Merchants don’t have an option when it comes to whether to accept  credit card payments any more, as more and more customers are using credit cards to make purchases. Processing credit card fees for merchants have also reached affordable levels, making it possible for businesses of all sizes to take advantage of this sales boosting tactic. Selecting the right credit card processing service for your business is a challenging task.

Here are seven processing credit card tips to help you select the right merchant processing service for your business:

1. Bank or independent merchant card processing company?

Most merchants usually have an account with a bank, and let the bank handle its credit card processing requirements too. Banks offer good rates to preferred customers who have had a long relationship with the bank. Independent credit card processing companies may offer the same services at better rates. Additionally, businesses benefit by having more than one merchant card processing account for their commercial solutions.

Banks typically take up credit card processing for large businesses only, and offer limited payment gateway access. Independent credit card processing companies, on the other hand, offer processing credit card solutions to businesses of all sizes and types. They can provide solutions for electronic, manual and automatic credit card payments.

2. Understanding processing fee structure

A merchant card processing company earns mainly through the discount fee that is a percentage (1% – 7%) of each credit card transaction. Agencies may also charge other fees such as account initiation fee,  monthly minimum fee, chargeback fees, etc. Merchants must ensure that all the fees, terms and conditions are included in their contract.

3. Specialized credit card processing companies

Some credit card processors specialize in providing solutions for specific types of businesses such as retail stores, restaurants, internet companies, etc. Each industry has unique needs and risks. Businesses with ecommerce applications need a merchant processing service that assures secure transactions to mitigate credit card fraud. Businesses with high risk profiles are charged more.

4. Settlement processes

Settlement is the process of moving funds from the merchant account to the checking account of the business. Credit card processing companies move funds daily, weekly or monthly. They either deposit credit in a batch after deducting fees or on a per transaction basis. Some merchant card processing companies retain a percentage of the settlement as a cushion against charge backs. Verify the frequency and amount of settlement so that it meets your cash flow needs.

5. Cost of Credit Card Terminals

Credit card processing needs installing credit card terminals at the business location. Businesses can purchase or lease hardware depending on their business plan and volume of credit card sales. Some credit card processors provide free credit card terminals with the merchant account while some integrate their system with the pre-installed machinery at the merchant’s end. Either choice will affect monthly fees and discount rates. Weigh your options before choosing either course.

6. Cost of electronic payment gateways

 Merchants that use ecommerce applications need their merchant accounts to be linked with electronic payment gateways. Credit card processing companies provide payment gateways as part of the package or set up and install payment gateways of the merchant’s choice. Cost of the service varies with features such as security, encryption, SSL to reduce the risk of credit card fraud in online payments.

7. Term of contract and cost of add-ons

The contract between merchants and businesses is usually for longer than a year. Terminating a contract prematurely incurs a hefty fee. If a merchant plans to expand the business to other locations, it is recommended that it select a processing credit card company that offers discounts for additional terminals and merchant accounts.

Different types of credit transactions incur different discount fees. Higher the risk, higher the fee. Card-less transactions cost more than those in which the processing of credit cards at the physical location. Keeping this in mind, sometimes it makes more sense to have separate merchant accounts for each type of credit transaction.

Good, reliable services that help your business grow profitably are as important as getting a good processing credit card rate. Get the most out of your credit card sales by following these tips to select the right credit card processing company for your business.

Tags: Credit Card Processing

You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.