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Updated Apr 04, 2024

10 Tips for Choosing a Credit Card Processor for Your Construction Company

How to Choose a Construction Credit Card Processor

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Lori Fairbanks, Senior Analyst & Expert on Business Strategy
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Selecting a credit card processing company presents a unique set of challenges when you own a construction business. Because of the construction industry’s project-based nature, payments are often large and intermittent. Plus, you may want to accept card payments in various ways, depending on what’s convenient for your clients. For example, in addition to accepting credit card payments over the phone and in person, you may want to accept card payments online via invoices and in the field using a mobile POS system connected to your phone. 

While much of the information here can apply to any business, we’ll look at special considerations for construction businesses when choosing a credit card processor, including what to look for in contracts, rates and fees.

Editor’s note: Looking for a credit card processor? We can help you choose the one that’s right for you. Use the questionnaire below to receive information from a variety of vendors for free:

Tips for choosing a credit card processor for your construction company

Here are 10 tips for choosing a credit card processor for your construction business.

1. Get a merchant account via an ISO/MSP.

There are two primary payment processor types:

  • ISOs/MSPs: ISO stands for Independent Sales Organization, and MSP stands for Member Service Provider. They’re essentially the same thing – approved merchant account providers. (Visa calls them ISOs, and Mastercard calls them MSPs). Most processors are ISO/MSPs. They work well for companies that process more than $3,000 monthly and those with varying transaction amounts. This type of payment processor is likely the best fit for your construction business.
  • Merchant aggregators/payment facilitators: The other processor type is a merchant aggregator or payment facilitator. These companies sponsor multiple businesses under their master merchant accounts. Businesses that process less than $3,000 monthly may save money by working with this type of processor. They typically charge a flat rate with no monthly or annual fees. However, aggregators tend to be more risk-averse than ISO/MSPs, and irregular transaction amounts can trigger a fraud alert that causes the processor to freeze your account.

2. Be upfront about your transaction amounts and volume. 

When you call for a price quote, the credit card processing service’s sales rep will ask you your average ticket (invoice) size and the dollar amount you process – or anticipate processing – each month.

It’s crucial to be as accurate as possible with these numbers so the rep can give you accurate pricing. If you decide to proceed with the company, this information will help the rep set up your account correctly. If you have an irregularly large transaction coming up, or if your business is busier than average and you anticipate processing a higher volume of transactions, call the processor ahead of time for approval.

TipBottom line
POS systems for small construction businesses can add payment flexibility and speed up your project's workflow. Check with your potential payment processor about its mobile POS offerings.

3. Choose a company that offers month-to-month service.

When it comes to contracts, like many other small businesses, construction companies should ensure their processor doesn’t require lengthy terms. Look for a processor that offers month-to-month service. This consideration is crucial because if the processor’s services aren’t a good fit for your business, you can close your account without penalty.

Processing contracts may include lengthy terms and charge expensive early-termination fees. It’s critical to read your contract to verify the term length, cancellation procedures and applicable fees before signing with a company. 

When requesting the contract to review, the sales rep may send the application only; however, this is only one part of the contract, so you may need to specifically request the terms of service and program guide. The program guide is typically where the information regarding the cancellation policy resides.

4. Request interchange-plus pricing information. 

Industry experts recommend the interchange-plus pricing model. However, many of the sales reps you call will quote you the starting rate for tiered pricing – also called the “qualified rate” – that applies only to regular cards you accept in person. You may have to specifically request an interchange-plus rate.

Some sales reps may discourage you from choosing an interchange-plus plan because the company makes less money than with a tiered pricing plan. Others may have specific prerequisites before you qualify for their interchange-plus plans. For example, they may require you to process a specific transaction volume each month or be a customer for a certain amount of time. However, the best credit card processors offer interchange-plus pricing to all their customers without these restrictions.

Requesting interchange-plus pricing information gives you a level ground for comparing quotes. This pricing model is based on interchange – a table of rates set by the card networks – and everyone pays the same amounts. The processors add a markup to these rates, and that’s the rate you’re quoted, so you can easily see which companies offer you the lowest rate.

Tiered pricing is challenging to compare because processors add markups to the interchange rates and then sort them into tiers. The number of tiers and the types of cards and transactions sorted into each one vary by processor. However, many have three tiers for credit and debit cards: qualified, mid-qualified and nonqualified.

5. Find out about fees.

Credit card processing fees include monthly statement and gateway fees and an annual PCI compliance fee. Processors may also charge a monthly minimum. Additionally, there are standard incidental fees (batch, voice authorization, AVS, chargeback, retrieval and NSF fees) and network fees (APF, FANF, NABU and data usage).

When you call for a price quote, request a fee schedule. Once you’ve narrowed down the companies you’re considering to your top three or four choices, ask them to send you a complete contract to review – including the application, terms of service and program guide. 

Read the entire contract, highlight or list all the fees it mentions, and compare it to the fee schedule. If fees weren’t disclosed or sound odd, ask the sales rep about them and see if they’re willing to waive them. If they are waived, ensure you receive a waiver or an amended contract.

TipBottom line
If you're growing your construction firm, understand that business is seasonal. There may be months when you process fewer payments than usual, so look for a processor without a monthly minimum requirement.

6. Look for a processor that offers level 2 or 3 processing.

When you accept a credit card from a consumer, it’s processed as a level 1 transaction, which requires minimal information to process. However, if your clients are often other businesses and pay you using corporate cards, you’ll pay higher processing rates unless you provide the processor with additional transaction data. 

For level 2 processing, you’d need to provide your customer’s billing address, customer code (or purchase order number) and tax amount. For level 3 processing, you’d also need to include an invoice number and a description.

7. Use a processor that accepts high-risk businesses.

From a payment processor’s perspective, construction is a high-risk industry because of the high invoice amounts, irregular payment spacing, number of industry regulations and the fact that customers may make card-not-present transactions. 

Credit card processing in high-risk industries isn’t appealing to many payment processors. Look for payment companies with experience doing contractor credit card processing, as these companies will be less likely to freeze your account when they see seemingly randomly spaced large sales. 

8. Ensure payment security is in place.

In today’s technological world, ensuring the services and tools you use are secure is paramount. This is especially true when searching for a credit card processor. A payment security breach could be devastating to a contractor, so ensure the credit card processor you choose adheres to the Payment Card Industry Data Security Standard (PCI DSS). This set of standards helps protect users and businesses from potential credit card fraud.

9. Be able to accept payments in multiple ways.

When speaking with a sales rep, verify that the processor can support payments made on the go, over the phone and online. Ask if the processor can facilitate ACH payments and other digital payment methods, such as e-checks, giving customers more flexibility.

10. Ensure the payment software integrates with your existing software.

Many payment processors integrate with the best accounting and invoicing software, so be sure the processor you choose can work with the software you already use. You may even be able to add a payment button to your electronic invoices, helping your customers quickly pay online.

Did You Know?Did you know
It can take weeks or even months for construction businesses to receive payments. However, when your construction company accepts credit cards, you can get paid much more quickly.

How to choose a construction credit card processor

Since construction jobs have high-ticket price tags, choosing a credit card processor with low rates and features that support your business is crucial. Consider the following steps involved in choosing the best credit card processor for your construction business.

Do your homework.

Many credit card companies do not accept construction companies as merchants because they are considered high risk. So, start your search by eliminating companies that won’t approve you. Next, focus on companies experienced in servicing B2B accounts and, ideally, construction companies.

Research online and get advice from online reviews and industry peers. When getting recommendations, ask about a processor’s upsides and downsides. 

Compare features and pricing models.

Avoid companies with high processing fees and rates. Instead, find processors with low, interchange-plus pricing and low or no monthly fees. Since construction is project-based, you don’t want to pay a high monthly fee when you have little revenue coming in; you also want to avoid a high interest rate on large payments. 

Get demos and custom quotes.

Contact the companies on your shortlist and ask for a software demo. Look for ease of use and the ability to apply deposits and partial payments to customer accounts at set milestones. 

If you like what you see, work with a salesperson to get a custom quote. They will ask you for your average transaction amount and monthly or yearly volume. Use your historical data, but let them know if you plan to expand or change your operation, like adding smaller jobs or getting a contract with a housing developer.

Compare the quotes.

Compare each part of the quotes you receive, including the following:

  • Processing rate
  • Monthly fee
  • Incidental fees
  • Services offered

Then, using your historical sales data, run the numbers for each company to gain a complete picture of the total charges and compare them. Weigh the benefit of specific services or features against the costs. Based on this analysis, choose the payment processor that best meets your needs.

Best credit card processors for contractors and construction

Here’s a glance at credit card processors that work well for contractors and construction businesses:

Company

Pricing

Monthly fee

Good because

Stax

Interchange-plus or flat monthly price subscription model

Monthly plans starting at $99

Low rates; online invoicing and recurrent billing

Payment Depot

Interchange-plus

Plans from $49 to $199 per month

Accepts high-risk merchants; good for high volume; mobile processing

TipBottom line
For more information on these processors, read our Payment Depot review and our review of Stax.

Benefits of accepting credit cards for construction work

The Federal Trade Commission advises Americans to pay contractors with a credit card instead of other payment forms. Aside from this consideration, here are additional reasons why accepting credit cards is beneficial for construction businesses:

  1. Customers prefer paying with plastic. If your construction business is old school and accepts only cash and checks, you may be unintentionally turning away business. Credit cards provide consumer protection, making customers feel more confident. Additionally, customers with rewards cards can get cash back or other perks when using their cards. Finally, using a credit card for construction is easier and faster than applying for a home improvement loan.
  2. Accepting credit cards improves closing ratios. When you can accept deposits at the point of sale, you’ll move the sales process forward and eliminate customers who change their minds.
  3. Accepting credit cards facilitates collection. With existing projects, when you send invoices by email, customers can pay with a credit card online, thus speeding up your collection time and improving cash flow. Credit card transactions are approved or declined on the spot, so you’ll know whether the customer has paid before you begin work.
  4. Most people have at least one credit card. Many U.S. adults have a credit card. While younger people are slightly less likely to have a credit card, most payment processors allow you to accept other payment forms used by millennials and Gen Z consumers – such as Apple Pay, Google Pay, Samsung Pay and sometimes ACH.

Jennifer Dublino contributed to this article. 

author image
Lori Fairbanks, Senior Analyst & Expert on Business Strategy
Lori Fairbanks has spent years analyzing business software and guiding entrepreneurs to the everyday tools needed to run their companies. This has included providing recommendations on POS systems, e-commerce platforms, employee monitoring software and more. With her hands-on experience in the business world, Fairbanks has also advised on topics like business structure, accounting tasks and other matters related to operations. Her expertise has been trusted by Business Insider, Top Ten Reviews and more. Fairbanks also enjoys consulting on communications and public relations strategies, helping clients with audience targeting and initiatives related to newsletters, feature profiles, advertisements and more.
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