If you are starting up your own small business, you will need some method of processing payment from your customers’ credit cards.
A merchant service processes the credit card payments you receive from your customers via a specific account related to a credit card processor.
This processor works with your customers’ banks to direct the payments into your bank account.
Unfortunately, dealing with merchant processing can be an enormous headache for any small business owner, as you are likely to encounter extra-long contracts and cancellation costs as well as hidden fees that will penalize you as you try to offer your own customers the best service you can.
Here are a few suggestions you can follow to help you during your selection process.
Cost — Many processors hope to catch the eye of the small business owner by claiming in their advertisements that they offer “the lowest rates” available.
It is an easy trap to fall into, and it works because the so-called “lowest rates” only apply to one card and one transaction type.
Details like the brand of card, the way the card was entered (swiped or manually keyed in), or the way that you keep receipts will impact the variety of rates processors offer.
Instead of looking at rates, you should focus on the overall cost based on the type of business services you offer, your transactions, and the specific types of cards your customers will use.
Contracts — You may encounter processors that require you to sign a contract for a lengthy amount of time (usually three years) and then slap you with excessive cancellation fees.
These contracts may also include a clause that allows the processor to take a certain minimum payment for the remainder of the contract even if you decide to cancel early.
It is recommended that you not sign any contracts when selecting your merchant processor and avoid those that require them.
Customer service — It is never safe to assume that all processors in the field will be able to offer you a level of customer service that won’t leave you pulling your hair out when you need support.
Many processors won’t handle even the smallest problems that arise, so shop around, researching your options to find out what the customers have to say before you make any final decisions.
Trust — It can be scary to realize that you are leaving your profits in the hands of an outside service (which sometimes turns out to be one person).
You will certainly want to trust your processor, so you should attempt to test the level of knowledge your potential service exhibits by asking them questions during a phone interview.
Sniff them out — You should always ask around before you make any decision.
Check out the Better Business Bureau’s website to hunt up any feedback on the provider you’re thinking of employing.
When talking with other business owners who have dealt with this particular provider, discuss the tech support they were given as well before you set up an e-commerce merchant account.