Key Questions to Ask When Choosing a Payment Vendor

In today's rapidly evolving digital commerce landscape, selecting the right payment vendor is crucial for businesses. This recap blog summarizes key insights from our webinar featuring IXOPAY experts Hetal Giaimo, SVP of Product, and John Noltensmeyer, CISO at IXOPAY, who discussed Gartner's research on the key questions businesses should ask when evaluating payment vendors.

Keep reading to learn the key considerations for payment vendor selection, including understanding your payment strategy, prioritizing customer experience, ensuring security and compliance, evaluating cost structures, and future-proofing your payment infrastructure.

Before evaluating payment vendors, it's essential to align your payment strategy with your overall corporate strategy. Gartner emphasizes that your business goals should drive your payment requirements—including the channels where you offer your products, target geographies, customer payment preferences, and cultural attitudes towards payments.

Market Analysis

Conduct a thorough analysis of your target markets to understand local payment preferences and regulations. Different regions may favor specific payment methods (e.g., mobile payments in Asia versus credit cards in North America) and have different ideas about returns or chargeback procedures. Evolving regulations and regulatory changes, such as PSD2 and GDPR, impact payment practices and security requirements. 

Future Growth Considerations

Plan for both current needs and future growth. Identify payment methods you want to offer now and those you may need to support in the future, especially as consumer preferences continue to evolve. You might also consider the payment channels you will offer in the future, such as payments via chat or social media.

The payment journey is the final step in the shopping process, so it must be seamless and secure to avoid lost sales and negative customer experiences. Our SVP of Product, Hetal Giamo, highlights the importance of outlining the payment journey you want your customers to experience and answering critical questions.

Experience Across Channels

For example, you may want to offer customers the ability to pay online or via mobile. You may decide to accept credit and debit cards or offer a buy now, pay later service. Additionally, be sure to evaluate how the vendor supports your various channels. It is important to know if online, in-person, and mobile checkouts are integrated into a seamless experience with shared tokens or if there are disparate and disconnected experiences. 

Personalization Options

Consider how the vendor can enhance the shopping experience through personalized payment options and targeted promotions. Does the vendor have the capability to analyze past transactions to recommend new products? Can it offer the ability to pay with the customer's most recent payment method?

Security Measures

Security should not compromise user experience. Ensure the vendor employs measures like 3-D Secure and tokenization to enhance security without inconveniencing customers like manually entering credit card numbers and or requiring additional authentication steps.

Security and compliance are non-negotiable when it comes to payments. Our experts and Gartner agree on the importance of a robust security posture, while our CISO, John Noltensmeyer, recommends understanding your vendors' approach to PCI compliance. 

Reducing Liability

Gartner recommends a combination of tokenization and hosted payment pages. The reason is the reduction of PCI scope—you limit where you are storing, transmitting, or processing payment cardholder data. For example, if you use a hosted payment page that provides you with a token, you’re outsourcing your risk. And while PCI DSS compliance is essential, businesses must also consider data protection laws beyond PCI, such as GDPR.

Vendor Security Assessment

Evaluate vendors based on their security certifications and track record. Inquire about their fraud prevention tools, incident response plans, and security auditing processes.

Data Minimization

Understand how the vendor minimizes the amount of sensitive data stored in your environment. Solutions that offer tokenization or encryption can help reduce your compliance burden.

Ongoing Compliance Monitoring

As regulations change, ensure your vendor has mechanisms for ongoing compliance monitoring and can adapt to new laws and standards seamlessly.

Cost is a significant consideration when selecting a payment vendor. Gartner suggests a detailed cost analysis to avoid hidden fees, as well as an understanding of the various pricing structures. 

Bundled vs. Individual Pricing

Understand the differences between bundled service pricing and individual service pricing models. Bundled pricing can offer simplicity but may not be cost-effective for all businesses.

Total Cost of Ownership (TCO)

Calculate the total cost per transaction across the entire payment journey. Include direct costs as well as indirect costs, such as customer support and dispute resolution.

Market Expansion Costs

Consider the costs of expanding into new markets. Understand the fees associated with different payment methods and currencies, as these can significantly impact profitability.

Given the rapid technological changes in the payments industry, it's crucial to assess a vendor's ability to adapt to new technologies and regulations. Gartner advises businesses to scrutinize the vendor’s adoption and implementation of new innovations.

Product Roadmap

Review the vendor's recent innovations and product roadmap. A forward-thinking vendor should have plans for adopting emerging technologies such as AI, machine learning, and blockchain.

Integration Flexibility

Choose a vendor that offers flexible integration options to work with your existing systems and can adapt to future changes in your technology stack.

Understanding Trends

Ensure the vendor has a clear vision of the current payment landscape, including emerging trends like cryptocurrency acceptance, and has strategies in place to incorporate these into their offerings.

Selecting the right payment vendor requires a holistic approach that considers customer experience, security, compliance, cost, and future adaptability. By considering the key questions outlined in Gartner's research report, businesses can make informed decisions that support their long-term payment strategy and growth objectives. As digital commerce continues to evolve, partnering with the right payment vendor will be pivotal in navigating future challenges and opportunities.