erchants who accept credit, debit, prepaid and other types of electronic payments need reliable systems to authorize, settle and manage their transactions.

Many factors, such as security and the ability to address multiple busine ss processes, make it essential for merchants to use savvy providers that understand the industry and offer robust payment solutions.

However, one size does not fit all. Following are five tips to help you guide merchants in selecting providers that meet their unique business requirements.

1. Ensure providers employ security best practices.

Security has always been important. Now it's also visible, and this is drawing attention to the topic. Merchants will benefit from partnering with providers that recognize security is a process - not a static implementation - and continually strive to improve their systems and minimize the risk of data compromise.

Commonly cited best practices include the following:

• Use of 128-bit secure sockets layer encryption to safeguard the transmission of transaction information

• Use of strong cryptographic ciphers like 3DES or the Advanced Encryption Standard to encrypt stored data.

In addition, merchants should insist their providers be Payment Card Industry (PCI) Data Security Standard-certified.

This broad and effective program was driven by Visa U.S.A. and MasterCard Worldwide and adopted by American Express Co. and Discover Financial Services LLC to ensure that comprehensive baseline security standards were established.

2. Negotiate flexible service agreements.

Beware of long-term contractual commitments that don't serve merchants' long-term interests. Reputable solution providers operate based on performance: If they do not deliver quality service, merchants should be able to walk away without any financial penalties.

3. Focus on total cost, not base price.

Merchants are best-served when they make decisions with an eye on the total cost of acquiring a given solution and not merely on the system's base price. Here are factors that can contribute to total costs:

• Upfront or nonrecurring setup costs
• Equipment acquisition
• Ongoing transaction fees
• Subscription and licensing costs
• Staffing requirements
• Maintenance time and resources.

4. Look for ASP solutions.

Operational costs are an important part of a payment solution's total costs. In contrast to the traditional distributed-software model (PC-based software or software installed on a server), an application-service-provider (ASP) model is a viable option for merchants.

Under an ASP model, solution providers centrally host the payment processing system and carry much or all of the responsibility for product updates, security updates, database backup, training, customer support and other maintenance activity.

The ASP model is Internet-based and highly configurable. It is a very effective method that enables merchants to accept and process payment cards of all kinds.

An added bonus for merchants is that ASPs do not typically require hefty upfront licensing fees followed by ongoing annual maintenance charges. Instead, fees are usually paid by subscription or per transaction.

5. Look for providers offering solutions, not just products.

Segments of the payments industry are shifting from product sales to solution sales. Many merchants' business operations have become strategic and complex. They require providers that add value to their businesses.

The providers you recommend should offer solution sets and technology that go beyond basic credit card processing to meet total operational requirements.

The bottom line: Make sure the payment solution provider can not only talk the talk, but also walk the walk to meet merchants' needs. And remember, details really matter.

Look at contract restrictions. Make sure providers you recommend understand your merchants' businesses and are knowledgeable regarding security and best practices.

Follow these guidelines, and you will select payment providers that offer immediate utility and have long-term potential.

Aaron Bills is co-founder and Vice President, Business Development, 3Delta Systems Inc. E-mail him at abills@3dsi.com or visit www.3dsi.com.