How to Accept Enterprise Level Payments
Choosing a merchant account is a complicated and risky process for even the smallest one-register businesses. The right decision can enable your location to accept credit cards at reasonable rates, but the wrong decision can result in expensive fees, delayed payments, and reduced margins. Most small business owners who get stuck with a bad provider end up cancelling their accounts and switching to a different provider, losing a few hundred dollars in the process and gaining a healthy skepticism about the credit card processing industry.
At the enterprise level, however, choosing the wrong processor can be downright catastrophic. Astronomical fees, withheld funds, and data breaches can bring your entire corporation to a halt in an instant. Switching providers isn’t as simple as placing a call and mailing back equipment, and the cost of implementing an entirely new system can be prohibitively high. Simply put, you don’t have the luxury of learning a valuable lesson with a bad processor.
So what should you be on the lookout for? What makes one enterprise-level processor better than another? The following is a general overview of what you should consider when choosing a credit card processor for your enterprise level business.
Manage Your Costs
Large-scale enterprises are a tantalizing prize for most credit card processors due to the basic nature of credit card processing fees. As a general rule, most per-transaction fees are calculated in one of the following ways:
- As a percentage of the transaction amount
- As a flat fee charged per transaction
- As both a percentage of the transaction amount and a flat fee
This flexibility allows merchant account providers to tweak figures one way or another in order to maximize their margins on a given business. Low-volume, high-ticket merchants (automotive distributors, hardware suppliers, etc.) will find themselves paying huge amounts in per-transaction percentages alone, while high-volume, low-ticket merchants (retail and restaurant chains, dues-collecting organizations, etc.) will see their small flat fees start to add up over thousands of transactions. One way or another, the processor has the ability to take a sizable cut of your revenues.
The first rule, then, is to understand your business type and negotiate rates accordingly. For merchants with very expensive items but a low number of individual sales, it may be best to ask for high flat fees or monthly fees in order to keep the processor’s percentage low. For businesses that accept a large number of micropayments (often defined as roughly $10 or less), it is essential to reduce or eliminate the flat dollar amount per transaction, even if it means a higher percentage rate.
Another consideration is the overall cost of the processing system. What monthly or annual fees will you encounter? Are you required to show quarterly or annual proof of PCI compliance? Are you leasing your point-of-sale equipment or purchasing it? What one-time costs are associated with setting up the merchant account? Minimizing the time and maintenance required by your system will allow you and your employees to focus on making sales and streamlining operations.
Once you’ve settled on a merchant account provider, the final key matter is interchange fee management. Enterprise level corporations often qualify for Level 2 or Level 3 interchange rates, which are lower per-transaction rates reserved for certain business-to-business and business-to-government transactions. In order to obtain these rates, merchants will need to utilize special POS software that passes along additional details for each transaction. They will also need to accept payments from clients who use specific corporate purchasing cards issued by Visa and MasterCard. Many payment processors like to promise Level 2 and Level 3 rates without knowing for certain that their merchants will qualify for these rates, so it’s not recommended that you make your choice based solely on this pitch. However, once you’ve made a selection, it is a viable way to reduce costs.
Secure Your Network
Security is one of the most complicated and dynamic aspects of the payment processing industry. Unless you have a very strong background in network management, it’s likely that pitches like “P2PE,” “tokenization,” and “PCI compliance” sound like total gibberish to you. Realistically, though, you don’t need to understand the “how” of payments security as long as you focus on the “why.”
Think about the structure of your business. How do its parts connect to each other? For example, do you use a single internal system to manage your warehouse inventory? Or do you operate dozens of retail locations, each with a handful of internet-connected point-of-sale terminals? Try to identify points where your hardware interacts with external systems—banking networks, the Internet, accounting software—and make a note of each of these potential liabilities. Also be sure to look for internal liabilities such as data storage and unstable or antiquated hardware. These are the specific areas that you will want to ask your sales representative about in order to determine which company’s service suite is the best fit for you.
Any legitimate payment processor should be able to provide PCI-compliant hardware and software, so you can disregard that pitch immediately. Traditional credit card terminals in particular are largely provided by the same handful of manufacturers and are minimally susceptible (though not immune) to data theft. Internet-connected virtual terminals or online shopping carts can be incredibly diverse (and, as a result, accessible to third parties), but this doesn’t necessarily mean that they are less secure than phone lines. As a general rule, you will want to ensure that the data traveling from your network to any external services is encrypted and traveling over a secured connection. You will also want to be sure that you are not storing any unencrypted sensitive information on your servers or computers, as this is not compliant with industry regulations.
Each enterprise scale organization faces its own specific security challenges, so there is no blanket solution that ensures complete protection from fraudsters. The smartest approach is to pinpoint potential areas of risk and secure them individually. Don’t be afraid to ask questions—What does that acronym mean? What does this software do?—and to reconsider the methods you currently use to accept payments.
Integrate Your Systems
Systems integration is one of the biggest priorities for modern enterprise level corporations, but it’s also one of the biggest potential headaches. This is because there are hundreds of ways to link your company’s payroll, accounting, inventory, analytics, and payments, but there is rarely a clear-cut “best” option. The good news is that you can avoid difficulties down the road by making some smart decisions at the outset.
From a general payment processing perspective, there are two approaches you can take. You can go with a top-down, all-in one provider for your entire organization, or you can add separate custom solutions and then integrate them with each other. There are advantages and drawbacks to each approach, so the best integration strategy for you will depend entirely on the structure of your business.
The majority of enterprise level corporations—wholesale distributors, manufacturers, big-box retailers, restaurant chains—will find that an all-in-one solution is best for them. This is because all-in-one solutions offer the simplest integration and the highest degree of top-down control for large organizations. Having a consistent service provider for all aspects of business management will minimize retraining, ensure consistency across locations, and facilitate high-level analytics for all departments. As long as the system meets your company’s needs and is reliable, this model should be fine for your corporation.
However, there are risks to consider. For one thing, it is much more difficult to swap out an entire system than it is to change a single part. If you find that you are dissatisfied with any aspect of your all-in-one provider, you can’t simply replace that piece with a third-party solution. In most cases, you’ll be forced to discard every element of your business management system in order to fix a single problem. This inability to mix and match can force you to stick with a provider even if they are a bad fit for your company.
Another drawback to consider is that your various departments and locations will have limited flexibility to find their own custom solutions. If one of your franchisees sees the need for a different service than the system you’ve selected, they won’t be able to address those needs with a third-party option. This makes all-in-one solutions an imperfect option for decentralized organizations that oversee independent branches.
Finally, there’s cost. All-in-one solutions are generally more expensive because of the convenience they provide and the provider’s costs for developing and maintaining a proprietary system. They also limit your ability to shop competitively for low rates by bundling their standard processing rates with the rest of their services. If your ultimate goal is to keep costs down, then you are best served by piecing together several low-cost solutions that can be dropped if they get too expensive.
If you decide to tie together multiple services, find out what other solutions they integrate with before signing up. Don’t assume anything. Even if it seems like one service should directly connect to another, that doesn’t mean it will. In fact, it’s always best to run these decisions by your IT department if you have one.
Once you have a general sense of the type of processing solution your enterprise business needs, start doing a little research. Look for top-rated providers, then whittle down the list based on which processors offer the services you need. When you’ve narrowed the list to five or so providers, call them to see what kinds of features and service you can expect. Be thorough and patient, and try to give them the best sense of what your business requirements are. Once you feel comfortable with two or three providers, it’s time to collect quotes and start negotiating (see: Fee Sweep). With a little planning and smart shopping, you should be able to find an efficient and affordable merchant account provider for your business.
What do you look for in a payment processor for your enterprise-level business? Let us know in the comment section below: