MasterCard and Visa handle most of the world’s debit and credit card networks, and your relationship with these companies will be through a card processor. That’s why when you open a bank account or inquire about setting up a credit card payment solution for your clients, the bank will recommend their solution. However, it’s important to know that you can utilize any processor, regardless of your bank.
This, however, it is a field where you are spoilt for choice. There is a wide array of options, with many companies trading under different payment names, under license from the primary card processors. Most of these firms employ people on commission only and so, don’t be surprised if your business is approached.
Well, that being said, here are a few factors you may want to consider when looking for a high risk payment processing solution that meets your needs.
Contract Duration
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Contracts for some solutions can have a period of up to 5 years. The downside is that if you are a running a small business and come to realize that the terminal isn’t suitable for your changing business down the road, you will be held back or forced to pay a hefty penalty for early contract termination. What you want is a card processor that does not charge you for early termination or cancellation. Some processors require a 30-day notice as well as cancellation fees or not more than $250. A possible compromise is to search for firms working with an array of card processors who can switch as well as re-configure your terminal to an alternative processor from a small fee, thus meeting your current business needs.
The Cost
Saying that money matters is an understatement when it comes to a business environment. However, it is the smallest of firms that feel the pain of additional fees and costs the most. The upfront costs tend to differ for every card processor, but it is the fees related to credit card processing that can be particularly convoluted.
An excellent place to being is knowing whether the payments processor charges a flat-fee per transaction or a monthly fee. Companies like Paypal and Square don’t operate on a monthly fee basis and instead charge a percentage for every transaction that’s processed. Paypal, for instance, charges a 2.9 percent fee.
The argument between a fixed or flat fee goes back to transparency. The lack of a fixed rate allows processors to charge varying rates for different types of cards. The American Express is known to be more expensive, with transaction fees going up to 3.5 percent. MasterCard on the other hand charges between 1.5 to 2.6 percent and Visa 1.4 to 2.4 percent. Having a transparent flat rate, according to PayPal, is in place to serve the clients the best, by giving them a choice.
There is also an argument for the monthly fee solution. It goes back to having a grasp on the products you wish to sell and how the clients will pay and also if the flat fee will start eating into profits. Depending on the ordinary size of every sale, the per-transaction charges can add up and so, it is important to watch your monthly statements if you pick one of the options. This will help you know whether switching to the other is a good idea for your business growth and sustainability.
That’s not all; it’s equally important to note that most processors today, regardless of the structure of the fee, have different types of transactions, namely: card present (CP) and card not present (CNP). The latter happens when a merchant puts in a credit card number by hand, and it’s usually more expensive than its counterpart due to the increased risk of fraud.
As you research potential credit card processors, pay attention to how they have structured the fees. Apart from the transaction fees, other fees to be on the lookout for include interchange fees, compliance fees, gateway access fees, cancellation fees and statement fees. Not everything in this regard is entirely transparent so, ensure you ask questions when uncertain.
The cost of the equipment is another thing to consider. If you wish to process credit card payments in person, then you will need a credit card reader. Some providers give these for free while others charge depending on the capabilities of the device.
Customer Support
Payment processing is not usually straightforward. In most cases, the processing occurs without you having to think about it, but there are cases where a process requires explanation, or a bug needs some assistance to resolve. As such, knowing the type of merchant service you will get is just as imperative. An excellent credit card processor will have round the clock basic customer support and technical support. They will ideally have clear service paths functions related to payments like chargeback management.
Security and Fraud
Protection against fraud in this digital era is more important than ever and so, choosing the best merchant services online- High Risk Solutions that builds security into your business transactions is always advisable. Chip card acceptance is an example of a fraud solution for in-store transactions. Fraud detection and prevention online, on the other hand, takes on a different path, and you will want to know what is available to you depending on what you are selling, and the channels involved. For in-store and online, you will also want to consider the steps to take in order to make card data even more secure as it will be transmitted and sometimes stored for future purposes. An excellent credit card processor will usually offer a bundled solution for the best security for your business transactions.
Seek Advice
There are many independent and well-established companies, including the local Tax Assist Accountants that can offer advice when it comes to picking a card payment solution based on the evaluation of your specific needs, the means that you accept payments and the estimated card payment volumes. Additionally, trade agencies can offer advice to members and also digging for information online can give you a solid indication or feedback regarding the card processor you may be looking into.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.
