In order to accept credit cards either online or through your physical storefront, one of the things you are going to need is an account with a credit card processing provider. A Credit Card Processing Provider is a company that manages the interface between your credit card terminal or shopping cart software and the Visa/Master network.
Since you are paying a portion of each credit card transaction to your credit card processing provider, it is important that you fully understand the services that your provider offers and how much you are going to pay for these services.
The rate that you will be charged depends upon many factors including the type of product or service you sell and the amount of the average sales transaction. Using this information you can shop around to find a credit card processing provider that offers you the best value for the least money.
For example, if you sell mostly high-ticket items you may be better off finding a provider that will offer you a higher flat-rate transaction fee and a lower discount rate. It may be better for you to pay as much as a $1.00 per-transaction fee when combined with a lower discount if your profit margin can handle it. On the other hand, if you sell a lot of low-priced items, you are better off finding a provider that offers a very low per-transaction fee and a discount rate somewhere in the area of 2.5% or less.
Be Prepared To Pay A Penalty For Poor Credit
If your personal or business credit is below par, you are not going to be able to negotiate much in the way of processing and transaction fees. If that's the case, look for credit card processing providers that work with people who are in your particular credit situation. But don't go with the first one that makes you an offer. Even though you may not be able to negotiate, you can still shop around for the best deal.
Look For Technical Integration Issues
Your online ordering software needs to be able to communicate seamlessly with your credit card processing provider's software through a program that is known as a "Gateway." Not all providers offer gateways that are compatible with all shopping carts. Make sure that yours is.
Evaluate Your "Risk"
There are a number of credit card processing providers that will not do business with start-up companies or companies that serve certain markets such as the Adult Entertainment or Gambling industry.
Be prepared to pay higher fees if you are in those industries and be prepared to spend some time finding a credit card processing provider that is willing to serve you. The best way to find one that serves your industry is to check your competitors' sites and see which providers they are using.
Do You Need International Processing?
If your business has a global presence that requires you to handle credit card transactions from outside of your home country, you are going to need an international credit card provider.
Some merchants choose one provider for their domestic transactions and another for their international transactions since the fees are usually higher when the customer is from another country.
Your best advice is to shop around, read the contract carefully and completely before signing, and have your attorney and accountant review all of the paperwork before you commit. That way you'll know for sure what you are agreeing to and you'll have a much better chance of running a profitable business when you can control your credit card processing costs.
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