What Should I look For In A Credit Card Processor?

When trying to find out what should I look for in a credit card processor, take into consideration that all credit card processing companies perform the same basic service in the credit card processing transaction. Once your buyer swipes his credit card at your POS terminal, or you input the information, it passes through several processes before the money actually gets deposited into your account. The information is sent to your credit card payment processor and they submit the transaction to the bank that issued the buyer’s card. The issuing bank accepts — or declines — the transaction and returns an authorization code which is sent back to you from your credit card processing company. This and other transactions for the day are sent in a batch back to the credit card processing company, where they are distributed to the issuing banks for payment. The issuing banks send the money to your credit card processing company, who in turn transfers it to your assigned merchant bank account.

What Distinguishes Credit Card Processing Companies?

Some credit card processing companies specialize in online businesses. Some prefer to handle only established businesses, some focus on certain industries, while others have special plans dedicated to new or small businesses. But there are some basic talking points you want to explore when researching credit card processing companies:

1. What is The Company’s Experience and Credibility?

Your credit card processing company is part of the team that is actually loaning you money on good faith that each sale settles without returns or chargebacks. That being the case, you want to be sure the credit card processing company you contract with is financially stable and credible. Check with the Better Business Bureau to see if there are any complaints against the company. And don’t hesitate to ask if they have experience handling your particular business model.

2. Is the Company PCI Compliant?

Both you and your credit card processing company must be in compliance with the regulations set out by the Payment Card Industry Data Security Standards (PCI-DSS). In today’s fast-paced world of electronic communications, are you responsible for safe guarding your customers’ private information from on-line hackers and credit card thieves looking to commit credit card fraud. When answering what should I look for in a credit card processor, ask what security methods and technology the company has in place and what support they provide to help you become compliant.

3. Will Their Equipment Be Compatible With Your Present Equipment and Software?

Some credit card processors have proprietary equipment and software that may not work with what you already have in place. Be sure to check before you contract with a credit card processing company or this could be an added expense.

4. What Are The Cancellation Policies?

The majority of credit card processing companies charge an early termination fee to cancel your contract before it expires. Fees and other cancellation policies vary from company to company. Ask about termination fees and find out if there are any conditions when these fees may be waived. There are some providers that do not have contracts or charge early termination fees, this can be a major benefit in making your decision.

5. What Are The Fees and Pricing Options?

Part of the answer to what should I look for in a credit card processor is to ask for full disclosure of all the fees that might be charged to your account. What is the interchange rate? What is the cost for each transaction? Is there a monthly minimum fee, compliance fee or statement fee? And ask to see a sample statement to become familiar with how and where each of these fees are applied.

6. Is there Customer Service Available?

Ask if they provide you with a contact to answer questions that may come up during your contract period. The person who handles your initial application is often a salesperson for the company. Their job is to get you signed up. Ask who you can talk to if you have questions or need to add services to your contract.

These are some of the important questions you should be asking when comparing credit card processing companies. When you do, you will usually find the biggest differences will show up in the answers to your questions about fees and pricing options. Certain fees are fixed by the credit card associations and apply across the board to every credit card processing company. So processing companies try to beat each other out by offering low rates on the fees they control. It’s understandable that you would be drawn to the company that offers you the lowest overall fees. As a business owner/operator, your interest is in keeping as much profit as possible from each sale. But in the end you may find that choosing a credit card processing company simply on the basis of costs turns out not to be your best option. So maybe the question we need to answer here is not really “What Should I Look For In A Credit Card Processing Company?” but…

How Do I Find A Credit Card Processing Company To Fit My Business?

Finding a credit card processing company to fit your business takes some homework on your part. Before you dive into the pool of credit card processing companies make a list of your credit card processing needs so you can ask questions that are specific to your business:

• All my credit card transactions will be processed through a point-of-sale terminal. Does that make a difference in my transaction rate?
• I have an on-line store and need to process credit cards through my shopping cart. How will that affect my rates?
• I have to process credit card payments in the field. Do you have any mobile devices or software available?
• I sell products that can be paid for with a government sponsored program card. Can you set up my program to accept EBT cards?
• I expect to have a high volume – or low volume – of business. Do you have monthly minimum or maximum fees?
• I operate a seasonal business. What should I look for in a credit card processor? and What are my upfront expenses to open an account and what are the early termination fees?
• I am located in a tourist area and will need to accept foreign-issued credit cards. What are your conversion rates?
• I want to accept American Express and Discover Card along with MasterCard and VISA. Can you link those to my merchant account?
• I want to accept gift cards. Will your equipment be compatible with my gift card software program?
• My MCC (Merchandise Category Classification) code classifies me as a high-risk business. Will I have to maintain a reserve account?

Armed with these kinds of questions and, of course, taking into consideration the most important one what should I look for in a credit card processor, you may discover that the credit card processing company offering you the lowest rate, is not necessarily the right processing company for you. Whatever your business, if you want to accept credit cards, you’ll have to open a merchant account with a financial institution or a credit card processing company. Take an inventory of your credit card processing needs, and you’ll be much better prepared to find the best processing company for your business.