5 Questions for your Credit Card Processing Company

5 Questions to Ask When Looking For A New Credit Card Processing Company

1. Does your Credit Card Processing Company have a cancellation or early termination fee?

Processors who have cancellation fees or early termination fees always have something that they’re hiding.

They may tell you one thing on the phone or in person, and then when you see your first recurring bill you see something completely different.

When you call your credit card processing company, they inform you that you signed the contract you are now locked in with a hefty fee to change credit and debit card processors.

If a national processing solutions company has to charge you a fee to force you to process with them, why in the world would you sign up with them in the first place?

If your business is small or just starting, be careful to read over all the included credit card transaction fees.

Processing for small business owners should include little to no fees, as well as no commitments as you try to grow your business.

All types of businesses should seek the best payment processor, but it is especially important for new businesses that might not yet have great returns.

2. Are you giving me tiered pricing or interchange pricing?

If the credit card processing company you’re looking at says “tiered” or “I don’t know” when you ask this question,  it’s time to hang up and move on.

When you receive interchangeplus pricing, you can always see exactly what credit card companies like MasterCard, Visa, Discover and AMEX are charging you plus what you’re paying the transaction processor as your go between.

If you receive tiered pricing, your credit card processing fees are not as easy to understand.

Processors will promise you a low interchange rate (i.e., 1.59%) but not tell you that many credit cards, business credit cards, debit cards, prepaid cards and gift cards have different levels of fees and charge a markup on top of this percentage just to get your credit card payment processed by a payment system.

This really is false advertising at its finest.

Many credit card issuers, as well as the issuing bank, will hide fees, hoping that you don’t notice them before it comes time to pay those fees.

The acquiring bank wants to make as much money as they can off of your credit card processing.

3. What other fees will I be charged monthly or yearly?

All processing companies have additional fees that they may or may not charge.

These fees can include compliance fees, statement fees, annual fees, PCI compliance fees, Batch fees, swipe fees, monthly minimum fees and the like.

Make sure to always ask what other fees are applicable. If the processor you’re looking to work with needs to cross out fees on an application when you question the fee, this should be a huge red flag.

What this most likely means is that if you didn’t object to the fee, you would have been charged it because they could have gotten away with it.

Why would you want to work with a company that is trying to take the most they can from you and lock you into a long term contract?

Most processors that promise a low flat rate will always have other hidden fees that make up the difference elsewhere.

4. Is it better to just use Paypal or Square for processing cards?

In some instances it can be better but in most cases it is not.

When a company has a huge advertising budget they have to make the money off the consumers.

The more marketing you see the more money they are making.

How do you know if Square or PayPal is right for you?

The most important question is, “What is your average ticket price?”

If your average ticket is below $10.00, both are a great option for you.

If your ticket price averages over $10, you’re paying way too much.

Ask yourself, “How much processing do I do?” If you do more than $2,500 a month in processing credit cards, there are better options than both Square and Paypal to keep more of your hard earned money in your pocket.

Square specializes in mobile credit card processing options, meaning that they turn your mobile device into a credit card swiper.

Square has become a top credit card processor by focusing on smaller physical accounts.

Paypal, on the other hand, handles both mobile and online credit card processing.

Mobile payments are accepted on the mobile card readers through a mobile app on the device.

We recommend using processing equipment with POS software (point of sale). All POS systems are designed to accept credit cards, but most can do much more than just that.

Most can accept payments from contactless payment methods, like Apple Pay or another program on their mobile wallet.

Electronic payments can be easier and more convenient for your customers, as they don’t have to worry about forgetting their wallet to know that they can still purchase products through your merchant account provider and payment gateway.

5. This credit card processing company sounds too good to be true…

Most companies have a catch.

Some companies say that what makes them better is, “they cut out the middle man” or “we’re direct.”

The truth is that interchange fees are the same for all companies.

Some payment processing companies advertise a super low percentage but make up for it by adding a higher swipe pertransaction fee, or by adding hidden fees.

Some companies may even give you a low rate to start with but then raise the processing fees over time.

If a company cannot guarantee in writing that your rates and fees will not change over time, it’s time to find a more reputable company to be your merchant account services provider.

No matter which payment card processor your company chooses, all of them will be able to handle accepting card payments.

However, you must dig deeper than that.

Accepting credit card payments is not enough of a reason to choose a processor.

They must offer you low fees for each card that is processed. If they can offer you all of these things, they might be a processor worth exploring.

Your processor must also supply you with credit card readers, either for a low price or for free, and offer card security through their secure credit card network for all who use their card terminal.

A secure credit card network will keep your customers safe from credit card fraud. Credit card terminals will only accept a purchase after the customer’s PIN number is put in during the purchase. 

Additionally, the POS system must be able to keep you, along with your customers, safe from fraud. Don’t process fees that you don’t need to incur by inviting fraud to your financial transactions. 

POS machines will ensure that card acceptance only takes place after many security measures have been taken, like duplicate card checking, account verification and occasional password protection.

Accepted cards will continue the purchase, while declined cards will not go through. The system will only charge cards that from a legitimate bank account.

Final Thoughts:

If you’ve asked each of these questions to a potential merchant account provider and they’ve given you the right answers, congratulations!

Beware that most online sales reps for credit card companies have been trained to be vague, so dig deep with them!

Know that you’re going to get what you signed up for. Make sure that each and every month your new processor is working to keep your business.

This is how you know if the processor you’re choosing is one of the good ones.

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