Choosing the Right Payment Processing Partner

When a software solution is paired with value-added services such as integrated payment processing, it enhances the merchant’s ability to streamline daily operations. As a software vendor, how do you make the right choice in selecting the best options?

When a software solution is paired with value-added services such as integrated payment processing, it enhances the merchant’s ability to streamline daily operations. As a software vendor, how do you make the right choice in selecting the best options?

Tips for Evaluating Payment Processing Partners

Your choice should take in many factors when deciding what is best for your solution and your customers. While most payment processors can’t fully understand the challenges of running your business, you can expect that they understand the types of solutions that are best for the verticals you support. Look for a partner that is channel-focused within your area of expertise.

From a technology perspective, businesses today have needs that span outside of the typical brick-and-mortar POS and are looking for a true omnichannel experience that blends online and in-store processing into one cohesive solution. Therefore, an ISV should find a processing partner that offers semi-integrated solutions to simplify payment processing needs in a single integrated platform. For example, the solution should offer PCI-validated point-to-point encryption as well as support for many form factors such as mobile apps, in the cloud technologies and chip-enabled PIN pads that support WIFI, Bluetooth and Ethernet.

Once you are comfortable that the processor provides the appropriate system capabilities, it’s important to understand the support structure for you as well as for your customers. As an integration partner, you should receive a partner support team with sales engineering consultants, integration support, easy-to-follow APIs and SDKs, a relationship manager, and an ongoing technical support team. Take the time to find a reputable payment processor with a knowledgeable, experienced support team for you and your customers.

Now that you have verified technology solutions, vertical compatibility, and a support structure, it’s time to focus on sales, residuals and the referral processing agreement. Do you have a sales team dedicated to selling your software solution or are you looking for a sales distribution partner? Some processors can make your product available through their sales teams and agents while others rely on referrals from your company. In either case, your partnership should include a specific marketing strategy to promote the payment integration in order to sign new merchant accounts.

The residuals earned from new merchant accounts can be quite complicated and many processors tout high residual splits. Don’t be fooled by a high percentage split; instead, look for transparency. All figures should be clearly defined and outlined in your residual statement. Ask for sample residual statements and compare apples to apples when possible.

Lastly, determine the structure of the agreement. Many contracts include exclusivity clauses, which by itself can be positive or negative. Working with one processor has its advantages such as increased residual levels and a more straightforward solution for your customer. Should you go the exclusivity route, look for a provider that has connections to multiple processors, thereby allowing for exceptions.

Finally, ask for references that are similar in size and channel as your company. Investigate and ask specific support-related questions that will help determine if the payment processor fits with your company and your customers.  


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Tony Calcagno is currently the director of channel management at North American Bancard (NAB) and has more than 13 years of experience as a merchant retention professional. NAB’s Velocity provides ISVs, software developers and businesses secure, integrated and customizable payment solutions.