Choosing the Right Payment Processor

As a merchant, it’s very challenging to know which payment processor is right for you.  While price is important,  being able to pair your offering with the right bank is equally critical.  Payment processors are constantly adjusting their risk tolerance levels of what accounts they will and won’t accept. When it comes to the direct response business, sometimes the concern is the type of product offered, and sometimes it’s the billing model. Digestible, high ticket items and other products float on and off the prohibited lists for the 12 domestic payment processors that Swipe Payment Solutions offers. In other cases, certain payment processors won’t accept a reduced-priced first purchase or a risk-free trial.  There’s no point in applying to a payment processor that is not interested in your business type.  When you are denied for a merchant account, they will often run your credit.  This will often tip off the other payment processors during your next application, hurting your chances of approval further. So, applying to the right payment processor the first time is important. Here are some tips to help you get it right the first time:

Using the Wrong Bank or Your Local Bank

There are only a few payment processors suitable for most direct response offerings.  Using the wrong payment processor can come back to bite you in several ways.  The scrutiny of using the wrong payment processor feels punishing.  It usually comes at the worst time. Reviewing your telephone scripts, tax returns and financials are often required.  Long calls with the bank’s underwriting department annoy merchants who are just trying to conduct business without being hassled.  Higher rates, reserves held, and lower allotted processing volumes are other consequences of using the wrong payment processor.  Just a few chargebacks or returns and your campaign can be shut down completely and forever.  Many merchants are terminated with no proper time to open another merchant account.  Each month Swipe sees merchants who started their campaign and must switch payment processors. After having months to establish payment processing, now they’re panicked and need approval within days.

Local Bank

Never use your local bank for a direct response campaign.  Your local bank isn’t accustomed to seeing the normal spikes in payment processing volume advertising can bring.  Something as innocent as business success often causes a temporary pause in processing, which can bring your business processes to a halt.  In some cases, legitimate merchants are asked to leave and find a new payment processor.

How to Protect Yourself

Using the right payment processor can be the number one factor in determining whether your business is a success or failure.  After all, what can be more important than your ability to take payments for your product?  Make sure you always have a backup account in case of fraud.  Or, perhaps sales volume will suddenly exceed your expectations and you will need to additional payment processing volume.  Perhaps you’ll decide to change your offer and your existing processor won’t approve the modification.  Having a backup merchant account just in-case is a good idea.  Why skate on thin ice?  The cost of a second merchant account is minimal compared to the risk.


About the Author

Curtis Kleinman is the COO at Swipe Payment Solutions and can be reached at:
Phone: (310) 573-9019

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