Entrepreneurs need to cover all their bases and one that is often overlooked is payment processing. If your business plans to accept credit cards as payment at some point, you will need to select a merchant account provider to process credit cards. Unfortunately, choosing a credit card processor is typically a lengthy, frustrating, and inefficient process… and many businesses go bust along the way. Here are some tips to prevent this from happening to your business:
one) Cancellation fees are not allowed – Be sure to read the fine print in your credit card processing agreement. You may be surprised to know that cancellation fees range from $250 to several thousand dollars. This fee is a way to guarantee your loyalty to the processor, whether or not you are satisfied with their service. The good news is that getting rid of this fee shouldn’t be a problem: most merchants have the right to waive it. To avoid this problem, talk to the seller and make sure the fee is not charged in writing, either in the contract or in the form of an amendment. For a startup, having a no-cancellation fee clause is great insurance in case something goes wrong.
2) Exchange only plus pricing– The bulk of the processing fee goes to Visa and Mastercard – this fee is called “exchange” and is unshakable. Exchange plus pricing is the most fair form of pricing structure for your business, meaning you pay an exchange commission plus a fixed markup that goes to the processor as a service charge. This structure ensures that there are no complex commissions or hidden costs, unlike tiered pricing structures.
3) Comparison Store – Research shows that the best deal can be found comparison of merchant credit card processors– at least five. However, be sure to compare apples to apples and make sure every handler knows you’re actively shopping. You can easily make your bets more competitive by using the power of comparison.
4) What about PayPal?- If you’re into e-commerce, PayPal seems like the perfect choice for a processor. It’s a good choice in the beginning when credit card revenues are low and your services are rising. However, with revenue running in the thousands, it’s time to reassess as PayPal may charge more for its services than a traditional merchant account provider.
TransFS is a price comparison site for credit card processors. Just like getting multiple airfare deals with Expedia, TransFS allows business owners to compare high-quality processors apples-to-apples and ensure they get the best deal with no cancellations or hidden fees, only trade-in plus prices. TransFS also launched the Credit Card Processors Directory, where business owners can rate and read reviews.
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