How to Evaluate Credit Card Processors

It can be quite beneficial for a small business to accept credit cards, but before you can accept them, you need to wade through all of the credit card processors that are vying for your business. You will probably find quickly that most credit card processors that offer merchant accounts will not accept small businesses so you will most likely be looking at credit card processors known as third party processors. Each of these processors offers different fee structures and options available for their accounts.

The rates and fees associated with these third party accounts can differ greatly and this is one of the things you will need to ponder before making a final decision on what processor you choose.  There are many factors that can affect these fees including the amount of time you have been in business, the type of business you do, the sales volume you do, the average dollar amount per transaction, and even your own personal credit rating can be taken into effect.  When evaluating credit card processors, you should be aware of what fees they are charging you and for what types of service.

You should always make sure you are reading the fine print when you study different processors because there can be a lot of hidden fees tucked away in those contracts. The discount fee, for instance, may be well known when you sign on with a particular processor, but a few months may go by and you will find it is actually rises a percentage point or two.  If you would have read the fine print, you would have seen that after 3 months, for example, the discount rate rises and the rate you have at the beginning is only an introductory rate.

Credit card processors have a lot of tricks up their sleeves sometimes. One of these tricks, that isn’t really a trick, but more of an association, will require you to have a bank account with their merchant bank, for instance, in order to get a good rate. Pay attention to all the rates and all of the associations with the account.

Another consideration you should take into effect when evaluating credit card processors is the equipment. You have two main choices in getting equipment; you can buy it, or lease it. Leasing may be a better option if you are only using the equipment short term, such as for a week during a tradeshow, but if you are going to use the equipment longer than that, you should probably buy it. Though it will be a larger cost up front, typically $600 - $1000, you will save $100s over time since you won’t be spending money monthly to lease the equipment.

The final thing you should evaluate when looking at credit card processors is termination. If, for some reason, you need to terminate your account, you should see what the consequences are. Some have quite heavy fees that you agree to as soon as you sign the contract. Others are more lenient and understanding. Always ask when meeting with a processor.