Your online business rises and falls on margins. You need to make every penny you can from every transaction, and spending money on merchant fees and payment processing charges eats into your profits. At the same time, you need secure and reliable business partners to work with. Choosing the right payment processor is an important factor in both the stability and profitability of your online business.

Yet, the world of online payment processors isn’t particularly intuitive. There are many choices out there, and what’s right for another business may not be right for yours. Competition can be fierce, and often the loudest voice simply wins. You’ve got to understand the marketplace and made the decisions that are best for your business.

Here are some key factors to consider when choosing an online payment processor:

  • You need to start by identifying the characteristics of your transactions. By that, we’re talking about having some idea of how many transactions you’re going to need to have processed each month, and how much your average transaction is going to be. For a website that sells a single product, it’s easy enough to figure the average transaction value. For a site that sells a wider range of products, however, it can be a much more daunting prospect.
  • Processors vary widely on their rates and fees. Once you know what your transaction value and volume are going to look like, you can start to compare apples to apples. Some processors are more geared toward high-volume, low-value sites, whereas other processors are better for high-dollar purchases. Make sure you get a full rate and fee sheet from the payment processor so that you’re not facing surprise fees when it comes to the end of the month.
  • Look into currency acceptance, as well. Depending on just how international your business is, you may need to talk to your payment processor about foreign currency exchanges. You can take a real hit here if you’re not careful.
  • Security matters to both you and your customers. Making sure that your payment processor meets industry-standard security specifications is important. Not only will it reduce the risk of chargebacks and other payment problems, having a strong security policy and protocol in place will also help to boost your site’s credibility, and can help to reduce shopping cart abandonment.
  • Eventually, you might decide a merchant account is best. Using a third-party payment processing company is in many ways ideal for an Internet business. You don’t need to worry about too much in the way of software configuration, for example. But you pay for the convenience; rates and fees may be higher than they would be if you had your own direct merchant account with a bank.

Ultimately, it’s up to you to decide which payment processor is best for you. You need to collect as much data as you can from potential payment processors, compare it with what you know about your business, and pick the processor that best fits your needs and your operations.

Emma Vasar is a finance expert whose passion for small business turned into her compiling a database of valuable information. 

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