Small Business Credit Card Processing: Getting Started

credit card processing tips
Credit card processing

One of the most common reasons for a business to invest in credit card processing equipment is to increase cash flow. When using paper invoices, one may need to wait 30, 60, or even 90 days to get paid, and when strapped for cash during specific selling seasons, this can have a severe impact. Additionally, as unfortunate and frustrating as it may be, there is never a 100% guarantee your customer will pay you for your services or product.

Credit card processing solves all these problems. It gives you cash in-hand, as soon as the transaction is compete.

However there are a variety of things to consider when choosing a credit card processing vendor.

Who to Partner With?

The choice of partner for a credit processing system will directly affect the financial condition of the business. It is an important financial decision that should be investigated not just in terms of the immediate benefits to the business but also in terms of the relationship with the credit processing service provider.


If you already have a business bank account, you may already be able to take advantage of their credit card process service. You may be able to get everything that you need from a single source and maintain the business relationship you have already established with your bank.

Online Vendors

These venders serve as a middle link between two banks. They may do this with great competency or not, depending on the vendor. They offer accounts to home businesses, wireless and online businesses as well as traditional retail stores.

Why Does Partnering Choice Matter?

One way that the partner choice can have future impacts on a business is when there is a dispute on a charge, a request for a refund, or any other process that includes communications with the providing company.

Additionally, some credit processing companies offer both in-store and online servicing with SSL, or Secure Socket Layer protection. This is a standard that online customers look for before releasing their information online as it protects against fraud.

How Are Payments Processed?

Although there are slight differences between the companies that offer this service, the general pattern is the same. First, the customer releases their credit card information, either in the real store or in an online store.

Next, the credit processing vendor system will route the information through a network of secure connections which will finally land the data at the customer’s bank account. The bank will either approve or decline the request based on the information in the account. That response travels along the same secure path back to the business from where the request was issued.

Depending on whether the small business has an account with an online vendor or a bank, the information will then usually be posted to a website that can be viewed by both the customer and the merchant business. At this point, the transaction is cleared, and the transmission of goods or services can occur. The funds are first passed from the customer’s bank, then through the credit processor’s system, and are finally routed safely to the merchant business’ bank.

Although cash purchasing is more direct, the advantages of credit purchases are significant. The customer is allowed to pay for the purchase in the future, making them more likely to purchase now. If the customer gets the advantage of paying in the future, the business also receives a similar advantage — that of getting paid today.



Each bank will offer their customers slightly different product and service support; check with your bank for details. In general, the advantage of using your lending institution for the credit card processing services is that you can utilize a centralized system. The bank’s rates may also be very competitive. Banks often claim to have a better understanding of the credit processing systems through their years of experience, which certainly makes some sense. They usually supply all of the equipment, processing support and customer service; you will always know who to call and routing transfer calls is less complicated. Point of sale devices provided by some banks now include check processing on site, making checks as easy to process as credit cards.

Online Vendors

An online vendor must compete with these advantages, normally by appealing to customers who do not have a merchant bank account and who wish to conduct business transactions.



Although the banks may consolidate all of their services into one central location, the processing fees are very direct. This means that banks expect that they will be paid for providing these services directly, unlike online vendors who may appear to offer lower initial costs, but have hidden fees. This does not mean that banks will not introduce hidden fees; it means that customers must realize that they will incur costs for this service no matter what they do. Hidden fees are a staple of every business, and as a partner business, you should become adept at locating and analyzing them.

Online Vendors

One of the greatest drawbacks when using online vendors for credit processing are the fees they often charge. The customer service charge can be incurred for technical supports and security concern requests and more. They may or may not offer money back guarantees, and in general there are many comparative shopping points that require time in order to research properly to determine the right fit for a small business. Online vendors may not have the technical support to fulfill all of their promises; buyer beware.

Getting the Fit Just Right

Each small business will have specific requirements for their credit processing load. Rather than trying to decide which provider of a credit card process is the “best,” it is a much more practical approach to consider the appropriateness of the match. By taking an inventory of the business’ major needs, it is possible to then construct a “match needs” diagram that can provide a visual perspective needed to make a good decision.

To make the best decision, it is necessary to know how to match the priorities of the business with the provider that best fits their specific criteria.

Authored by Eric Packer | Co-founder of