Credit Card Processors For Small Businesses

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Learn how to set up your business for success by accepting credit cards with our tips on how to choose the right equipment and processors.

Credit Card Processors For Small Businesses

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Merchant Maverick: In Depth Reviews On Credit Card Processors, Payment Platforms, And Other Valuable Merchant Services

You may have heard by now that the use of cash as a payment method is on the decline. Few people carry significant (or any) cash with them when shopping, preferring to rely on debit and credit cards. In addition, the COVID-19 pandemic indicated an even sharper decline in the percentage of cash payments, although it is not certain that this trend will continue when life returns to “normal”.

However, it is extremely important that your business has the ability to accept both credit and debit cards and possibly other payment methods. You don’t want to lose all those additional sales opportunities because frustrated customers walk out without making a purchase because they can’t use their credit card and don’t have any cash.

Unfortunately, paying off credit cards is both complicated and expensive. In addition to the need to obtain the necessary processing equipment, you must go through an extensive underwriting process before being approved for a merchant account. (Note that payment service providers (PSPs) like Square offer a simplified account that requires very little paperwork.)

The payment processing industry is also notorious for charging arcane percentage-based fees and other unpredictable per-event fees. It’s so difficult to predict that it’s almost impossible to estimate your true cost of taking out a credit card in advance.

Credit Card And Payment Processing Industry Overview

We are here to help. This article explains how to set up credit card processing for your small business. We’ll discuss the various options for taking card payments, including the hardware and software you’ll need. We will also show you some alternative payment methods that you may not be aware of. Finally, we’ll point you to some additional resources that can help you learn more about the confusing world of payment processing, so you can make more informed decisions about how to handle credit card payments for your small business. be accepted

Choosing a payment processor for your business requires going through a list of steps. Before choosing a particular provider for your processing needs you may want to do some careful research into your options. However, it is important to closely monitor your actual expenses once you are approved for an account and begin accepting credit card payments.

While it would be impossible to come up with an exact number, we estimate that at least half of small businesses in the United States overpay for credit card processing. This is usually because they didn’t follow the step-by-step process we’re going to outline below and instead took the word of the first sales agent who walked in the door. If you want to avoid joining this unfortunate group, read on.

Your first step – which will require a significant amount of research on your part – is to choose a payment processor that’s right for your business. Most processors typically offer one of two types of payment processing services: (1) true, full-service merchant accounts or (2) integrated accounts, which you’ll find with payment service providers (PSPs), such as square, stripe , or PayPal.

History Of Credit Cards

Both of these methods for processing payments have their advantages and disadvantages. Using a payment service provider gives you fast and easy account approval, minimal recurring fees, and offered flat rate pricing. However, you will also face limited customer support options and a higher risk of your account being suddenly closed or frozen. Also, flat rate pricing tends to be lower at higher monthly processing volumes.

Merchant accounts offer better account stability and generally lower processing rates and require more underwriting to be approved for an account. You’ll also be looking at long-term contracts, early cancellation penalties and a host of additional monthly fees on top of your transaction processing costs.

Unfortunately, there is no easy way to determine which option will be best for your business. As a very general rule, payment service providers work best for businesses that process less than $5,000 per month. Those who process more than this amount are usually better off with a real merchant account. We encourage you to look at both options and compare your estimated costs under each before making a decision.

Once you have identified several potential candidates (we recommend at least three options), contact them and get a quote. In addition to asking about per-transaction fees, don’t forget to ask about potential fees as well, as they can add up very quickly.

What Is Credit Card Processing And How It Works

Given all the pricing models for card processing, a true apples-to-apples comparison on price would be difficult to achieve. However, if you make sure that your contract can be terminated at any time, even if you make a mistake, you will not be stuck with a bad processor for a long time. Just remember that the basic exchange fee for processing transactions is through your processor and out of their control. However, the markup charged by your processor can be reduced through negotiation (to a reasonable degree).

Processing rate plans come in four different types, the interchange-plus and subscription pricing models clearly reflect the provider’s markup, while the flat rate and tiered pricing options do not. For a more detailed discussion of processing rate pricing plans and how to identify which one you are using, see our article, How to Identify a Pricing Model on Your Processing Statement.

Unless your business is e-commerce only, you will need some tools to process your transactions. This can be a traditional countertop credit card terminal, a point of sale (POS) system, or even a mobile card reader that works with your smartphone or tablet. If you accept any online sales, you will need a payment gateway to facilitate these transactions as well.

We go into more detail about the products and services below. For now, the only news is that none of this will be free. You either have to buy, rent or lease your processing hardware, and payment gateways and other software services almost always require some kind of additional fee. Also, be aware that popular products like Square’s line of terminals and card readers and Clover terminals and POS systems are proprietary products that won’t work with a different provider if you decide to switch processors later.

Excellent Credit Card Processing

When it comes to hardware, we strongly recommend that you buy your own equipment rather than buying it. Additionally, be very wary of the increasingly popular use of “free” credit card readers that require you to sign a long-term contract.

This may mean actually starting your own business, changing processors, or perhaps moving from individual cash only to online sales. No problem, there is a lot involved in completing all the legal paperwork, from acquiring a physical location/online store to hiring employees. Some of them we cover on this website, but most we don’t. In fact, there is so much involved that we won’t try to cover everything here. We’ll assume you got the best advice from your available sources, your grand opening was a huge success, and you’ve used your brand new credit card processing service, multiple times.

As part of opening your business and starting to accept payment cards, you’ll find that you’ll deal with frequent customers, fraudulent charges, failed transactions, and more. When dealing with these issues starts to get really painful, take a deep breath and remind yourself that these are just regular hassles associated with credit card processing. Ultimately, your reward will far outweigh your pain in the form of increased sales.

Unfortunately, starting your business isn’t the last – or even the most important – step. The most important step is to continue to monitor your monthly statements and regularly review your credit card sales data.

Credit Card Decline Messages: Everything You Need To Know

Sometimes, processors mistakenly charge merchants on per-event items. It doesn’t necessarily mean your processor is bad. It could be a simple data entry error. But if you don’t watch and talk about your statements, no mistake will be corrected. When you finally see these additional charges months or even years later, the processor may refuse to refund you 100% of the additional payment. We have seen many complaints about this issue on the Better Business Bureau website.

We will warn you that some providers choose to increase your prices and fees after you have been with them for a period of time (usually six months to a year). Unfortunately, this often happens without your notice, so review your processing statements carefully

Merchants can accept credit card transactions in person or online. Another type of transaction, mobile payments, has become more popular in recent years as wireless terminals and mobile card readers have allowed businesses to do so.

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