Credit Card Processing for Small Business Owners
Choosing a credit card processing solution will have a major impact on your business. Your customers expect you to take their preferred payment method, and an increasing number of them choose to pay using a card instead of cash.
For small businesses, choosing the wrong payment processor can have a dramatic negative effect on your business. Not only do you need to think about fees, but you will have to consider the customer’s security as well. How do you choose the right processor? Should you buy or lease your equipment, and how can you secure the funds to get the equipment you need? Read on to find out the answers to these questions and more.
What is a Credit Card Processing Machine?
Anytime you go to a store, there’s a good chance that you’ll see (or use) a credit card processor. This is the machine that you swipe your card at or enter your chip into. These processors are inside of stores, outside at gas station pumps, and sometimes are even attached to cell phones.
Most of the time, these machines serve a limited function. They can take and process your card, connect to a check reader, or process a rewards and loyalty program card. Even though they have limited functions, they play an essential role in the day-to-day operations of any business.
There are dozens of options to choose from when selecting the best credit card processing system for your business. How can you find the right one for your needs?
Choosing the Best Credit Card Processing Companies
There are several factors when deciding which processor to use for your business. You might feel tempted to choose the first processor you come across, but this is a decision that you should put a lot of thought into. Once you determine you need a system, there are some things you should consider before committing to a provider. Let’s look at how to choose the right system for your needs.
Find a Business Partner Instead of a Service Provider
Choosing a provider is about more than finding a company to process your credit card payments. You need to look for a company that views you as a business partner. You want a provider that you feel comfortable with and that’s invested in your success.
Since you’re paying fees for transactions, your provider should do everything they can to help you grow your business. Look for a provider with a track record of working with small businesses.
What is the Cost of the Service?
Credit card processing companies charge fees to run your card. This is how they make money. The question that you should ask yourself is what fee structure works best for you.
Most providers charge different fees based on different types of transactions and the number of swipes you accumulate over a set amount of time (normally a month). Think about your customer base and the type of transactions you’ll see most often. Are most of your sales in a physical location?
There are a few things you should consider. The average amount of each transaction will play a major role in which fee structure you should look for. If the fee for each transaction makes up a decent amount of your average sell, it wouldn’t make much sense to accept this type of structure.
If you plan on having $3,000 or less in credit card transactions a month, using a mobile payment processor might be your best bet. These companies tend to charge a set fee for each transaction but don’t charge you monthly or annual fees. If you go this route, remember to think about the average amount of each transaction. When a company charges you 3% per transaction, it might be best to have a minimum charge for each swipe.
If you make more than $3,000 in credit card sales per month, you’ll probably need a full-service credit card processing company. You’ll have to pay a monthly or annual fee, but your fee for each swipe will be lower than what mobile payment processors will charge.
Where Do Your Customers Come From?
To figure out the best credit card processing solution for your needs, you need to think about how your customers will interact with it. A good processor will make it easier and quicker for your customers to buy your product or service.
If you serve customers in a brick n’ mortar environment, a terminal might be your best bet for a retail store. A terminal close to an exit allows you to serve customers while keeping an eye on your inventory. In a restaurant environment, you could use a terminal, mobile card reader, or a combination of the two.
For businesses that also have online sales, you’ll need to find a provider that can handle both for you. Using two processors can become a headache. Online credit card processing is a complicated process that requires specialized software. Also, using two processors could actually violate the contract you have with some providers. You should also check with your POS system provider to make sure that the credit card processor you choose is compatible.
Read the Contract Before You Sign
This is a rule for any business endeavor, but you should take extra care when going over contracts for your credit card processing provider. The first thing you want to see is if there is a heavy cancellation fee.
Preferably, you could find a service provider that will allow you to operate on a month-to-month basis. Companies that want you to sign up for a long-term contract tend to have higher fees for canceling the service early.
If you believe that you might need a different provider later on, then be prepared to pay a hefty fee in order to get out of your contract early.
Credit Card Processing for Small Business and Fees
Undisclosed fees tend to cause problems for businesses when they choose a credit card processor to work with. These fees vary, but many of them show up buried in a contract with deceptive names. Sometimes, they’re simply listed as “other fees.”
You should know exactly what you’re paying for. If you ever see fees in a contract that the business wasn’t upfront about, walk away. Don’ let mystery fees take money out of your pocket. Keep an eye out for application and setup fees as well. If you’re going to pay them once you get the equipment, you shouldn’t have to pay them for filling out an application.
Also, look for any language that may restrict your ability to use different payment processors or certain technology. Sometimes, credit card processing companies only want you to use their software for other unrelated tasks, such as POS systems or e-commerce.
Always make sure you know what you’re signing up for before committing to the first or to the cheapest payment processing company you find.
Many companies will offer free placements and equipment, but there is almost always a catch involved. For example, when you return the equipment, they might charge you a restocking and wear and tear fee that’s more than the equipment is worth.
As your business grows, you’ll encounter new challenges and needs. Maybe you’ll need to change locations or expand into new areas. You might add on to your existing building and need to add new software. Will your payment process provider grow with you?
As mentioned above, if they won’t grow with you and you need a new credit card processing company, you could face a heavy termination fee to your contract that could limit your own ability to grow.
Make sure that as you grow, your processing company will work with you to provide flexible solutions. A company that works with multiple small businesses will probably already understand the growing process and might already have a plan in place.
Does the Processor Provide Software Updates?
Even though EMV chip technology has been out for years, many businesses still don’t have this option for customers. If you’ve ever been to a store that doesn’t offer it, it’s probably because of their credit card processing company.
Chances are that their processing company either didn’t update their equipment for free or they wanted to charge them too much money for the business to justify paying the cost. Before you decide which processor to use, find out if they make it easy to transition to new technology as it becomes available.
This not only includes EMV chip technology but cryptocurrency as well. More businesses have started to accept Bitcoin, Ethereum, and other currencies. If this becomes the norm, you need a company that won’t hold you back by overcharging you for updates to your equipment.
Should You Buy or Lease the Credit Card Processing Equipment?
One of the early decisions you’ll need to make is whether to buy or lease equipment. This decision will depend in part on how many machines you need for your business. If you only need one or two processing machines, the cost shouldn’t be too high.
If you need several machines for multiple locations, you might consider leasing. The issue with leasing is that while you’ll have lower up-front costs, by the time you pay the interest you’ll end up paying much more money than the machine is worth.
If it is at all possible, buy the equipment outright. If you need funding, there are low-interest rate loans that you can take out to help cover the cost. Here at Your FundingTree, we have an entire nationwide network of preferred lenders that will compete for your business to help you buy the equipment you need!
Your FundingTree Helps Small Business Owners
Finding the right credit card processing service takes up a lot of time that you could use for something else. You will have to research each company, reach out to them, work out offers for their service, and then decide the best fit for your business.
Here at Your FundingTree, we can handle most of the work for you. All you’ll need to do is fill out a quick online form that gives us some details about your business. We’ll reach out to trusted partners once we determine your needs and get offers and contracts for you to review.
We’ll find out if you have to request an interchange-plus rate so that you will have the information you need to negotiate better rates.
The interchange-plus rate lets you know the amount of markup a processor charges and is something that you will want to know prior to making a decision.
We’ll also help you find month-to-month contracts, which we discussed before. These contracts save you money due to lower rates and the lack of a long-term and difficult-to-exit contract.
Since the processors we contact know that they are competing with other companies for your business, they’ll give you a better price than if you were to contact them directly yourself. No company will bid against itself, but they will bid against their competitors.
Credit Card Processing for Small Business
We can also help you secure funding for your small business’s credit card processing needs by getting lenders to compete to earn your business. A 90-second online application is all you need to get offers from up to five finance companies. You can use this money to get credit card processing equipment, a POS system, or other things for your business.
The best part about our service is that it’s free! All you have to do is spend two minutes filling out an online form, and we’ll take care of the rest. You’ll receive offers from trusted partners that handle credit card processing. Then you pick the best credit card processing company for you, and you’re done!
Are You Ready to Find the Best Processing Company for Your Business? Fill Out Our Quick Application, and We’ll Get to Work Matching You with Potential Partners or Call 704-904-0774 Today!