Thursday, May 14, 2009

Building Payment Networks - Part 5

So you have your biller built (or bought), your accounting software tied in, your planned payment method mix planned, so now you need to choose the best payment partners per payment method. Of course the easiest way to do this is to let let PG help you (email but you can also try and sort it all out yourself. Here is a checklist for assessing payment partners;

1. Financial Due Dilligence - Credit Check them by running a Dunn & Bradstreet check (normally less than $24 or ask for a recent audited financial statement to see how their financials are so they do not go broke after taking money from your customers;

2. Technical - do a technical due dilligence by having your biller bitches check out their Integration manual and specs. If they suck technically in reality or just the opinion of your billing bitches who will have to agree with your choice to do the work to integrate and manage the service - pass;

3. SLA - insist on a SLA (most payment companies have them but deny it!;

4. Legal - review the T&C making sure a) deal is non-exclusive so you can deploy identical or similar partners and methods; b) deal terms let you back out with short notice say 30 days, c) choice of law is your home turf and not in a place where you could never litigate successfully or cost effectively (there are lots more points but this gives you an idea what to look for). If you use a lawyer get him / her to quote you a per contract review and closing fee 8do not get ripped off by agreeing an hourly rate as you may pay 2K plus just to get a payment contract reviewed by a lawyer who has never done one before of a payment company you choose not to use - so save this for last after you do your own high-level check;

5. Commercial - get multiple offers and bid them off anonymously against each other (a,b,c payment companies pitch you and you pitch them back until you reach a best deal) and watch for such things as with-holding funds (some mobile payment companies keep 90 days payment traffic) and high chargeback processing fees and do not pay a flat fee for deal closing as this is just the sales guys way to make cash so insist on a revenue share model;

6. References - check their industry references with other virtual world operators and online content sellers.

Of course, this is just a high level check list, to do it right GMAIL who has negotiated 500+ of these payment deals over 50+ payment vendors. Or you can go it alone and sweat the details yourself ... Good luck!

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