What to Consider When Choosing a Credit Card Processing Provider

Are you trying to decide which credit card processing company to work with but aren’t sure which one to choose?

Choosing a credit card processing provider can be a tough decision. In the US alone, 108.6 million credit card transactions occur each day. If your credit processor isn’t working, you could lose out on thousands of sales.

But how do you chose a credit card processing provider? Check out this guide to learn how to choose the right one!

Understand How Credit Card Processing Works

Before you choose a credit card processing provider, you first need to understand how credit card processing works. Debit and credit cards don’t directly interact with businesses of any size.

Instead, every business needs to work with a third-party credit card processing service through a merchant account provider. Also known as aggregators, merchant account providers work with credit card payment processors to handle transactions.

While credit card processing can be confusing, here are some terms that will help you understand better:

Merchant Account Provider: This is a company that offers your business point-of-sales equipment as well as online payment services. They send in the order payment information and then send it to the payment processor.

Payment Gateway: This is an application service provider that facilitates e-commerce transactions. This allows for safe and secure interactions between the payment processor and merchant account provider. The merchant account provider can send order payment information through the payment gateway.

Payment Processor: The payment processor serves as the gatekeeper between the credit card association and the merchant account provider.

Because of this process, single merchant account providers (aka, your business) can accept credit cards, debit cards, gift cards, and electronic benefit transfers.

Understand Your Cash Flow

To choose the right credit card processing provider, you need to understand your cash flow. If you’re accepting less than $3000 per month in credit card payments, then a mobile credit card processing company (also known as a payment facilitator) that doesn’t charge monthly or annual fees and charges a flat rate is your best bet.

While the percentage you pay for each sale will be higher, there aren’t any regular fees, so your overall costs will stay low. If your business processes more than $3000 per month in credit card payments, then you should work with a full-service credit card processor.

While these companies charge regular fees, they offer lower rates per transaction, allowing you to save money in the long run.

Study the Fees and Services

Speaking of saving money, you need to make sure you study the processing provider’s fee and service regulations before signing on. As we mentioned, full-service credit card processing companies will likely charge you a monthly fee or an annual fee.

Both small and large companies will charge a flat rate fee per transaction, also known as an interchange fee. Typically, the interchange fee is between 0.05% and 3%. Here are some other fees that the company may charge:

  • Application Fee: The processing provider charges a small fee for your application
  • Setup Fee: The processing provider charges you a one-time fee for equipment setup
  • Monthly Minimum Fee: Even if you don’t make any sales in a month, the processing provider may still charge you a minimum monthly maintenance fee

Every credit card processing provider has different fees and rates, so make sure you have a clear picture of everything you’ll be charged for.

Consider How You Plan to Accept Payments

You also need to think about how you plan to accept payments before you choose a credit card processing provider. If you own a brick and mortar shop, you’ll either want a mobile card reader so you can check out customers from anywhere in the store, or you’ll want a countertop checkout station.

If you plan to accept payments online as well as in-store, then you’ll want to work with a provider that supports both methods. Not only is it a hassle to handle two processors at once, but you may also be in violation of your contract, as some providers have exclusivity clauses.

Look at the Security Features

Credit card fraud is the most common type of identity fraud, accounting for nearly 36% of all identity fraud instances in 2018. When someone purchases something from your online store, they want to make sure that their payment is secure.

When speaking with credit card processing providers, ask what fraud prevention tools they use to keep customer data safe. The provider you work with should offer tokenization and encryption features for both online and offline purchases.

If you accept online payments, the provider should also support CVV2 and SSL certification. Additionally, you want to make sure that the processing provider is PCI compliant. PCI compliance means that the processing provider has taken the necessary steps to ensure your business information is secure with the highest levels of data security.

Look at Their Accepted Payments List

Last but not least, you want to make sure the credit card processing provider you choose accepts all major debit and credit cards. This includes Visa, MasterCard, Discover, and American Express.

While it may be more affordable to go with a company that only accepts Visa, this could cause you to lose out on a huge customer base and thousands of dollars in sales.

Are You Ready to Choose a Credit Card Processing Provider?

Now that you’ve read this guide, it’s time for you to choose a credit card processing provider. The next step is to call up some providers for quotes and read online reviews and testimonials.

The right credit card processing provider can make all of the difference, so take your time studying your options! And, be sure to check back in with our blog for more business-related news and tips.

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