Finding the Best Small Business Credit Card Processing Options

There are a number of factors you’ll want to consider before selecting a merchant account provider for your small business. Credit card processing options can seem pretty complicated – however, if you stay focused on the needs of your own business, you’ll do just fine.

Over the next few days, we’ll talk about how to find the best small business credit card processing solution for your situation.

To get started, let’s take a look at some of the standard fees that apply to merchant accounts – plus some pointers on how to avoid a few of them completely.

Here are some of the typical fees associated with credit card processing:
Discount rate (a percentage of sales)
Per-item Fees
Monthly Minimums
Statement Fees
Annual Fees
Application Fees
Chargeback processing
Early Cancellation Fees
Fees for supplies (e.g., drafts, roll paper, etc.)
Terminal purchase, lease or rental fees

Be sure ALL of these fees are spelled out clearly, in writing, on your contract before signing. I personally wouldn’t consider a company that charges 1. an application fee or 2. an annual fee or 3. monthly minimums. I’ve reviewed many statements where a seasonal or low volume merchant did $0 in processing for a given month, and got hit with $40 or $50 in monthly fees because there was a $25 monthly minimum, plus other ongoing charges, written into their contract.

Take Away: Avoiding these 3 types of fees can help keep hundreds of dollars each year in your own bank account. If the agent you are dealing with won’t waive them – find one who will.

Also, beware of any processing company that over-simplifies their fee schedule. Many will lead with a very low rate (i.e. 1.19%) and the merchant will go about their business believing that this is, in fact, what they are paying for processing.

I can assure you that is NOT possible. Ever. Fixed costs by the major credit card associations (Visa, MC, AMEX and Discover) exceed those super low rates for most transactions – so there is no way ANY provider can honor that pricing across the board. It would be like a furniture store buying a couch at $500 wholesale … and selling it for $400 retail.

The numbers just don’t add up.

The reality is that this low rate will apply only to a very specific type of transaction – debit (rather than credit) card, swiped at the point-of-sale (vs. being key-entered into the terminal). All transactions falling outside these specific parameters (including ALL credit cards – especially those offering some type of perk or reward to the user, non-swiped transactions, etc…) will be charged at higher – often MUCH higher – rates.

Tip: Push your agent to reveal – in writing – what those rates are up front to avoid any unpleasant surprises.

Finally, be sure to find out what specifically causes your transactions to “downgrade” to those higher discount rates – and make sure you are working with a company that will work with you to avoid those downgrades – many won’t as that is where the true profit in your account lies.

The more informed you are, the better prepared you’ll be to negotiate the best rates for your small business. Credit card processing pricing can get a little complicated – but you should still be able to get clear answers from your agent re: how much you’ll be paying each month.

Tomorrow, we’ll talk about how the type of business you are in can affect your rates.

Til Then,

PS Does the majority of your business take place outside the office? Want to take advantage of those low debit card swiped rates mentioned above? The PAYWare mobile card encryption sleeve can convert your iPhone into an on-the-go processing solution – which means you’ll qualify for the lowest possible swiped rates more often. Contact me today to find out more!