7 Things to look for in an online payment system

Today, Feb 2000 by Rode, Brade

When it comes to choosing an online payment system it's important to see it as a customer-centric, business-critical technology.

In the world today there are different payment mechanisms: cash, check, automatic payroll deduction, direct debit, credit cards, etc., and in the not too distant future there will be a variety of online payment systems.

When it comes time to choose a system, consider the following:

1. Easy to use. Many of the initial systems placed barriers in front of the user: onerous registration processes; software to download; unfamiliar Internet currency to buy. An online payment system must make it easy for the consumer to register and purchase - any major points of "friction" will prevent adoption.

2. Scaleable. A payment system must be able to scale in two ways. First, the technology must be able to process a high volume of transactions. Second, a successful solution must be able to be deployed quickly.

3. Easy to implement. An online payment system must be flexible and easy for merchants and other partners to implement quickly. If the solution requires extensive systems integration, it's not likely to succeed. It should be open and able to integrate with major operating platforms, Web servers and e-commerce systems.

4. Ability to gain critical mass. A payment system is of little value unless it has the potential to gain acceptance by users and merchants.

5. Global. The Internet presents global commerce opportunities, but some systems can't process cross-border transactions. Make sure your payment solution supports and converts multiple currencies in real-time and complies with all tax regulations.

6. Secure/Private. The primary concerns by customers are security and privacy. Many people simply don't want to provide sensitive data to online merchants. And, in certain geographies, legislation limits a merchant's ability to collect this data.

7. Cost-effective. Payment systems need to be cost-effective for merchants to deploy and use. Some systems have high transaction costs, hidden fees, and penalties. Remember, payment systems are optimized for different size transactions some solutions are built to process higher transactions while others are designed for smaller purchases.

Once you've run through the above checklist, you should be able to clearly assess the pros and cons of competing solutions. Remember, it's not a "one size fits all" market.

Brad Rode is president and CEO of iPIN (www.ipin.com).