When choosing a partner for your small business credit card processing needs, what are the most important factors to consider? Small business owners are often working with small margins, and focus mainly on cost when making business decisions relating to vendors and suppliers. The smooth and efficient handling of credit card transactions is imperative for any successful business, and having a system that does not function properly, or is often off-line, can equal lost business. Therefore, cost is but one consideration, with customer service, and the amount of time between the transaction and the deposit of funds into your account being equally as important.
You will need to compare the front-end costs and the ongoing fees of the prospective firms. The onetime costs for equipment and start up is where most people do their negotiation, but the ongoing fees will have the greatest impact on your profit margins. If you have a good credit score, use it as leverage to get your equipment cost and front-end fees reduced. (The terminal that you will need to purchase will be around $200, as will the initial set-up fee, for a $400 total.)
The ongoing costs include service costs, monthly statement fees (inquire to see if this is waived by going paperless), transaction fees and the rate that you’ll pay for the credit, known as the discount rate. This fee is a percentage of each transaction and will be the most impactful on your bottom line. Typically, the fee will be around 2.50% and does not vary widely between providers; remember when you are negotiating, that even a small reduction in the rate will increase your net revenues. Beware of anyone offering a substantially lower rate, as this deal is most likely too good to be true.
Once you’ve considered the fees and determined what numbers work for you, it is time to investigate that different levels of service offered by the processing companies. Customer service and tech support that is available 24 hours a day, seven days a week, is something that should be standard, and if a potential company does not offer this, it is best to remove them from your list of consideration. Remember, if your terminal goes down, you can count on lost business; it is imperative to partner with a firm that is on call and ready to help you get back on line as soon as possible.
Small businesses rely on quick turnaround of merchandise, and having a company that deposits your credit card sale revenues into your bank account in a quick, timely manner is another very important consideration. One final tip for when you are looking to partner with a credit card processing company, is to not sign a contract for greater than a one-year term.