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Purchasing Tips for Credit Card Processing

Skye Schooley
Skye Schooley
Staff writer Staff
Jun 16, 2014

Review these 10 tips before buying a credit card processing system.

Evolving your business from accepting cash only to one that accepts credit and debit cards is a necessity in today’s digital era.

Incorporating credit card processing into your business model can expand your customer base and lead to an increase in sales. According to a TSYS U.S. consumer survey, more than three-quarters of shoppers preferred debit or credit cards as their method of payment, as opposed to just 12 percent who prefer paying with cash.

Rishav Chopra, head of business operations and revenue optimization for global payments at Intuit, said modern payment options, such as electronic invoicing and Apple Pay, are rising in popularity, thus increasing the importance of adopting new forms of payment technology to meet customer needs. He also said purchasing a credit card processing system can positively impact your business by expediting the processing time.

“One of the biggest benefits of using credit card payment today is that it can speed up the time from ‘getting paid’ to having money in your account,” Chopra told “By introducing electronic invoices that are credit card enabled, you can drastically expedite payment.”

According to QuickBooks’ recent global survey, 66 percent of small business owners said payment processing time had the largest impact on their company’s cash flow. This is just one of many reasons why it is so important to find the right processing agreement for your business.


Editor’s note: Looking for a credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.


Credit card processing equipment

Credit card processing systems have two major components to their pricing – the upfront hardware cost and the ongoing contractual software cost. Your hardware should be able to read credit and debit cards, transmit and receive data, generate customer receipts and transactions, and store each transaction in a database. Your software should route and store all these transactions.

The majority of credit card processors are all-in-one terminals. If you already own your processing equipment, you can generally negotiate a lower service cost. Many companies offer free hardware with a signed contract, but be wary of these, as free equipment frequently comes with reduced functionality and higher monthly or processing fees.

David Gafford, co-founder of Shift Processing, said you can expect to pay a one-time fee of $150 to $300 when buying a credit card processing terminal, although it can cost more depending on your needs. For example, Chopra said that if you are looking to purchase a complete countertop POS system, prices can go up to $1,000.

Leasing may seem like an attractive way to minimize initial cash outlay, but it results in a much higher equipment cost in the end. Before signing a lease, make note of the cancellation policy and associated fees. According to Gafford, buying hardware is always a better way to go.

“Processing terminals should never be leased from a credit card processing company,” he said. “Leasing is a way for credit card reps in the field to get paid, but it’s always a terrible option for business owners looking to accept credit cards at their place of business.” [Related: The Best Credit Card Processors of 2019]

Credit card processing contracts

The second component to purchasing costs is the ongoing processing or servicing fees. Chopra said these heavily depend on the plan you choose with your providers and are frequently written into your credit card processing contract.

“These plans come in all forms of variable rates (i.e., 2 to 3.5 percent per transaction) and fixed fee components (i.e., 50 cents to $5 per transaction),” he said. “When thinking about the costs associated with a credit card processing system, it is important to think about the total cost of getting started on payments, including hardware, software, processing and servicing fees, etc.”

Purchasing tips for credit card processing software

Aside from the well-known tips of doing research and verifying contract terms, there are other factors to consider when you’re purchasing credit card processing equipment.

1. Determine what pricing model works for you. There are multiple pricing models, including tiered, interchange-plus, subscription and blended pricing. Flat or tiered fees might seem like a good idea, but they can cost you more in the long run. Established businesses generally benefit most from the interchange-plus model.

2. Find a processing company that matches your brand. It is essential to consider how a processor’s benefits complement your business model. For example, if you cater to a younger, savvier crowd, you will likely benefit more from a credit card processor that’s compatible with modern payment technologies.

3. Read the fine print. Chopra said it is important to review everything carefully before you sign. Make note of what you are signing up for, how long the contract lasts, the agreement you are making with the merchant, and any upfront costs or servicing fees. Have a sales representative explain any questions you have.

4. Don’t sign a contract that has an exit clause. Gafford recommends finding a merchant account that has a month-to-month contract without an exit clause or early termination fees. You want your processor to earn your business month after month, not be locked into it by a contract.

5. Know the required account policies and fees. Most credit card processing companies require you to have a bank account with them so they can easily transfer funds. Ask about the monthly account fees, online access, and minimum balance or withdrawal restrictions.

6. Purchase a universal processing system. Avoid a system that is locked in with a single processing company. Gafford said that purchasing a universal processor enables you to switch service providers as needed.

7. Ask about integration capabilities. Integrating a credit card processing system with your current platform should be a simple task. Pick a processor that has a lot of plugin options.

8. Evaluate the processing times and features available. Determine how long it will take to set up your account, start processing your payments and deposit funds into your business bank account. Some companies offer a same-day funding option. You also want to be sure it includes the features you need, such as gift cards, loyalty programs, chargebacks, refunds and e-commerce connection access.

9. Consider cash-discount credit card processing. This recent trend has customers paying the credit card processing fees, instead of business owners. Gafford said businesses can give their patrons a choice to pay with cash or a credit card. If they choose credit card, they agree to pay the credit card fee at the point of sale, and the business receives the full payment amount.]

10. Partner with a company that has great customer service. In case of questions or error, make sure you have a reliable source to talk with at your processing company. Gafford said the best processing merchants give you a dedicated account representative to handle any issues that arise.

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Skye Schooley
Skye Schooley Staff
Skye Schooley is a staff writer at and Business News Daily, where she has written more than 200 articles on B2B-focused topics including human resources operations, management leadership, and business technology. In addition to researching and analyzing products that help business owners launch and grow their business, Skye writes on topics aimed at building better professional culture, like protecting employee privacy, managing human capital, improving communication, and fostering workplace diversity and culture.