Law #1 - Don’t Concede to Commodity

Merchants scrutinize decisions about order management, fulfillment and customer service based on the ease with which they fit into their operations, show positive ROI across shorter-cycles and limit the additional infrastructure needs upon the organization. All payment processing decisions should be looked at in the same manner. Looking through the “lowest-cost” lens leads, in part, to minimized expectations that a payment processor can add value to the business. Choosing a “low cost” solution without understanding the value returned by all options is a luxury most merchants cannot afford in any part of their business.

Law #2 - One Size Does Not Fit All

Merchants today have more choice than ever when it comes to managing payments and choosing the platforms through which they run. Simply put, when selecting a payment processor and platform, “better for you” is more important than “most popular.” What the merchant sells, how it sells its products or services and the medium through which most of the payments are received should always dictate how a merchant processes those payments.

Law #3 – Don’t Get Tied Up in a Bundle

“Interchange”, “assessment”, “downgrades” -- terms associated with payments transactions are abundant and confusing. If the cost of processing meets the bottom line need, it’s easy to think the specifics aren’t important. They are, and they should be to the processor as well. Merchants should be sure to monitor and audit where their money is going, which will help establish processing benchmarks as well as reduce or eliminate unwarranted processing charges.

Law #4 – All Payments Are Not Created Equal

Merchants should choose platforms that reduce declined authorizations, improve re-authorization success rates, lower the percentage of refunds, and help facilitate easy adoption of competitive service differentiators, such as alternative and international payments, which expose products and services to new consumer audiences and new revenue opportunities as a result.

Law #5 – Don’t Ignore Alternative Payments

The current economic conditions are fueling consumer adoption of alternative payments. By offering an alternative payment method such as PayPal, whose 70 million active accounts produced nearly $16 billion in total transaction volume in Q4 2008, merchants can take advantage of those accounts which contain almost $3 billion in stored value that is spent every two weeks.

Law #6 - Find a Friend

In a competitive market for payment management services, it’s increasingly clear that a processor’s ability to understand the fundamentals of the merchant’s business can add value to its business. A merchant needs a true partner with deep experience in his or her business to make the most of the opportunities available in today’s business environment.

Law #7 – Watch out for Connection Overload

Rapid advances in retail platforms over the last decade have left many retail systems at the point of overload. A payment engine should be a major component in streamlining operations as they relate to all other business cycles in a merchant’s operation. The single point of failure for many retailers is that there are too many points of failure. By choosing a processing platform that connects directly with networks, merchants can dramatically minimize these points of failure.

These seven laws can all be reduced to one golden rule of payment processing: the more holistically merchants look at the value of payments, the more value-oriented, and less commodity-driven, their decisions will be.

A processor should be an advocate in the complex world of payments. Their approach should be consultative and they should be working in the long-term growth interests of the merchant’s business.