5 Things to Look For In a Credit Card Processing Company
Posted by Matt Krautstrunk on May 31, 2011 in Business Management [ 1 Comment ]
The days of “cash only” have passed us. If your business doesn’t accept credit cards you are missing out on a world of opportunity. Credit card processing services can benefit your business in a myriad of ways; however, getting setup with a credit card processing and merchant services account is sometimes confusing for small business owners not familiar with what to look for in the technology.
Finding a credit card processor that fits your business isn’t easy. First you must decide if you are going to need your transactions to pass through an online payment gateway. If you have a brick and click, offline and online business you will need to integrate your merchant services account with your online shopping cart.
1. Interchange Plus Pricing Structure
Interchange plus means that your business pays a flat fee, plus a markup to the processor for services. This type of payment is the most consistent and doesn’t allow payment processors to issue hidden costs within tiered pricing. Make sure to look for majority, if not all of your service contract to fall under interchange plus pricing. This gives your business a more consistent way to plan for future cost of goods sold.
2. Exchange Rates
Your business is likely concerned about the price at which merchant services operate. Most credit card processors will take anywhere from 2% to 3.5% from each transaction. The type of exchange rate you are offered is dependent on a variety of factors, including how long you’ve been in business, the industry you operate in, and even your personal credit history. Try to keep your discount rate around 2% to 2.5% to give your business more breathing room when it comes to additional fees.
3. Cancellation Fee Structure
You would be surprised at the cancellation fee structure of many credit card processing companies. Some have rather modest fees at $200 where other, more integrated services will costs you upwards of $2,000 to cancel. Make sure you read the fine print and understand exactly what the cancellation fee will be, should you decide to cancel your contract. Credit card processors use a fee structure to stay competitive in an industry where businesses consistently undercut one another.
4. Account Policies
All credit card processing companies have different policies with their business accounts. Here are a few questions to ask a potential vendor:
- Are there any bank account requirements to maintain?
- What bank account restrictions do you have with your payment processing service?
- What monthly minimum gives your processing company the ability to terminate your account?
- Can I access my account online?
- What is the swipe rate? Which cards qualify for this rate?
5. Equipment Costs
The cost of equipment is also something to take in to consideration. If your credit card processing company needs proprietary software, be sure to evaluate if they offer leasing or outright purchasing. Talking with a vendor will help match your needs with their service offerings. If you need to accept credit cards for a delivery service your needs will be different than a business who accepts primarily in-house credit cards. Be weary of companies that only allow leased equipment, because leasing will end up costing your business much more in the end. Purchasing your equipment outright is almost always the most financially sound decision.
If you own a business looking for credit card processing there are a variety of different options available to you. However the only way to accurately assess every one of your options, you need to talk with a few credit card processing vendors.