HOW TO EVALUATE A CREDIT CARD PROCESSING COMPANY?

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Are you confused by the huge number of companies offering to process your credit card transactions? Don’t worry, you are not alone. Hundreds of new entrepreneurs face such a dilemma every day as there is fierce competition in this industry today. This article will help you understand a few of the practices and terminologies in this industry and help you to better evaluate the credit card processing companies so that you can choose the one that is best for you.

If you have a small home based business or your do sales through the net, there are a few things that you need to be aware of and some questions which you should ask.

Firstly, you should know that most of the big banks and financial institutions will not give you a merchant account if you have a home based business or a start up business. Secondly, since you aren’t selling your service or product face to face, banks take a high risk as the customer is paying for something which he or she will not receive immediately. Then, if you don’t fulfil the sale, the customer will apply for a chargeback and the bank has to pay back the money to the customer. If there is no money in your checking account then the bank will be under a huge loss.

If you own a web site and take orders over the internet, you would have to set up a shopping cart so that you customers will be able to make purchases easily. Moreover you should make sure that the shopping cart is secure. There are several shopping cart applications in the market today; hence, you need to research and buy the one which is compatible with the payment gateway provided by your credit card processor. Generally, merchants purchase the shopping cart application from the credit card processor itself. This will save a lot of money and time.

Fees and transaction rates

The rates and fees that are applicable to you depend on a number of factors. Your credit card processor will consider all many factors to decide the rate to process your credit card transactions. There is no fixed rate that is offered to every body. The most important factors are the type of business you are in to and your credit report. “High Risk” businesses attract more rates than others.

Rates will vary from 1.5% to 3% depending on the processor’s risk analysis of your business. Also ask what other service fees will be applied at the end of each month like annual fees, statement fee and so on.

Don’t think that accepting credit cards adds unnecessary costs to your business and shy away from it. Today, accepting credit card payments is not a luxury but a necessity.

Another issue that you should look into is the cost of the equipment that is required to process these cards. Depending on the type of transactions the equipment required will vary.