers a frictionless path to payment and employing a complete Commerce solution you can build long-term relationships and generate ongoing recurring revenues from loyal customers, wherever they are in the world.
By Ed Chuang, Marketing Director at Avangate.
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