Guest Column | May 31, 2013

Key Characteristics Of A Tremendous Payment Processing Partner


By Phil Wimberly, Senior Vice President, PayPros

Through the 1990s, evaluating payment partners was as easy as sorting out the revenue offering–a simple question of who will pay the biggest share of the profit on merchants signed together. In the 2000s, additional values like gift card solutions, PCI security strategies and mobile payment options became important measuring sticks when deciding how to participate most effectively in the valuable revenue stream represented by your customers’ merchant accounts. These payment-related business services–products and programs that are not credit card transactions themselves, but make electronic payments smarter and more effective–are increasingly the most important values a payments partner can offer a software developer or VAR.

These value-added, payment-related business services come in many shapes and sizes. Some have a horizontal appeal. Activation portals which approve merchants for an account without application or underwriting processes are valuable, whether your customer is a yogurt shop or a chain of health clubs. Some are vertically-specific, such as parallel payments, allowing a single transaction for several products offered by disparate vendors, with the intelligence to deliver funds to the proper merchant account. This is useful to veterinarians, online retailers and membership management solutions, but may not create leverage for grocery stores. eInvoicing solutions and the ability to custom-brand payment-related portals and reporting represent a new breed of technologically-based payment services that providers are delivering to developers and VARs, with the goal of differentiating your solution from simple banking services.

Identifying Opportunities

These examples can provide advantages for your software, increase customer retention and drive utilization of your preferred payments solution. The trick is to find a partner with the ability to identify these valuable payment-related business services, and the technology platform to deploy them quickly. A perfect example is a recent research survey we conducted at PayPros, identifying a valuable opportunity for our partners.

Example: The Declined Recurring Transaction Problem

We surveyed 230 businesses processing recurring and repeat transactions, yielding telling insights into the impact of having regular payments declined due to outdated or expired card information. We set out to learn the true pain points for operations–beyond the obvious ones, such as the loss of a percentage of revenue. We decided to uncover the perceived benefits of, and wishes for, account updating within their integrated payment systems. The data collected paints a vivid picture of what businesses struggle with daily.

Perceived Value of Eliminating Card Declines

When asked how eliminating the majority of card declines might impact operations, the top answer was “increased cash flow.” Popular responses also included, “better customer relations,” “reduction in card processing fees” and “improved staff productivity.”

Lost & Delayed Payments

Any card decline will delay the payment–from a day to several weeks. A portion will never be collected, as the customer or card information cannot be tracked down. The average value of lost and delayed payments for a business is $8,069 monthly. The average merchant never recovers 5 transactions monthly, accounting for $613 in lost revenues.

Tracking Down Declined Cards

The survey uncovered a number of soft costs–those not accounted for in revenue lost and processing fees. When a card is declined, staff is redeployed to track down the new information. Communications in the form of mail or phone calls are executed. When businesses measured the monthly cost for these expenses alone, they found they spent $271.

Partnerships That Solve Problems

The point of the survey? My organization decided to learn the experience of a niche group of businesses–those accepting repeat and recurring transactions. We quantified an acute–yet preventable–problem for your customers. Moreover, our Decline Minimizer account updating service addresses the problem. This is the type of vision you should seek in payment partners. Partners will need the technology and vision to solve problems for your customers, delivering intelligent solutions that will increase loyalty to your applications and, by proxy, increase revenue for you.