If you are either starting a new business or you are looking to switch credit card processing companies, you will want to be sure to recognize the main factors that you should be comparing. While you will need to pay fairly significant upfront costs and ongoing credit card processing fees, accepting credit cards can truly open up the potential to reach more customers and allow you to boost your sales significantly.
Over 80% of businesses that begin to accept credit cards as a form of payment see an increase in sales. This, along with the advancement of mobile payment solutions, choosing the right credit card processing company is more important than ever before. However, because of the variables involved, it is not the easiest choice to make. Below, we will be going over some of the most critical factors that should be included in your decision-making process.
Factors To Consider In Your Decision-Making Process:
- Fees and Cost
The main thing that you are going to want to look at when you are initially comparing the different credit card solutions would have to be the fees and the cost associated with each processor.
There is a fee that is charged for every transaction that you process with a company. You want to figure out what fee you can expect to pay for each company. This will give you a good idea of how much of your profits would get lost due to processing fees. Typically, the rate will sit anywhere from 2 percent to 3 percent. With that being said, the rate that you are going to end up paying will depend on a variety of factors.
For one, it will likely depend on the type of credit card that is being used for the transaction. For instance, is the customer using debit or credit? It will also depend on the type of transaction it is. For instance, is it being done online or in-person? In-store transactions are going to cost your business the least amount in processing fees because the card is being physically presented which reduces the overall risk to the credit card processor for having to deal with cases of fraud. It will also depend on the overall size of the transaction. For instance, is the total transaction high or low? The larger the transaction, the lower the transaction fee will be.
Application and Setup Fees:
There are also application and setup fees that you will likely be charged when you make the decision to sign up for a credit card processor. You are likely going to need to pay a fee for the setup, depending on the company that you opt for. Some might not charge for this.
Monthly Minimum Fee:
Another fee that you will need to calculate and add to the overall cost would be the minimum monthly fee that the credit card company must collect each and every month. This is to ensure that you are not costing the processor more money than you are giving them each month. Therefore, if you fail to reach the minimum one month, they will automatically push you towards the minimum and charge you excess fees to do so. Therefore, if a company has a minimum of $50 for one month and you only reach $35 in credit card fees for that month, they will automatically charge you an additional $15 to push you to the minimum.
Gateway Access Fee:
A lot of processors will also charge you a monthly fee associated with providing you a payment gateway. This is the technology that effectively transmits transaction data from the point of sale or processing system directly to the card companies.
Early Termination Fee:
Another thing that you are going to want to keep in mind when you are signing up for a processor would be whether or not they charge an ETF or early termination fee for breaking the contract term length.
It is very important to understand each and every one of the fees that a processor will be charging you prior to signing up. Not only will it help you accurately calculate your on-going business costs, but it can help you choose the right processor for your business type and size.
- What Payment Types Are Accepted?
Another major thing that you are going to want to keep in mind when you are looking to pick and choose a processor for your business would have to be the payment types that are accepted. Ideally, you want to find a processor that accepts all types of credit cards. That way, you are not forced to turn away a potential customer simply because they do not have the right type of card for your processor.
You will even want to be sure that the processor you end up choosing has the right technology in place to accept new payment technologies as well. This is especially true if your business targets the younger generations because a lot of these younger people are becoming more and more accustomed to paying with NFC technology and using their phones as their new digital wallets. The number of people that use these new technologies to pay is only increasing by the day so you want your business to adapt quickly.
- Customer Service
When it comes to choosing the ideal processing company, you will want to factor in their customer support and level of customer service as a whole. Not only is it imperative to find one that offers 24/7 support, but you also want to find one that has a great reputation in the marketplace for being quick to respond to issues and resolve them. While you cannot base this criterion off of your own experiences, you should be able to check for reviews online to see what companies people have the most trouble with. Being able to resolve processing issues quickly is crucial in business so this should be placed high on your list of priorities when choosing one.
Overall, there are a lot of things that you are going to want to think about when it comes to choosing the right credit card processing company. By following the tips above and comparing your options, you should be in a good position to choose the right one for your business.