Telling your customers that you cannot accept their form of payment is a sure way to kill your sale! It is a fact that many customers prefer to carry credit cards to cash. They also tend to spend more when using their credit cards. Moreover, if you are hoping to branch out globally or own an online business, accepting credit cards is almost the only way to keep your clientele growing voluminously. Hence, it is almost imperative that you consider accepting credit cards and employing the service of a credit card processor.

What is a credit card processor?

• It is a corporation that directs the process of transferring authorized and captured credit card funds between different financial accounts (the merchant account provider and the credit card issuer) for a fee.

Types of companies which do credit card processing

• Banks
• Third Party Processors
• Independent sales organizations (ISO)
• Financial Service Providers
• Small Business and Trade Associations

Do your research on the reputation of the credit card processor. If need be, obtain referrals from current clients (whose companies are comparable to yours in size and industry) of the processor. Companies such as ISOs may boast of 99% approval rate of applications. Do not be lured as they may charge you higher fees. They are also not as strictly regulated as banks, hence be vigilant if selecting an ISO.

Starting costs

• Application fees
  1. Be careful with these as they may be non-refundable even if your application is rejected.
  2. Set up or account activation fees

Some of these fees may not be clearly stated. Please find out about all the costs, read your contract conscientiously, including any fine print before signing anything. Do also note that there are many credit card processors who do not charge any start up fees at all.

• For card-present transactions, you need terminals (the machine used to swipe cards).
  1. May cost anything from $150 to $1000 if you purchase them.
  2. May cost as little as $35 per month if you lease them. However by leasing them, you may be stuck with a noncancellable contract and may end up paying more than necessary.
• For card-absent transactions, you need software to verify transactions from your PC or directly over the phone.

Remember to compare prices of equipment and software carefully as similar ones may vary in price by hundreds of dollars depending on the processors.

Required Monthly Fees

• Gateway fees
• Statement fees
• Monthly minimum fees

Transaction Fees

• Discount rate
• Transaction fees
• Address Verification fees
• Voice Verification fees

If your credit card transactions volume is low, chances are that your combined transaction fees and discount rate may end up less than the monthly minimum. In this case, the difference will be added to your monthly bill. If your credit card transactions volume is high, you may want to look for a processor who charges lower transaction fees and discount rate.

More fees

• Technical Support fees
• Service Terminal fees
• Annual fees
• Programming fees
• Internet processing fees
• Shipping and handling fees
• Customer support fees
• And many more

Many of these fees may be just arbitrarily added on. Please make sure you are aware of all the charges you will incur before finalizing any contract and if possible avoid having to pay such fees.

Other Considerations

• Point-Of-Sale (POS) options
• Customer service
• Technical support: – - This should be preferably 24/7,efficient, effective and prompt
• •Monthly transaction limit
• Procedure in dealing with chargebacks

Do discuss your specific business needs with the sales representative of the credit card processor. Find the most suitable solutions for your business type. For example, there are several online gateway systems to process credit cards. If selecting a shopping cart software, you need one that interfaces with these gateways. The best way to do it would be to discuss it with the sales representatives of different credit card processors and choose the one with the most appropriate solution.

In short, the five key things you must consider are their rates, services, terms, solutions and incentives. Please read the fine print carefully. This just cannot be stressed enough. Know the conditions for termination of the processor’s service. There have been cases where the termination fee is separate from cancellation fees for any equipment leased. The amount of work you need to do before you could settle on one credit card processor must seem daunting. However, keep in mind that it makes your business more flexible and provides your customers more payment options. Wish you all the success!

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