If your business accepts payments on behalf of others through its website, you need to know about the payment processing rules.
You might take this payment because you have an online marketplace where other businesses display their goods for sale (like Amazon, Wowcher, Groupon or NotonTheHighStreet.com), or you offer concierge services, food delivery services (like Deliveroo) or even insurance and other service-related products.
January of 2018 saw the introduction of new legislation (called PSD2) which extends far wider (to catch more businesses), a previous requirement for all relevant payment processing businesses to acquire a license to operate these kinds of arrangements.
The licence can cost over €200,000 and take more than a year to be granted.
Your business processes payments for others - do you need a licence?
The good news is that many businesses have managed to comply with the legislation, and avoid a direct licensing obligation, by working with an authorised third-party payment provider that holds a licence to process payments on their behalves.
But since the fines for non-compliance are considerable, and all businesses accepting payments (no matter how small) are caught, our guide sets out what you need to be considering and ensuring you have in place, if taking payments for others is part of your business model.
How do you choose a payment-processing provider for your site?
Here are some things to look out for when selecting one:
Getting your payment processing sorted as soon as possible will mean that you're PSD2 compliant from the start, and that you'll also not cause any unnecessary interruption to your customers.
So, look for a processor that has pre-made UI components (these are all the on-screen buttons, menus, text boxes, etc. that a customer needs to use) - this is a much quicker way of integrating the third-party payments system on your site compared to those that don't.
2) Global reach:
Even if you're only selling within the UK for now, you may want to expand into other countries in the future; so, make sure your payment processer enables you to expand further, without the need for separate solutions in different places.
While your customers will technically be paying your payment processing provider rather than paying your business directly, some of the best providers enable you to customise the payment experience to fit in with the rest of your customer experience and branding.
No matter how small or large your customer base, you need to be able to manage funds coming in and out of your business easily. Make sure you choose a payment-processing provider that has an easy-to-use platform, which will enable you to easily see, track, and amend all your transactions when you need to.
Most of the main providers you'll come across today have very good 'plug-and-play' offerings that can be relatively easily embedded into a website without the need for you to have significant technical knowledge or skills.
As with any new business relationship, you may run into questions or even have problems with your payment processing that need fixing urgently - so it's very sensible to take into account the processor's customer service support when picking yours.
Look at what they mention on their site (do they offer 24/7-hour support service or a reply-within-48-hours service, for example?), and take a look at online reviews of their service, if possible, too. A simple 'compare payment processors' search on the internet yields some helpful sites that can help you to identify which provider may be a good choice for your business. Most will offer free trials as well and/or demo accounts so that you can see how well they fit with your environment.
Providers will generally charge you a % handling processing per transaction. Pay attention to refunds as well, since if you need to refund a customer payment, there is often an additional processing charge for this too.
Other benefits of third-party payment providers
Not only can a payment-processing provider keep you compliant with PSD2 legislation, it can also teach you valuable things about your customer base by giving you often unique data insights into their spending patterns.
And of course, it allows you to focus on what it is that you do best - running your business, rather than getting bogged down with complex legislative and administrative details.
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