There are a few mistakes which can get you into trouble if you are too careless during ecommerce payment service provider (PSP) selection. Here are some of them.
You misunderstand the length of the contract and penalties for its early cancellation. Your contract with the payment processor remains valid for a limited period of time. Merchant setup is a costly procedure for the payment service provider. Consequently, the payment service provider will try to make the term of the agreement longer. In this way it will have more chances to compensate the merchant setup costs and even gain some profits. An average contract term fluctuates between 3 and 5 years, while early cancellation penalties are usually high. If you cancel the contract, you are obliged to keep paying the monthly fees until the initial term ends and cover other related costs.
You cannot estimate your future transaction processing volumes. Don’t make volume commitments, if you cannot estimate the volume of transactions you are going to process on a monthly basis. If you do not fulfill your volume commitments, you, probably, will have to pay the penalties, as provided by the agreement, and loose your discount rate. If you are a new business and you are not sure, how many transactions you are actually going to process, do not overestimate your future success in terms of transaction processing volumes. Any commitments you make must be consistent with your business model. Volume commitments are more common for stable businesses, which have been on the market for some time.
At Payment Gateway Software we have a considerable experience of working in merchant services industry. Our specialists will be glad to help you with the choice of the best payment service provider (payment processor) to partner with. Contact us, and we will assist you in selection of the best PSP for your specific business model.