Hitmetrix - User behavior analytics & recording

Choosing a Commerce Service Provider

Among the most important considerations for any company preparing to take orders on its Web site are how you’ll process orders and how you’ll receive payment from the bank. You’ve got two choices. You can license software, increase your IT infrastructure and bring the technology inhouse. Or you can outsource your order processing to a commerce service provider and pay on a per-transaction basis.

If you’re a small- to medium-sized business, Jupiter Communications, New York, advises outsourcing. According to Jupiter, unless your business has rare, proprietary needs, your site should focus on building core business rather than on creating the capital-intensive infrastructure it takes to bring order processing inhouse.

With larger companies, outsourcing the payment processing is not cost-effective. It is economical for larger companies that process a high volume of online orders to set up an infrastructure to process orders internally.

If you’ve determined that outsourcing makes the most sense for your company, here are 10 questions you must ask prospective technology vendors:

• What is the uptime of your payment servers? The correct answer can be tricky because the better the uptime (time the servers are available) the more costly the service likely will be.

If a company says we don’t measure our uptime, run. If a company states they measure it but keep the information confidential, that’s perfectly OK. Find out if you can get them to commit to uptime service for you.

Look for 99 percent, but understand that is still almost 9 hours of downtime a year. Internet service providers only guarantee 99 percent uptime. Just because a CSP can keep their servers up 99.99 percent of the time doesn’t mean they are accessible to the Internet 99.99 percent of the time.

What is the cost of processing orders over the Internet? Predict your volume and make sure you understand the costs of processing transactions on the Internet.

Many CSPs charge up to $1 per transaction. That might be OK when you are running 40 transactions a month, but the cost gets prohibitive when you begin to process 100 orders a day. Look for vendors with discounted rates for high volumes or flat monthly rates.

Is there a fast connection to the bank or credit card processor? Make sure the back-end system is connected to the bank or credit-card processor with a fast connection.

Avoid CSPs that have built their own systems using modems or third-party Internet solutions.

Also ask the CSP about transaction response time. Ask to do a test transaction to see how long it takes. The transaction time should be three to four seconds.

If you don’t get a fast connection, consumers will hit stop and leave the site because the transaction takes too long. Consumers will wait about 30 seconds before they leave. Keep in mind the time it takes to write the order to the database and process it through the shopping-cart software. Add in the bank processing time. Each step should be less than five seconds under normal circumstances.

Can you handle an increase in volume? My favorite product claim is “our solution is scaleable.” Don’t take this at face value. Ask how the CSP plans to this.

I know of a merchant that had never sold anything online, but had a large following. When the merchant’s e-commerce site launched, it made a sale approximately every three seconds the first few days. Image if a CSP had two merchants do that at the same time – the volume could take down an entire CSP. Make sure the CSP has a plan to add more servers in times of high load.

What shopping cart vendors do you work with? Finding out what shopping-cart software the CSP is integrated with will avoid any need to write code.

Focus on content and marketing programs, not technology, when building an online store. Make sure the payment solution is integrated into your shopping cart. Don’t get into the environment where you are writing the code yourself. The first time it is easy, but updates from the shopping-cart vendor or the CSP will keep you writing code on a regular basis.

Is fraud protection available and does it cost extra? Fraud protection is critical. As Internet access becomes more available, crime will go up. We have already started to see some growth of fraud because of free PCs and discounted Internet access promotions.

Also, make sure fraud protection is not an additional fee. It should be included in the payment processing fees.

Do you offer 24-hour support? This level of support is imperative in case you have a problem or a server goes down. Several companies offer 24×7 coverage. Again, this is a cost decision. Round-the-clock support can be expensive. You are vulnerable to lost sales, however, if a CSP doesn’t provide 24-hour support. If your storefront goes down at 5 p.m., for example, you could loose more than 12 hours of selling time, or an entire weekend, until someone comes back into the office to fix the servers.

Do you provide online reports? Merchants should be able to credit orders from an easy-to-use Web report. Some systems require merchants to jump through hoops and keep track of the credit-card numbers. Look for a system where all it takes to do a credit is the click of a button.

What type of security is there? To protect yourself and your customers, make sure credit-card numbers are encrypted on the server and inaccessible to the merchant and consumers. This protects both the merchant and consumers in a financial transaction.

If you don’t do this and the credit card numbers are exposed, everyone loses.

How big is your service? Ask the CSP how many merchants they support. Look for companies with brand names you can trust.

Make sure the back-end system is connected to the bank or credit-card processor with a fast connection.

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