If your small business deals directly with retail customers, you need to be set up to accept card payments. Unfortunately, this isn’t simple. Confusing terminology, rules and fee structures mean that if you don’t understand what you’re doing, you’ll end up paying much more than you should. It doesn’t make sense to simply choose whatever merchant bank other businesses that you know, use. They could easily be making a mistake, as well. You need to do our own groundwork.
Understand swipe or interchange fees
Each time a customer swipes a card on your card machine, the merchant bank processing the transaction charges you a swipe fee or interchange fee. Merchant banks have for long been criticized for overcharging merchants in this area. While the Durbin Agreement attempted to limit what merchant banks could charge, it was poorly designed legislation that actually ended up allowing merchant banks to charge retailers more on small transactions.
It’s important that you compare the fee structure across different banks for the smaller transactions.
Buy your own card processing terminal
Card processing terminals are cheap devices that cost no more than a couple of hundred dollars. Leasing a processing terminal from a merchant provider, though, could cost as much as $50. It makes no sense to lease when you can buy for so little.
Don’t fall for the bait-and-switch
Many credit card processors will offer attractive low interchange fees for the first few months, and then switch to an expensive, regular plan afterwards. It’s important to look at the long-term costs of any deal. If there is low rate on offer, you want to make sure how long it lasts.
Make sure that all your systems talk to one another
Your online card processing terminal needs to be able to communicate with your sales tax program and accounting program, among other things. It isn’t a given that it will. You need to carefully go through information available about inter-operability with all of your software.
The contract is important
Merchant account contracts are usually not boilerplate that you can skim over. Every contract is different, and can include information about fees and charges that cost you significantly. It’s up to you to go over the fine print carefully, and to understand. There could be special fees, different fee tiers for higher sales levels. You want to understand your contract.
Try to combine services
Your own bank, the one where you get your business credit cards and banking needs met, will possibly be your first choice when you go around looking for a merchant account. While you should shop around, it does make sense to combine services where possible. You could get discounted services.
Look for responsive customer support
Sensitive customer support is an essential. It can be hard to understand card processing when you’re starting out. When problems crop up from time to time, you’ll need help.