Credit card processing
The first thing you should do when looking for a credit card processing provider or merchant account service is to shop around. Look at multiple vendors before deciding on the right provider for you. What may seem like a good deal might actually not be at all. Shopping around will ensure you get the best deal for your company.
For smaller sized businesses it is important that you realize you will probably not be able to get the same deal a larger corporation will get from these providers. Businesses that are new to credit card processing will be subjected to a three-tiered pricing structure:
- Qualified
- Mid-qualified
- Non-qualified
Although it might be an up-hill battle for newer businesses, don’t give up. Negotiations can still happen and you can still get a good deal if you talk to enough providers. Leverage a lower rate from one company to get an even lower rate at another.
You also need to know what you need from your provider and state it upfront. If you are a new business, you should look for more flexible contracts so you aren’t stuck with something that might not be beneficial in the long run for your business. You can always renew your contract; less is better in this case.
Also research the companies your are looking at. There are plenty of merchant account scammers out there, so do your homework. Get references of their past and current customers. See how their customer service team treats you. Are they helpful? Are their call centers open during the hours you need? These types of questions are really important and could help with negotiation points.
The last thing to remember when negotiating with credit card processing companies is to read the fine print. You need to know if there are any hidden fees. A large hidden fee could possible hit a new business much harder than a larger corporation.
If you do your homework, read the fine print and shop around you should be able to find a credit card processing company with ease. Just take your time and remember to follow through with all areas of the negotiation process.
Shannon Suetos is a writer based in San Diego, California. She writes extensively for Resource Nation, an online resource that provides expert advice on purchasing and outsourcing decisions for small business owners and entrepreneurs.
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Although going to an auction site and comparing credit card processors can result in a better pricing structure for many companies, there is still a great deal of opportunity for most companies to go further than the typical negotiation process. In 1991, Visa an Mastercard had 8 Interchange categories. They now have over 300. How processors treat Interchange qualifications can be more critical than the rate you negotiate.
My company, Financial Mitigation Services, helps companies to understand what they are paying and why and we have been successful in recovering substantial dollars for our clients.
As a result of the complexity of processing billing procedures and the continued upward creep of processing costs, this is an expense category that every business should take a hard look at.
Your article has some great points and every business setting up a merchant account could benefit from heeding your advice. One thing to add is that there is no requirement to use a three tiered pricing structure. Most processors are now accepting of an “Interchange Plus” pricing structure. The Interchange Plus pricing structure is, by far, the fairest and least expensive method of pricing for businesses that accept credit cards.
Our company, Financial Mitigation Services, has found that over 70% of businesses that accept credit cards pay substantially more than is necessary to process credit cards. Utilizing an Interchange Plus pricing structure is one step of many that businesses can take to minimize costs in this area.