Why every Business Owner Should Get to Know their Card Processor

There was a time in the not too distant past when Canadian banks had a significant controlling interest in both the issuing side of the credit card business (providing card services to consumers), as well as the merchant processing function (providing merchants the capability of credit card processing). This control of both sides of the transaction protected the profitability of many of the banking institutions, however it failed to either bring down costs to business owners or drive innovation in the card processing industry. Recently, many entrepreneurial merchant services companies have started to offer merchant services to small and midsize Canadian businesses at a much lower cost and greater efficiency than banks had. If you haven't reviewed your existing agreement with your card processor, now is the time to review your rates and terms.

The Role of a Card Processor

Credit Card Processing organizations, often referred to as merchant services companies provide the technical capability to process electronic payments, using three primary cost considerations;

• Cost of Processing Service – A card processor will determine the pricing a merchant will pay for each transaction based upon the risk associated with the way that transactions are processed. A standard retail store owner often pays the lowest rates with the primary activity being customer face-to-face transactions, at a consistent price point, with a delivery of products immediately. Business that process transactions via the following methods often pay more than a standard retail store;
1. Not face-to-face with the customer present at the time of the charge, such as mail order, telephone order, or internet,
2. Products or services that are going to be delivered in the future, such as customized goods, or future services like catering or reserved travel, or
3. A very large dollar amount per transaction.
• Cost of Processing Technology – A business owner will need to evaluate what method they will use to process the transactions, such as;
1. Standard Credit Card Terminal,
2. Internet Gateway, or
3. Wireless Terminal.
• Costs of credit card terminals have declined over the past few years, and the days are behind us of paying thousands of dollars per year for terminals. A card processor will evaluate a business owner's specific needs, and offer them the ability to rent, lease or buy a credit card terminal, or even suggest an alternative method of processing such as internet web-based processing gateway solutions or wireless terminals that can increase efficiency and reduce cost.
• Other Consultative Services – One under utilized benefit of a high quality card processor is their ability to share best practices with a business owner, having seen hundreds if not thousands of other businesses succeed and fail. Networking with other business owners is important, but often professionals in the merchant services industry have a view of the small and midsize business sector that others cannot provide, and a merchant services professional's sole goal is to help a business grow. Remember that they only get paid on the volume processed, so it's in the common best interest to generate a lot of business together for a long period of time.

If you are a business owner not currently getting the full value from your existing merchant services company in terms of providing you a low overall cost, with affordable hardware solutions, and other consultative services, now is the time to consider whether or not they are the right card processor for your business. The marketplace is more competitive than it's ever been, and the only thing you may be wasting by waiting is your own money!