CNP Expo: E-Commerce’s Gates of Heaven

May 20, 2014

CNP Expo: E-Commerce's Gates of Heaven In a Tuesday afternoon session on e-commerce gateways at the CNP Expo, moderator Justin Benson, the CEO of Spreedly, kicked things off by asking panelists about the pros and cons of merchants bundling their payment gateway and merchant account with one provider.

Ashley Forsyth, director of technical solutions at Transaction Network Services, noted that bundling is convenient for the merchant, but can mean less flexibility and fewer options. Carla Erlick, vice president of sales and business development at Optimal Payments, agreed, and added that often a small merchant will start with a bundled gateway and account, but “as a merchant becomes more sophisticated, they should reevaluate to see if they need a more granulated solution.”

Louis Kerns, head of payments at Shopify, said that the merchant’s volume of sales and their particular industry will also drive their decisions when choosing a gateway solution. For instance, a merchant in a high-risk industry may need a more secure, specialized gateway. Kerns also pointed to the innovation happening now with payment gateways, especially in the mobile optimization space using tactics like dynamic currency conversion. He believes that innovation can only be good for merchants going forward.

Erlick agreed, and emphasized the need for merchants to educate themselves about their options in terms of services and pricing models. She said many small merchants think they are getting a good flat rate, only to discover the rate applies only to particular types of transactions, and their other transactions are subject to a higher rate and high fees. According to Kerns, “some flat rates look cheaper to begin with, but when you tack on all the extra chargeback fees, gateway fees, merchant account fees, you would save money in the long run by going with a more sophisticated plan.”

Moreover, Forsyth pointed out that “besides processing costs, you’re also looking at getting an experience. Does your experience include things like collecting customer data—and does it need to? If you’re paying a flat rate, understand what you’re getting—is it just the payment processing, or does it also include a broader infrastructure?” He also recommends that merchants find a gateway solution that they can grow into as their needs expand in the future.