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Selecting the Right Credit Card Processor for Your Business

Austin Mac Nab
Austin Mac Nab

Selecting a credit card processor that is the right fit has major bottom-line implications for businesses.

Selecting a credit card processor that is the right fit has major bottom-line implications for businesses. Businesses looking to make the leap into accepting credit cards or companies considering a move to a new credit card processor can be overwhelmed by the many moving parts that make up this industry. Myriad fees, contract requirements and a lack of transparency introduce a lot of unnecessary confusion and complexity to the exercise of selecting the right credit card processor. Asking some key questions about fees, contracts, customer support and additional services can put small businesses on track to select the credit card processor that best meets their needs and protects their bottom line.

Credit cards are a nearly ubiquitous part of how business is done today. This is driven in part by consumer preference for the frictionless payment experience offered by credit cards. According to the Federal Reserve, credit card payments totaled $44.7 billion with a value of $3.98 trillion in 2018. Merchants on the other end of these transactions paid $53.6 billion in Visa and Mastercard credit-card interchange fees in 2019, up 8% from 2018 and up 107% from 2012, according to a Nilson Report. Fees that are unpredictable and out of control are the downside for merchants accepting credit cards.

Partnering with the right credit card processor can help small businesses maximize the upside of accepting credit cards, including getting paid faster, opening new sales channels (i.e., e-commerce), and increased sales and profits.

There are a lot of factors for small businesses to consider when shopping around for a credit card processor. Some of the key features to look for include:

  • Customized solutions for easy processing
  • Reasonable prices
  • Flexible terms
  • Robust customer service
  • Value-add additional services

To determine whether or not a credit card processor offers these features and is the right fit, businesses should ask the following questions:

Is signing a long-term contract a requirement?

This is one of the first questions businesses should ask when selecting a credit card processor. Some companies lock businesses into long contracts with very specific and expensive cancellation terms. The fine print of a lot of long-term contracts contains some alarming things, including unlimited rate increases, hidden fees and exorbitant cancellation fees.

Something frequently seen in many of these contracts is a 90-day notice to cancel requirement, which if not followed automatically, locks businesses into another three-year contract. A long-term contract is usually not right for the majority of businesses, and any business considering a provider with such a contract requirement should ask a lot of questions before signing one.

How much will it cost?

This question is also pivotal to finding the right credit card processing company. Many credit card processors charge significantly for equipment and fees to make additional profit. Some companies advertise they have extremely low rates while leaving out that they charge high fees; some do the opposite and advertise their lack of fees while omitting their high rates.

Another thing to watch out for is a company that advertises giving away free equipment. It is more than likely that a contract is attached to that "free" equipment. Businesses should ask any company offering free equipment about any strings attached to it.

Businesses should remember that if it sounds too good to be true, it probably is. One of the most common merchant complaints about processing companies relates to undisclosed fees.

Transparency is another factor in evaluating providers. Ask the provider if they list all fees and rates on their website.

Are fees easy to understand?

The mind-numbing number of fees involved in many credit card processing solutions makes it difficult for many small businesses to understand. Fees differ based on what credit card is used for each transaction, which means businesses are charged different rates by the credit card processor. 

Businesses should understand that it does not have to be this way. Some companies make it simple, offering unlimited credit card processing for one flat fee. 

Small business owners should look for programs such as surcharging or the cash discount program. These programs help businesses offset their fees and allow them to put more money back into their businesses to fund growth.

The Cash Discount Program allows merchants to give customers the option to pay a discounted price when they pay with cash or in-store credit. This eliminates the storewide service charge and reduces costs for both the customer and business owner.

There are many benefits to programs like the Cash Discount Program. Merchants no longer have to contend with rate and fee confusion or worry about fluctuating, unpredictable processing bills. This program also eliminates processing bills that progressively become more expensive as a result of biannual rate increases.

What are their customers saying?

Reviews are a great way for businesses to evaluate credit card processing providers. Google and Facebook are the best places to find reviews that come directly from customers. These reviews can help businesses find the most trustworthy credit card processing company that meets their needs. Customers should be wary of companies that don't have their reviews publicly available.

How is their customer support?

Great rates and low fees and great customer support should both factor into any business evaluation of a credit card processing company. Businesses should ask about the level of service if their machine goes down, or they have a billing question, or have a change that needs to be made.

Customer support is something that businesses may not think about until they've been waiting on hold for an hour to get their machine up and running again. Businesses can never go wrong selecting a credit card processing company that has a reputation for providing superior customer service. Businesses should not compromise on customer support in favor of ease of signup and sleek technology.

Before selecting a provider, test out their customer service by giving their support line a call. A long wait time can be an indicator of poor customer support.

Do they offer additional services?

Additional services offered by credit card processing companies can be an added value for businesses. Loyalty programs that are fully customizable based on the business's needs enable companies to connect with their customers, motivate them to return and attract new customers.

These programs work by giving the customer the option of signing up for a loyalty program when their transaction is processed. Once the customer signs on, the loyalty program can tap into the customer's transactions and offer incentives based on this data. A loyalty program can also enable businesses to send out notifications for larger promotions to all customers – such as happy hours, instant discounts and more –helping drive sales and incentivize customers to return.

Loyalty programs can also prompt customers to leave reviews after a purchase, helping increase the quality and quantity of reviews on Yelp, Facebook, Google and more.

The right credit card processing company is one that provides a simple, customer-focused solution that supports small businesses, enabling them to stabilize cash flow. Credit card processing fees should not be an eye-popping line item on a company's profit and loss statement each year.

Small businesses face a lot of challenges in a competitive market and are now grappling with COVID-19-driven uncertainty and economic repercussions. In this environment, every penny counts. Paying huge sums in credit card processing fees on a yearly basis is not feasible and not necessary.

Asking the right questions can help small businesses find an efficient credit card processing company that customizes solutions to meet their needs and offers innovative programs designed to help companies offset credit card processing fees or even avoid them altogether.

Image Credit: cyano66 / Getty Images
Austin Mac Nab
Austin Mac Nab Member
Austin Mac Nab is CEO, co-founder and executive leader of VizyPay, a West Des Moines, Iowa-based provider of payment technology solutions for businesses across the U.S. Mac Nab has been in this role since April 2017 when he co-founded the company.