Providing your clients with payment processing solutions can add value to the solutions and services you provide – and they can be a good source of recurring revenue for your business. Ryan Goodman, President of ConnectBooster, points out, however, that there are a number of payment processing mistakes MSPs can make and offers a few suggestions for how to avoid them.
1Partnering with the first payments company you talk to
Goodman says to remember that not all payment companies provide the same capabilities. You need to match the right payment solution features to your customers’ needs. To narrow down choices and find the right payments feature set for your client, ask questions such as:
- Does your client use a mobile point of sale (POS)?
- Do field workers accept payments?
- Does your client offer services and accept online bill payments?
- Does your client want the ability to set up recurring payments?
“Make sure the payments company has worked with businesses like your clients, they can avoid problems, and relate to the challenges they have,” says Goodman, pointing out, for example, legal offices, HVAC services, auto dealers, or B2B, all accept payment in different ways. Find a payment company with expertise in that market and that understands the baseline integrations necessary for accepting payments in those operations.
2Only checking the references the payments company gives you
Goodman says it’s also important to do your homework before entering into a partnership with a payments company. Talking with customers beyond the names of payments company-sanctioned references may provide you with a more complete picture of what it’s like to work with that provider.
Goodman suggests asking the references you talk to whether they know other people who use the payment company. He says if one business in a region works with a payments company, it’s likely there will be more. You can also read reviews online for some insight into any limitations of the payment solution, the support the payments company provides, or hidden costs.
3Assuming segmenting the network keeps payment data confined to predictable places
Goodman says it’s fundamental to control the parts of your client’s network that uses and stores payment data. This minimizes the chances of a hacker having access to the data, but it also keeps more of your client’s system out of PCI scope, making compliance easier.
Goodman says, however, “You may forget to look at the big picture.” He says it’s important to consider how your client handles payments in their environment. Does your customer store data in their network in ways you didn’t anticipate? For example, if your client sets up recurring billing. How do they collect and store the payment data they need? Make sure your clients are using encryption and tokenization as well as secure solutions at the point of sale, including EMV technology, to protect data throughout your clients’ entire operations. Also, advise your clients and help them establish and follow security best practices.
4Thinking fees are the same for any type of business
Different types of businesses will pay different payment processing fees, based on business classification. Goodman says some business types you wouldn’t imagine are considered high risk – IT service providers included. Goodman says to check merchant category codes (MCC), clearly explain fees to your customer, and avoid any surprises.
“There are a lot of different payments companies out there that can make things sound good,” he comments. “But you’re dealing with other people’s money, so there’s not a whole lot of forgiveness,” says Goodman.
5Not understanding your commission
Goodman adds that payment companies have a lot of interest in working with MSPs because of the new business relationships they can introduce them to. But remember, the partnership has to be beneficial to your business as well. He says not to be afraid to ask questions and make sure you understand exactly what your income will be. “If you don’t understand the underlying cost structure, it would be service provider beware at that point,” says Goodman. “They may tell you they’ll give you 60 percent, but 60 percent of what? You may find 25 percent of something clean could be more profitable. Truly understand costs so you know you are getting a fair shake.”
6Ignoring the commoditized payment market
Another mistake MSPs can make is not recognizing that to sell payment processing services successfully, you need to bundle them with other products and services that provide unique value to your customers. “There are hundreds of places a merchant can get payment processing. Couple it with value by taking the role of trusted advisor and showing your customers how to make their businesses run more efficiently,” Goodman suggests.