Online store payment methods – what to consider when choosing a payment service?

Mari Oksanen Written by Mari Oksanen - Sep 28, 2016

Online payment service providers are discussed regularly amongst online merchants and it’s no wonder. With so many features and varying prices, it can be challenging to find a payment service provider to match your exact needs. The list below shares some of the most important aspects to consider when choosing one.

1. Conversion factors

Conversion refers to the proportion of customers visiting your online store who make it all the way to the finish line, i.e. buy the product. Conversion at the payment stage refers to the proportion of customers who complete their purchase once they have gotten to the payment stage. 

The actual conversion rate at the payment stage is never 100%, since purchases can be interrupted for a variety of reasons. A high conversion rate of around 80% or higher is important, though. If it is lower, you are very likely losing actual sales.


You need as many payment methods as your potential customers have their favorites. Each payment method not offered is a risk because consumers payment preferences vary greatly.

I reviewed in our system the payment method distribution from the start of 2016 for those customers offering all of our payment methods in their online stores. Finnish consumers still prefer online bank payments, which made up 86% of payments. Card payments accounted for 12%, while invoices and installments made up 2%.

Therefore, you should ensure that customers can buy using any of the Finnish banks with the simple click of a button in your online store. It’s also beneficial to accept as many different cards as possible. Stores selling more expensive goods should also add an invoice and installments, even though their popularity is smaller than online banks and cards in Finland.


Make sure that the payment service provider is reliable and secure in the consumer’s eyes too. Should the consumer have questions about their transaction, it is essential that they can easily contact your payment service provider’s customer service.

2. Everyday management aspect

Selling online requires a lot of resources over time. When choosing a payment service provider, pay attention to aspects that will help manage everyday operations.


As transactions increase, you will need a tool that allows you to monitor and manage payments, as well as handle refunds. Verify that what is provided by your payment service provider is easy to use and is of assistance, since you will use it frequently.


Accounting reports may also differ between payment service providers. It would be worthwhile to check if the accounting reports can be automated so you do not need to reconcile settlements and orders manually. Also, check if your payment method provider’s settlement reports have a VAT breakdown.


The speed at which money travels from the consumer to the merchant may vary greatly dependent on the payment service provider and payment methods used. It would be useful to create a table comparing the different payment methods and their settlement period. When you take this into account, you will know how quickly the money travels from the consumer to you.


At best, monetary transactions are a largely inconspicuous part of online business, but sometimes there is a need for cooperation between you and your payment service provider. Make sure that your payment service provider has customer service that is easy to reach, without long waiting periods, and where they really know how to help you. This is essential for making everyday operations easier.

In addition to payment support, you may need technical support. So it would be beneficial that this too is available for both you and your online store’s developer. Consumers also occasionally need help with their online purchases, so it is important to assist them too. Ideally, consumers will be provided with their own dedicated customer service.

3. Reliability – payment priority

Reliability should be an obvious priority when choosing a payment service provider. Moving money around is such an essential part of business that issues with reliability cannot be overlooked. There are many aspects to consider regarding reliability, but at least consider these.


Ask the payment service provider about their service availability, or uptime. This refers to the percentage of time that the service is actually up and running without interruptions. In theory, the service should be available 100% of the time, or at least very close to it, because each interruption has the potential to eat away at sales.


When it comes to the movement of money, it is vital that your payment service provider’s finances are in order and that your payments are in good hands. Make sure to check their earnings from at least two years back in order to avoid any unpleasant surprises.

Also check how many employees your payment service provider has. If the service is being maintained by only a few people, it will inevitably have an effect on the maintenance of the overall service, the quality of customer service, and risk management.


Risk is a part of business. In order to minimize your own risk, make sure that your payment service provider has been approved by the Financial Supervisory Authority. The Financial Supervisory Authority requires significant investments in risk management from financial institutions and regulates their activity, which makes operations safer.

It is important that your payment service provider uses fraud prevention tools, to minimize the risk of abuse. The company should also have personnel specializing in risk management and customer service that has been trained to monitor the security of transactions.

4. Payment service fees

A payment service provider can never be free. This is due to the structure and regulation of the financial sector. It requires, among other things, risk management measures that require service fees. However, there are certain things that should be considered when trying to find the most cost-effective service for you. There is no one solution that fits all. 


Make sure that you are getting all the needed payment methods from your payment service provider with one contract. The service description will often include payment methods that require a separate agreement. This, however, may result in extra fees.


A good rule of thumb is that once your sales begin to increase, you should switch from commission based to a monthly fee based pricing model. This is because the commission model quickly eats away at profit. Monthly fee models also have transaction fees, but they are considerably lower than commission based pricing. 

Commission based pricing is well suited when selling only a few low cost items within a month.


Be aware that payment service provider contracts vary in terms of cancellation periods. To best manage risk within your company, consider carefully before committing to fixed term agreements. It’s safer to select providers that have open ended agreements and are easy to cancel, if needed. At worst, an unneeded contract can result in fixed costs for several years.

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