Choosing a Credit Card Processor – The Four Most Important Factors to Consider When Selecting a Credit Card Processing Company

Why do you need a credit card processor?

Simply put, it allows your business to accept credit and debit card payments. With card payments making up nearly 75% of consumer spending in the US, it is clear that people like using their credit and debit cards to pay for purchases. Unfortunately, if you are unable to adequately serve these customers, they are going to take their business elsewhere.

An important point to keep in mind when choosing a credit card processor is that just because your bank offers this service, it doesn’t mean that they will provide the best rates for you. There are many factors to consider when selecting a credit card processing company to partner with. These include fees and costs, the setup involved, security features, accepted payment types, integration, industry relationships, and how much customer support the company offers. Choosing the right credit card processing company is a crucial decision, as this organization can make or break your company.

At 365 Glacier Payments, we are here to make credit card processing easier for businesses to understand. This enables you, as the business owner, to spend less time worrying about how to process payments and to focus more time on developing customer relationships and growing revenue. In order to help you with your decision-making process, we have compiled four important factors you must consider when selecting your credit card processing company.

1. How much does it cost?

This may seem like an obvious factor, but we want to remind you of how important this decision can be on your business’ financial health. Make sure you ask your credit card processing company which pricing models they offer.  The two most desirable pricing models are flat rate or interchange plus pricing. You want to avoid tiered pricing if possible. What’s the difference? Here’s a quick breakdown:

Flat rate pricing guarantees the same low monthly rate for any type of credit card and makes it simple to estimate how much you will be paying in total fees each month. This pricing is a fixed percentage based on what the credit card processor, card brand, and issuing bank charge. The downside to this type of pricing is that many of the processor’s fees may be hidden. Thus, the merchant is unaware as to how much he or she is paying for the processor’s markup per transaction.

In addition to flat rate credit card processing, interchange plus pricing is another option for businesses.

Interchange plus pricing offers more transparency and can lower your costs. This pricing model is divided into charges based on the cost of interchange and assessments which get paid to the card brands and issuing banks. The additional markup over interchange is the cost the credit card processing company is charging for their services. All three will be visible and separated on your monthly processing statement, so they are fully transparent.

If you are on tiered pricing, it doesn’t necessarily mean that you are getting an unfair deal. It just means that it’s harder for you, as the merchant, to distinguish between who you are paying with each line item. With tiered pricing, processors typically offer a “qualified rate,” which is very low, but can hide their margin behind a much higher “non-qualified” rate. With this type of pricing, it is simply not possible to know your credit card processing company’s profit margin.  The lack of transparency and higher variability of monthly fees is why merchants prefer to pass on tiered pricing and go with fixed rate or interchange plus pricing.

2. Does the credit card processor offer excellent customer service?

Acquiring a payment processing solution system is not the same as purchasing any other piece of equipment for your business. Even if your system is running smoothly, there will be a time when you will need to contact the provider with questions or concerns. When an issue arises, it will be VITAL to be able reach someone quickly, at any time of the day, to expedite a resolution. Needless to say, if your credit card processing system encounters a glitch, your company is in peril of losing a massive amount of revenue. When vetting credit card processing companies, ask about customer support, and when and how (phone, email, etc.) the credit card processing company can be reached.

3. What reputation does the credit card processing company have?

Do your homework. It is important that your credit card processor has a great reputation.  Make sure to check the Better Business Bureau (BBB) to see if previous customers have filed complaints. It is also a good idea to read reviews on the processor’s Google business page, as well as similar reputation websites. This helps to determine what customer experience has generally looked like.

4. How much is the credit card processor’s start-up (or cancellation) fee? 

Credit card processing companies don’t usually charge a fee to begin utilizing their services, but many charge a fee for canceling. This gives you a lot less flexibility when searching for better terms.  Be sure to double check with the processor on the terms of setup costs (as these can often be removed) and whether you are going to be locked into a contract with a hefty cancellation fee.

BOTTOM LINE:

As you start researching credit card processing companies, make sure you consider the four important factors listed above. No one likes surprises. Know that having a competent, reliable processor who has your best interests at heart is imperative to your business. At 365 Glacier Payments we are dedicated to the education of merchants regarding business advancement and growth. If you have additional questions or need help setting up a merchant account, please schedule an appointment here. If you prefer, you can reach us at 866.857.8766 or email info@365glacierpayments.com