small business credit card processor

5 Top Tips for Choosing a Small Business Credit Card Processor

America is a nation of credit card holders. There are over 1.1 billion active credit cards and roughly 41 percent of Americans prefer to make payments with a credit card.

As a business owner, what does this tell you? If you aren’t accepting credit card payments, you’re missing out on a lot of customers.

You’re certainly already thinking about how to set up credit card payments in your business. Not so fast! While it’s a relatively simple process, the key is to find the right small business credit card processor.

However, with more than 1000 processors to choose from, zeroing in on the best option for your small business suddenly starts to look more challenging. We’re here to help.

Read on to learn how to settle on a good credit card payment processing company.

1. Establish the Needs of Your Business

Just because your business needs to start accepting credit card payments doesn’t mean you jump on any processor. Although these processors offer the same core service, they’re not created equal. Some processors, for example, will not accept your business if it’s in a high-risk industry.

As such, it’s crucial to assess the credit card processing needs of your service before you start looking for a service provider.

For instance, if you run a high-risk business, you want to narrow your search to credit card processors that offer high-risk merchant accounts. This link has more information on high-risk credit card processing.

The nature of your business’s financial transactions can also inform your choice of a processor.

If you’re a new business that’s still yet to build a sizeable customer base, it might make more sense to choose a processor that bills you on a per-transaction basis instead of a fixed monthly charge. As the business’s transaction volume grows, you can then assess whether it’s more cost-efficient to move to a processor with a fixed charge.

Ideally, though, you’d need a processor with a flexible billing structure, so that you can switch back and forth depending on the state of your business.

2. Fees

Beyond the billing structure of a credit card structure, you must get an exhaustive list of all the fees the processor will charge for the services.

Typical charges include:

  • Application fees
  • Setup fees
  • Statement fees (monthly)
  • Gateway access fees (monthly)
  • Interchange fees
  • Monthly minimum fee.

You’ll find some of these charges across all credit card processors, and others will vary. For example, not all credit card processing companies have an application (initial sign-up fees). To entice new customers, some companies offer free signups.

Similarly, not all companies have a monthly minimum fee. If you choose a processor that has this charge, you’ll pay it every month whether or not your business makes a sale.

When examining the fees, the goal is not necessarily to choose a processor that will cost you the least amount of money. More often than not, the best processors will charge a premium for their services. The key thing here is transparency.

You need a credit card processing company that’ll list and explain all their fees before you sign up. You don’t want to be caught with hidden fees after you’ve signed up and spent good money on setting up the service.

A simple online lookup of a credit card’s processor reviews will give you insight into its practices. Dishonest processors with hidden fees will often have negative online reviews.

3. Compatibility

If you run a brick-and-mortar business without any online processors, you’ll need a physical terminal or point-of-sale hardware. Generally, compatibility shouldn’t be a problem here.

However, if you run an ecommerce store, you won’t need a physical terminal. Instead, the credit card processor’s software will be integrated into your website. This is where compatibility issues can arise.

As such, when evaluating the various processors on your list, consider their systems’ compatibility with your own systems. Be sure to perform a test run and ensure everything works seamlessly before making your final choice.

In addition to compatibility, you may need a system that readily integrates with other business functions, such as inventory management.

4. Service Versatility

American Express, Visa, Mastercard, and Discover are the major card networks, but there are more. When picking a credit card payments system, it’s a no-brainer that it must be able to process payments regardless of the card network.

The vast majority of processors already do this, making it almost a foregone conclusion among merchants (businesses).

However, some new and upcoming processors may be yet to have the capability to accept all cards, and may not inform an unsuspecting merchant who doesn’t ask. So, just to be sure, confirm that indeed the processor you’re choosing handles all the major cards.

5. Speed of Remitting Collected Funds

When you set up a credit card payments system, you’ll need to open a merchant account. This is where your credit card processor will deposit the funds they’ve collected from your sales transactions.

The amount of time it takes processors to disburse the funds varies, but typically within two to three business days. Some do within a day.

As a small, growing business, you probably don’t have the luxury to wait a couple of days to get the money from the sales you’ve made. With this in mind, it’s prudent to select a processor with a reputation for disbursing merchant funds quickly.

Get the Best Small Business Credit Card Processor

Credit cards aren’t going anywhere. If anything, their usage will only increase. As a business, you have no choice but to accept credit card payments, even though it can increase your costs.

Top on your priority list should be to find a reliable small business credit card processor that suits the needs of your business. This guide will help you in that regard.

Browse our business section for more small business advice.

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