Guide to Choosing the Right Credit Card Processing Company

As a business owner, you have a lot of decisions to make, among them is choosing the right credit card processing company.

This isn’t a decision to take lightly as a lot is riding on it. The right company does more than help you accept credit cards or determine what type of cards you can accept.

Right Credit Card Processing Company

Your processing company affects the customer service you can provide your customers (you rely on the processor’s response to you), and even the security you provide your customers when accepting credit cards. Your business’s success relies on this decision – it’s a big one!

Check out our top tips on choosing the right credit card processing company for your business.

How Long is the Setup Time?

Once you decide to open up shop and accept credit cards, you need a credit card machine fast. Each credit card processing company has a different setup time. Some offer immediate approvals and get you up and running in a matter of a day or two. Other companies take weeks to approve applications and even more time to get the equipment out to you and set up.

Think about your timeline and what you need to be accomplished before choosing a company. Most small businesses just starting do well with companies that offer fast setup and minimal underwriting, while established businesses may have more complex needs.

What Equipment do they Offer?

If your credit card processing company will supply the equipment, what do they offer? Make sure it’s equipment that suits your needs. Think of the type of credit card transactions you’ll accept (swipe, chip, tap, or keyed-in), as well as where you’ll accept payments.

Some businesses need a stationary machine that doesn’t move off the countertop, while others want readers that travel with them to markets and pop-up shops.

Look at the terms too. If you buy the equipment, is it a one-time fee or are there ongoing fees? If you lease, make sure you look at the fine print so you know the full cost of leasing the machines.

How do they Handle Customer Support?

If your customers have a problem, you need a solution fast. If you work with a processing company that takes days to get back to you, your sales will drop fast. Inquire about the customer service, when it’s available, and how quickly they get back to you.

Ask about the methods of communication – can you call or is it strictly email or instant message? The method of communication should play a role in your decisions, especially if you may need customer support during ‘off hours.’

What are the Processing Fees?

In addition to equipment fees, you’ll pay processing fees. This is across the board with any credit card processing company. Look at what fees they charge and how they charge them.

The most common fee structures are:

  • Flat rate – Companies charge one rate no matter the type of transaction or the size. This works best for business with small average transactions. Most processing companies that offer instant approval have flat rate pricing structures.
  • Interchange plus pricing – This is the most common pricing structure. You’ll see the interchange fee (everyone pays this) plus the processor’s markup. They’ll charge you a percentage (interchange fee) plus a flat fee such as $0.30. You may see charges of 2.5% plus $0.30. This keeps the cost down on larger transactions as you’ll pay a lower percentage plus the flat dollar amount (cents on the dollar).
  • Tiered pricing – Some processors charge different rates for each type of credit card you accept. Qualified credit cards have the lowest rates and non-qualified have the highest rates. You usually don’t know which card falls into which tier, so this makes predicting your credit card costs a little harder.

How is the Security?

Ask a lot of questions about the company’s security. Ask about what they do to protect the customer’s information as well as your business information. Encryption and tokenization should be standard but check with each company to make sure.

All credit card processing companies should offer PCI compliance too. If they leave it up to you, consider another processor as it’s difficult, time-consuming, and easy to misunderstand unless you’re an expert in the industry.

Do they Have Industry Relationships?

Ask credit card processing companies what business relationships they have that may benefit you. For example, do they work with partner banks that may help your business grow? Think outside the box and see how you can network to keep scaling your business.

Can They Grow with your Business?

If you’re just starting out, chances are you have visions of growing. Even if you’re established, expansion may be in your future. You want a credit card processor that can grow with you. Choosing the right company is a big decision and is one you can hopefully stick with for the long-term. If you expand and outgrow a company’s capabilities, though, you may be right back at square one – not where you want to be.

How Should you Choose the Right Credit Card Processing Company?

We’ve given you a lot to think about. Write down what you want from a processor. Know your company’s needs now and in the next five years. Prioritize what you need and think of your budget.

What do you want to spend on credit card processing? Once you have these answers, shop around. Ask questions of each processing company you consider. Don’t jump at the first option provided to you.

It’s exciting to hear that you can get up and running right away, but the fees can eat at your profits if you aren’t careful. Look closely at the features, options, and pricing before choosing the company that works best for your business.

Author Bio:

Lou Honick is the CEO of Host Merchant Services. Prior to founding Host Merchant Services in 2010, Lou was the founder of HostMySite.com and received numerous awards including SBA Young Entrepreneur of the Year, Inc Magazine 30 under 30, and multiple listings on the Inc 500.

As a serial entrepreneur, all of his companies have operated on a singular devotion to outstanding customer service and support. Lou is a respected expert on the topics of customer service, payments and fintech, Internet technology, and entrepreneurship.

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