As a business owner, you would like your customers to have the convenience of paying you on whatever method they choose, whether by cash or by card. They can have the option to pay in person, using their phone or by going online. There are credit card processing companies for small business owners or for large companies. By choosing a credit card processing company, it gives them the freedom to pay anytime they want. Not only that, it will help you boost your sales and makes your business more reputable.
Choosing the company right for you is not easy. There are different kinds of credit card processing service features, each with their own pros and cons. In this article, we would talk about five things you need to know in finding the best one for your business.
Fees and Costs
The first thing you need to ask in a credit card processing company is, “What are their fees and costs?” If you’re starting a business or if you have a small business operation and you’re tight on the budget, you need to make sure that you can afford them. Credit card processing companies have processing fees that can amount to 5 percent of every sales transaction you have, which can be a huge chunk of your revenue. Here are some fees that you need to watch out for:
- Set up fees and application fees. There are fees that you need to pay upfront before you can start. They might charge you for application fees and set up fees/installation fees to just install the service or set up the requirements needed for your company. This fee is usually just paid one time and may be different from other companies.
- Monthly fees or Recurring fees. Some may have a monthly subscription that automatically renews every month. Some are paid yearly or quarterly. Don’t forget to inform them your payment information just in case it was updated.
- Monthly statement of account fees. These are fees commonly called monthly statement fees. It’s basically the fee that they require you pay to have them mail to you your statement of account fees. Some of the offer to waive it if you sign up to view your statement of account online instead.
- Monthly minimum fee. This is the fee that requires the processing company to have every month. If this fee is not met, you will be charged per month for it. The fee would depend on how much you have to pay for the difference.
- Monthly gateway access fee. Aside from the monthly minimum fee that you pay, the monthly gateway access fee is charged for using a payment gateway. This payment gateway is a secure way of transmitting your customers’ payment transaction details from the processing system going to the card payment companies. This fee varies from $10 to $30.
- Early termination fee. If you cancel out your contract before it ends, you will be charged with an early termination fee. A few card payment processors has this fee and the price varies from hundreds to thousands of dollars.
- Interchange fee. There is a small fee that will be charged with every transaction you make. It would be paid by your selected payment processor which will be given to the credit card-issuing financial institution or bank. This fee will depend on what was the type of card used and the amount and type of transaction made.
A lot of card processing companies have their own standards in their fees and rates. Some are more appropriate for large businesses while others are suitable for startup companies. They would consider several factors such as your company’s sales percentage, the number of years you have been in the business, your business industry and even your credit rating in giving out their fees and costs. Always ask questions if you don’t understand anything from your contract.
These are only a few fees and costs that credit card processing companies might charge you. Aside from these fees mentioned, there might be fees that would be charged to you from a third-party provider. There may be hidden fees that they are not telling you about, so make sure you read the fine print before signing a contract. If you are looking for credit card processing company fees and costs, you can find out more about them by reading CrowdReviews’ reviews of credit card processing services here.
Processing Time
Before they would consider or approve of your request, they want to make sure you have a legitimate business. Some credit card payment processing companies send an agent to look at your office and take pictures. The pictures would serve as proof that your information is correct. Meanwhile, there are other credit card processing companies that will acknowledge a picture of you inside your office instead.
They would also ask several requirements such as your business certificate or license, a photocopy of your current or previous tax returns, your statement of accounts, your profit and loss statements and the like. Once approved, they would need to have your consent for you to allow them to deposit or withdraw any funds to your bank account.
After doing all of these, they would be able to set up the processing of your account. They would be installing the software or the equipment.
Payment Types
You want to have your customers enjoy the benefit of choosing their payment options. It is highly recommended to use the payment types the largest credit card processing companies use, which are the four major credit cards: American Express (Amex), Visa, MasterCard and Discover. This is because you want to have your customers use every available payment option that they can use at their convenience. And most of them get their payments processed real time.
If you’re just short on finances, try to use one or two major credit card companies first. The most popular ones are the Visa and MasterCard types. MasterCard has additional card brands such as Maestro and Cirrus while Visa has Visa Debit, Visa Electron and Visa Plus.
If you want to expand your payment options some more, you can have the option to use one that accepts gift card or prepaid cards. Wal-Mart gift cards are a good example. Each has its own terms and conditions when using it. It is usually used for those that have trouble in finding out what to buy specifically and can choose whatever they want when the right opportunity comes. It can be used for physical products or goods or services. It can be customized and are called specialty gift cards that are most commonly used in restaurants or movie theaters. Best of all, this can be used locally or internationally.
One more option that you can use is the EBT or the Electronic Benefit Transfer. The EBT is used by people that have benefits given by the state welfare department. It is a magnetically encoded card used for payments. It is often given to families that can be used for food assistance (previously called Food Stamps) or for family assistance. There is no sales tax, card processing fees or surcharges charged when using EBT.
Customer Support
Before you have any clients, you want to make sure you know the process in payments. Having a credit card processing service should already include customer support that is available 24/7 because payments can be processed anytime, especially if you have international customers.
Find out how your customers can contact customer support. Are they able to reach them via phone? Or do they only have chat and email support? How long does it take for them to answer queries? They should be able to answer questions in a prompt and efficient manner, be courteous and they should know their products well.
If you have any problems with your credit card machine, they should be able to remotely fix any technical issues or have a technician physically inspect the damage and repair it. If there are any confusing fees or unexplained charges on your bill, they should be available to explain to you a breakdown of the charges.
Tech-Savvy and Secure: Are They Up to Date With Technology?
The top credit card processing services should have security as their number one feature. This is payments we’re talking about and you lose your revenue and income if it is not secure. They should be able to detect immediately any fraud and prevent it.
Most of the time, if a payment is considered as fraudulent, a “chargeback” would be there. Chargebacks will occur when the customer contacts their financial institution or bank to let them know that the payment that was made was not authorized. When this happens, the transaction gets cancelled and you will be charged with a chargeback fee.
If a business has a large number of chargebacks, it would be under observation and will be flagged as a “high risk” meaning there is a possibility to increase processing rates and could lower your credit score rating. If that happens, it is probable that it would prevent you to use credit cards, debit cards or any type of electronic payment in the future.
You should make sure that the card can process payments through several processors to make sure that the payment was successful. It means that if the card, for some reason was declined, you can use another processor twice or thrice until it gets through or else it would be placed on hold. It is possible that the first two attempts had technical difficulties.
Other security features that can prevent fraudulent purchases is having an additional security step like asking for a verification code like the CVV at the back of the card or asking for random card details.
Your security should always be up to date. If you’re using a card processor terminal, it should have the latest chip technology. If you’re using mobile processor, choose a state of the art mobile credit card reader that can be used directly on smartphones, iPhones or tablets. Nerd Wallet’s article talks more about choosing a credit card processing company here.
If you have international clients, make sure that they’re familiar on how to transact with you, especially online. Try to use a service that has language translators or something that is familiar to them.
Even though you have to pay certain fees by choosing a credit card processing company, it’s worth it. Just make sure to select carefully and fully understand their terms before signing up with them. To read more about reviews of credit card processing services, check out CrowdReviews’ top credit card processing services here.
John Tovar
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