Entrepreneur Neil Harris spent hundreds of hours researching online payment providers while setting up his service request site intently.co. to handle payments from all over the world.
He learnt many lessons from the gruelling process. Here, Harris shares his top tips for startup founders on the verge of monetising their online business.
Getting your website business ready can be a time consuming job. You’ve built your site, it looks great, and guess what – you’re starting to get some traction – even better.
Now you’re beginning to think about monetisation. You might be asking yourself questions, like when is the right time to start charging? How much should we charge? What technology should we use for payments? Is this going to be complicated, and what could go wrong?
When I built my online services marketplace, I knew I was going to be handling requests from across the globe, so I needed to find an ecommerce platform that could handle it. If I had to go through the process again, these would be my priorities:
(1) Choose a payment provider that best suits your business
A few companies offer a complete platform that covers a checkout, payment gateway and merchant account – these are known as “full-stack payments platforms”. If you choose one of these, then you can be up and running – taking payments securely from your site – in a matter of hours. If you are unable or do not want to go with a full-stack payments platform, then you’ll be getting into the “mix-and-match” of selecting and implementing components that are compatible with one another.
If only all products at each level of the technology stack worked with each other. Alas, this is not the case – you will need to work through your selections carefully. Whatever you decide to do, you will need to go through one or more application and approval processes. These can take weeks to complete, and rejections are common so planning is crucial.
(2) Check your payment provider allows the import and export of encrypted customer card data, and that you would not breach their terms
Once you have chosen your payment provider, check their terms and conditions carefully. Import or export of encrypted data is an important consideration if you use a subscription model for your business.
If for some reason you need to move to a new payment provider, will you be able to securely export your existing customers’ card data and import it into the new payment provider’s vault? If the answer is no, then you will need to contact each of your customers and ask them to provide their card data when you are live with your new payment technology. It’s pretty much a certainty that some of your customers will ignore this request, and as a result your business will immediately see a reduction in revenue. This is a big risk, and it could put you off switching technologies and tie you in with a provider you are not happy with.
(3) Look for cost effective solutions when you’re starting up
Payment providers tend to charge a fixed fee plus a commission percentage for each payment processed. These charges are usually pretty low, but sometimes you can find a great deal.
For example, Braintree will process your first £30,000 of payments completely free. Also, watch out for payment providers who charge a large sum just to get onto their platform – such payment providers are targeting larger businesses with payment volumes as opposed to startups and micro businesses.
(4) Take time to understand the risks your business would pose to potential ecommerce partners, and work out how to reduce or mitigate these
If you think there is any risk at all that you would be in breach of a provider’s terms, then my advice is to ask them. You need to be 100 per cent transparent with them. If you have user activity in certain countries, such as Iran and North Korea, then you may be in breach of terms. Even if you do not trade with those countries you need to make sure you have procedures in place to prevent customers from these countries signing up with your service.
(5) Web hosting
Choose your web hosting platform carefully, particularly if the technology on your site is complex. You need to make sure that you find a hosting company that understands your base technology and can get you up and running again quickly should your site go down. I recommend you find a hosting company that is renowned for its support and response times, even if it is a little more expensive than the competition.
(6) Applying to payment providers
Write a company information and policies document which you can use to support applications – it will help to position your business positively and mitigate risks when an underwriter reviews your application. Apply to several payment providers in parallel to reduce the time-impact of any rejections.
(7) Have a contingency plan in place
Because there is always a risk of your payment provider terminating your contract at short notice for some unexpected reason, I recommend that you implement a second ecommerce solution as a backup in case this happens. That way, you can switch to the contingency solution quickly if your primary solution is shut down.
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