Why Choosing the Cheapest Payment Gateway Can Sink Your Merchant Business

Um, well, gosh, I'm trying to think, I mean, like throughout, throughout my research, I mean, there's, there's a ton of stuff. I mean, like, uh, depending on like if the like one thing is just like depending on like if the, the merchant is, you know, doing a tremendous amount of, you know, volume transactions, right? There's, there's this natural. Inclination to like look for like the cheapest, you know, sort of payment gateway if like if that's if that's a thing that that your your site is supporting, um, but the thing that that like leaves out in a lot of cases is like the cheapest is not always the best only because um there's a ton. Of work that goes into like security um that essentially get, you know, the, the people that are a little bit more expensive or ultimately like, uh, like, like Adgen and stuff, they're the ones that are actually like doing it really well, right? So that's on the front end, it's like, yeah, you might, you might only have like 2%. 22 2.25% versus like 3.25%, but ultimately like you're gonna like see it like in in terms of fraud, like you're gonna have a bunch of fraud that ends up like leaking through. So that's, that's one thing that I that that was cause I just thought it was like a, you know, just uh it's a numbers game. It's like you just try to go to the lowest, lowest common common thing there. The other thing also that um it seems to be like a a A pretty good service and I think like you also see some third parties providing the service as well. Um, it's just around like for subscription businesses like this idea of like the, the magic card and magic number like you get for those more expensive services you get that for free. I think Stripe is one of the ones that like actually provides it for for for free as part of the service like if you're in a subscription service and like let's say your credit card has. Expired, like, like, and you're like subscribing to one of my services, your, um, my ser my, my gateway, my payment gateway service will ultimately like go in and check your, check your credit card company for a new number and then ultimately like just seamlessly make the transition to your new card and like that's, that used to be a really big source and I remember eHarmony. It was a really big source like people's expiring credit card. of like churn every month, but like these pay, these payment gateway or payment providers that um uh ultimately cost a little bit more, they provide that service and it actually reduces your, your churn. So it's actually worth if you're paying a point, you know, 1 point and 25% more, um, it's actually worth going with a more expensive provider. Um, they've got scale, they've got, you know, across, across a bunch of those things, so.

Well, I mean, I guess it's like, I mean, I, I'll pull in a little bit of personal experience into this because like I think it's like I was, I was, I, I internalized it because like I've been at places where we went with the cheapest provider and then ultimately like, you know, and I, I didn't realize it at the time because I like I hadn't done all the research I didn't. Understand the area as, as intimately, but we wanted the cheapest provider and then all of a sudden like we're having all these fraud problems and it was like, well, pulling those things together was just like not, I mean, it wasn't within my wheelhouse at the time, but now like looking back on it, I'm like, holy, holy crap, like that was like someone should have made, you know, should have known that decision and then in contrast, Like, when, you know, we switched payment providers at, uh, you know, a company further on down the path, uh, in my career, like, we, I think there was a more measured discussion. I think, like anecdotally, I sort of heard some of these conversations and now like I'm internalizing that where I'm like, I'm sort of connecting the dots and as I'm doing this research and I'm like, oh. OK, that makes sense. That wouldn't have been to to me, like if I was like the owner of a business, I would be like and I was doing high volume transactions. I'd be like, let's, you know, 1.5 is like $10 million like, of course, let's take that, you know, let's let's let's invest in that and get that $10 million. It just, it to me it felt a little bit um less uh less obvious, I guess. I would have taken the $10 million and like knowing what I know now, that's not, you need like. Like you need to be a little bit more measured about like,

Yeah, so, and I think like, like let's say I'm given this assignment to like actually migrate like payment providers. I mean I think like. Like similar to how like you, like in the past where I've done like evaluations on like if we're hiring a design agency to like, to like over the, I mean, I think there's, there's a raft of steps that you can take like one, in payment, the payment provider world, I think one, you can go to, to like the gardeners of the world and like actually pull out, pull out reviews and, and, and, um, write-ups uh of, of, of all these different payment providers. Number 2, I think like there's there's a lot more review view tools out there and what like even down to like Reddit forums and stuff like you can go in and like do research and find what you know sort of what the real story is around these different payment providers and what, what real customers or even coora I guess that's another good one too, um, what customers are really seeing with these, these providers and then lastly as you get into the bid process and this would be something that I think you would do, you know. Whether it was payment providers or ad agencies or what have you, right? It's like you're talking to their actual customers and you're, you know, getting, you know, you, you, like I have a rule of thumb where you talk to 3 customers from, if you're thinking of hiring a vendor, you need to talk to at least 3 customers because that sort of gives you, it's also my, my rule of thumb of like if I'm hiring a plumber or an electrician too, so, like I'll, I'll talk to, you know, 33 different ones to get to, to get 3 different perspectives, um. But I think like understanding like from three different perspectives of of potential clients um or of their clients I mean um is uh is is gonna ultimately be pretty, pretty helpful as well. So I was sort of like those are that's where I would start is like sort of doing that base level research, um, and, and, and sort of understanding that and then of course like as you get into. You know, actual implementation, like a lot of, a lot of times when we're working with these vendors, like they let you set up sandboxes and, and, or they'll give you like some kind of test period where you can like actually see if what they're, uh, reporting or what they're, you know, selling you is actually going to like have the results that you'd expect. So you could, you know, divert some amount of your payments. To this new payment provider and see, OK, well, let's see, like, are you better than, are you better than our existing provider or are you worse in terms of like the, the amount of fraud or the, the chargebacks or what have you.