There are a number of things that you should consider.
All merchant service providers will need to assess the credit risk associated with your business. This is because your customers are protected under Visa/ Mastercard scheme rules for up to 120 days, enabling the merchant provider to process chargebacks (ability to claim money back), usually for goods not being delivered, faulty or if the business ceases to trade.
It is therefore important to consider the following:
- What is the timing difference between payment of a good/service and it’s delivery or subscription? The longer the period the higher the exposure. With subscription based services, try and keep for a shorter period (weekly/monthly vs annually) or in arrears, as this will limit the credit risk for the provider.
- Is there any seasonality in the business, or are you able to provide a monthly breakdown of card turnover to determine the provider’s peak exposure?
The merchant service provider will also need to model the payment profile of the your business over a 12 month period. To enable the initial modelling they will require the following from you:
- A business plan including forecasted card turnover over the next 12 months and the estimated number of transactions
- The schemes e.g. Visa/ Mastercard set varying charges dependent on card type and type of payment risk, so an indication of the following would also be required for the provider to determine the pricing proposal:
- % splits by debit cards, credit cards and commercial cards
- % splits by type of payment eCommerce, Telephone or Face to Face (terminals)
- Are you proposing to use 3D secure as this will reduce your costs?
If you have international customers it is also worth considering the following:
- Which currencies do you want to take payment in?
- Do you wish to offer alternative payment type? Visa and Mastercard form a small proportion of card payments outside of the UK e.g. c70% in Holland pay by iDeal and in Germany ELV is popular.
Once a merchant facility has been agreed, your provider will be able to work with your web team to set up a payment gateway and integrate with your website.