What to look for in an end-to-end payments processor

Commerce is changing. Digital technology has transformed the way businesses interact with their customers and accept payments. We are now into a world of omnichannel payments in which people expect to be able to choose from a wide array of options including credit/debit card, contactless, mobile, online or even cryptocurrencies.

From a customer’s point of view, that’s great. All we need to do is tap our card or wave our phone near the machine and it’s all done for us. For the merchants, though, all that convenience can be hard work. Each payment will involve a number of parties and processes, all of which will have to be managed. For all the advances in technologies, businesses still say they are struggling to make payment work as quickly and effectively as they would like.

According to a recent survey, 61% of retailers say they have increased their spending on technology. Even so, almost four in ten say they spend five or more hours a week handling payment problems while 22% said they were worried about fraud and 28% said they were planning to change their payment gateway provider in the coming year. Almost a fifth said they had missed out on more than $5,000 in revenue due to slow payments.

In other words, retailers are making great strides in adopting new technologies and adding forms of payments but doing so hard work and is causing them to miss out on revenue. They want something simpler, which reduces the time they spend sorting out problems.

What they really need is an end-to-end payments processor.

Digital payments work simply, but there is a huge amount of complexity going on underneath. Each payment requires many different stages and the involvement of several different parties including:

• Payment gateway: This is the main point of contact between you as the merchant and your customer. As soon as your customer makes a purchase, whether online or in person, information is exchanged between their bank account and your merchant account. The payment gateway uses software which communicates back and forth between the buyer, seller and financial institution to work out if they have enough money in their account to make the payment.
• Payment processor: The transaction needs to be authorized and transmitted to clear and settle the transaction. This processes the payment by connecting the gateway to the card brands.
• Card issuer: Each customer will have their own card issuing bank. Systems will need to communicate with these institutions to process and authorize the payments.
• Merchant account: As a business, you will have a merchant bank account which will settle and approve all these transactions. The process will have to communicate with the bank or financial institution which manages your merchant account.

A process involving so many different parties has are plenty of opportunities for errors and delays. In a world in which digitally savvy customers have become accustomed to having everything put instantly available, that can lead to dissatisfaction which can have them taking their business elsewhere.

Related: Why now is the moment for end-to-end payments

An end-to-end payments processor is a provider which can handle all these processes and balance all these parties for you. It uses an application programming interface (or API) which connects the checkout system to the payment network. It enables the system to gather information from all participants in this operation into one centralized space.

It’s a managed service with a centralized payment channel which handles omnichannel payment transactions from the point-of-sale device together with centralized maintenance and support for the entire system. Every step is managed continuously with no down time or delays which may interrupt the payment process

This comes with many obvious benefits such as:

• Saving time: The most obvious reason is that it reduces the time required to manage transactions. This frees you and your staff up to concentrate on other duties – namely making sales and generating money for your business. Your end-to-end payment processor should reduce the risks of problems occurring and will handle any issues as and when they arise. It takes up less of your time and reduces the risk of costly delays which can frustrate your customers.
• Increased revenue: Thanks to constant management and less down time, the customer experience runs much more smoothly and effectively. This will increase the speed and volume of your payments and reduce any frustrations your customers may feel. It will help in customer retention leading to more payments and more revenue. 
• Faster innovation: By integrating with your software systems, it is possible to support additional integrations meaning you can upgrade and update your system as the industry evolves. It makes it easier for you to offer your customers the latest innovations as they become available.
• Security: Greater management of the payment process leads to enhanced oversight and visibility in which every step of the payment cycle is managed. This helps to mitigate the growing threat of online and offline fraud.
• Better customer service: The easier and more available your payment systems are the better your customer experience will be. By cutting out error and delays you make it faster and easier for people to make payments. This will reduce the number of abandoned purchases and make it more likely that people will come back for more.
• A flexible omnichannel experience: Whether making payments in-store, through a mobile POS or online, your customers will get the same fast and fluid experience in all your channels. This meets evolving customer expectations and enables you to stay one step ahead of the game.
• One provider equals more visibility: A single provider for all your payments makes everything much easier. Rather than having multiple partners or ways of managing payments you have only one source you need to call. Having just a single provider also gives you more visibility which helps you access data more effectively to improve your business.
• Consolidated reporting: Having one centralized system to handle all payments means you can consolidate all your reporting needs into one location. If you have multiple merchants and sales channels, you can see all the information in one place. This helps you track sales, identify trends and make more effective and profitable business decisions.

In summary, therefore, an end-to-end payments processor can consolidate your operations, simplify the customer experience and give you more insights on which to make any business decisions. In a world in which technology is advancing at an increasingly rapid rate this will not just be a nice to have but it will be essential to keeping pace with your competitors. If you don’t have it, others will. 

While many providers will claim to be able to offer end-to-end processing, relatively few can deliver a truly integrated, omnichannel experience. A provider that can will be particularly valuable. The multiplication of payment methods means you need a partner which can centralize not only the acceptance of payments but also the processing and monitoring of the entire process. When making a choice, businesses will need to look what features it can offer, security, costs and how it can be customized to their own operation.

Businesses need a solution which can move with the times and scale up and down as needed. With a REST API, it is possible to support additional integrations to the payment processing platform which makes it quick and seamless to scale up and down, as needed. If you need to accept increased transaction volumes, the functionality is always there for you.

Systems can add new ways to capture payment instructions whether in person, over the phone, or self-service, web, IVR, desktop, card reader, pinpad or kiosk. It can add payment methods such as credit and debit cards, ACH eCheck, and cash and paper checks. Any new innovations to the landscape can be integrated quickly and effectively into your existing operation making it quick and simple to stay at the cutting edge of technology.

Understanding costs can be complicated. Every party which interacts with the process will understandably want to be paid. The credit card company will charge a percentage of each sale, while the issuer will charge an interchange fee based on the industry, sale amount and type of card used. Your merchant bank will charge a mark up fee on each transaction and your payment processor may also charge a fixed rate every time you process a transaction. It may also charge monthly fees and a cancellation fee if you exit your contract early.

These often come bundled up so it can be difficult to see what party is being paid what. An end-to-end payment processor can consolidate all these payments giving you complete transparency over your cost.

Your provider should be on hand to provide quick resolution of any queries you have. With a multiple payments landscape resolving a problem can be arduous and time consuming. You will find yourself having to phone multiple parties to identify the cause of the problem and get it solved. Because each of those entities only control part of the process, their ability to solve your problems or even identify the root cause can be limited. The entire process can take time, cause frustration and suck up valuable time and effort which you would rather be deploying elsewhere.

Data is also a valuable commodity. End-to-end payment processing providers should be able to provide comprehensive data about all aspects of your sales. What information it provides and how easy it is to generate reports and integrate with your wider systems will influence what insights you can generate and how easily they can be used to drive business decision making.

Security will be a critical consideration. Cybercrime has flourished during the pandemic with fraudsters targeting commercial transactions across all industries and all channels. The greater mobility of data which comes with digital transformation inevitably creates opportunities for fraudsters. Assessing the security provisions of any third-party providers including those offering end-to-end payment processing will be of paramount importance.

Features to look for from the best-in-class providers include:

• Encryption: End-to-end encryption will be critical in making sure any data transmitted is as secure as possible.
• Tokenization: Replacing sensitive data with non-sensitive substitutes reduces exposure of payment data. In the payments industry this is used to replace a card’s PAN number with a unique string of numbers. Even if this data were to be intercepted it would not be possible to identify the card number. Tokenization is a way to offer a fast and seamless checkout while minimizing the exposure of data.  
• PCI compliance: The payments card industry security standard demonstrates that a provider has adhered to minimum standards of security and comes in various levels, from one down to four depending on the number of transactions handled annually. 

You will also want to know what provisions are in place to protect your customers and yourself in the event that a breach does occur. It is impossible to completely eliminate the risk of a hack or breach. What counts in such situations is transparency and accountability.

Payments processing, then, can be a surprisingly complicated business. Technology has transformed the landscape making everything fast and seamless from the user’s perspective. However, all that convenience takes a lot of effort to deliver. Retailers are working overtime, balancing multiple systems and providers to ensure payments are transferred in the seamless, convenient and secure way customers have come to expect.

All of that can take its toll, especially on smaller retailers. As people experience more advanced payment solutions, they expect everyone – regardless of size – to be able to offer the same levels of functionality and performance. That may be fine for a larger retail outlet to promise, but it can be a drain on resources for a smaller enterprise.

By integrating systems into one play through an end-to-end payment processing system, smaller businesses can compete on a more even keel. It can free up you and your staff and reduce the possibility of errors and delays which can take time out of your week and leave your customers looking for alternative places to make purchases.