The Importance of Risk Management and Processor Redundancy
If you have ever attended a tradeshow, you’ve probably met a payment processing provider. Each payment processor provides services with differences in rates and specialties, but the quantity of companies may have left you wondering why so many different payment solutions are needed. The real answer is that smart business owners focus intently on risk management and having processor redundancy is the single most important component of keeping your own banking relationships safe.
Why Don’t I Only Need One Payment Processor?
Many new site owners, and a surprising number of seasoned site owners, still think that one payment processor is plenty. In almost every case, that simply isn't true. In order to capture as many sales as possible from your join forms, you want to have an active billing cascade in place. If you look at any of the major sites online you will see they all make use of multiple processors, and when anyone attempts to sign up or buy a product from them, their site seamlessly sends the customer to the first processor in their cascade. If the sale goes through, the customer gets a confirmation and the site owner earns their payment. On the other hand, if for any reason the transaction fails, the potential customer is immediately sent to a 2nd, 3rd, 4th, or 5th processor in the cascade to complete the transaction.
Failed payment attempts can happen for many reasons. One processor may be experiencing an Internet outage at the moment the payment is being made. A tighter processor might have their fraud scrubbing set to be far stricter in a specific region of the world than another processor in your cascade. One payment provider may not accept a form of payment from a particular card or mobile system that another processor can accept.
By having multiple processors arranged in a cascade, you can be sure to collect money from the maximum number of potential sales. Meanwhile, to your customers, it appears as if their purchase is being made from only one attempt with a single bank.
Failing to have a billing cascade can cost you serious money in due to incomplete transactions, reduced customer convenience from fewer billing options, and there is virtually zero cost to correcting the problem by adding several payment companies to your new billing cascade. Operating without a billing cascade can also decimate any chance of you obtaining affiliate traffic because savvy affiliates are already aware that a weak payment sales funnel without a robust processor cascade can cost them sales as well.
OK Sure, But What If 100% of My Sales Are Already Getting Through?
Assume for a moment that one payment processor is somehow handling 100% of your potential sales and that every single one is going through without a hitch. Is that good enough? No, it isn’t and here is why: Things change!
If you build a relationship with only one processor and they have a falling out with their banking relationships up the chain, your processing can take a big hit. If your payment processor of choice goes out of business, you are in for a very rough time. If your payment processor is having chargeback issues, their scrub may become far stricter and your sales will dwindle as a direct result.
As the old adage says: “Never put all your eggs in one basket.” When it comes to payment processing, you want to have many eggs in many baskets with a great deal of redundancy to keep them safe.
That All Sounds Nice, But Can You Give Me A Real-World Example?
Let’s say you are operating one site with a single join page and one processor is handling all the sales that come through. Now, instead of being happy with the status quo, you add five additional processors to your billing cascade. Here are just a few ways it can help you immediately:
1 – You Can Boost your Affiliate Program
Send out a newsletter or speak to them behind the scenes and let them know your billing has been greatly improved so they should send you more traffic with an even better chance of generating sales thanks to a frictionless billing cascade working to their benefit.
2 – Make processors compete for the primary cascade position
Being in a cascade is nice for any processor because some of the sales on your site will go through their payment network, however the lion’s share of all transactions will go through whichever payment provider you set as your primary processor. By tracking your own traffic to see which sales come through, the average price point reached per sale, how chargeback ratios and payment settlement dates are handled, etc. you will quickly be able to see which processor is helping you earn the most money. Move the successful one to the top, and downgrade or remove processors that aren’t keeping up with the pace of their competitors.
3 – Breathe easy knowing you can never be held over a barrel
If you hear rumors that a particular country or bank is having trouble, if you have a disagreement with a billing rep at a trade show who works for a processor, if you see a processor making policy decisions you disagree with… take a nice easy breath and slide them down in your cascade, or leave them out entirely.
If you only have one billing company, you are at their mercy. We have all heard horror stories about successful sites that have had their entire revenue stream shut off suddenly for dubious reasons, and it could easily have been avoided by having more than one biller in their cascade all along. As soon as you have a redundant cascade of reputable payment processors, you are the one in complete control, and they know they can be put out in the cold any time you feel like doing it. It can take weeks to be on-boarded with a new payment solution, but it takes only a few seconds to reorder your cascade or remove an option from it.
Why Would MobiusPay Tell Anyone to Use Multiple Processors?
It may seem counter-intuitive for us to tell you to use multiple processors. So why would we do it? First, because it really is the best advice for business owners and we actually do want you to succeed. Second, and perhaps more importantly, MobiusPay is never afraid of competing for your trust, loyalty and business. We have been around for more than a decade helping hundreds of clients make the maximum amount of money on each and every transaction. We are very confident that we will gain plenty of business by being added to a new cascade and eventually earning the top spot and moving up in your cascade by proving we can provide your company with a competitive advantage. If your current payment provider is afraid of adding competitors to your cascade, that really should tell you all you need to know.
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