Enter The World Of Credit Card Processing? Here Are 10 Key Points To Remember

If you are just starting out in business or take your existing venture to a new level and attract a wider customer base it is probably regarded as essential that you have the ability to take card payments.

The world is online these days and that means you have the option and ability to widen your net to attract customers from anywhere on the planet to locals who live a few blocks away from your business.

When you sign up for a service like CBD merchant accounts, for example, this makes it possible to accept card payments online, over the phone, or in-store, and that means your opportunities to grow the business are almost as big as your ambitions.

Credit card payment processing

Here is a look at some of the key points you need to know about credit card processing and what it can do for your business, plus an overview of what sort of features to look out for.

1. Compete on a level playing field

If you are running a retail or wholesale business and dealing with domestic customers on a regular basis you want to be able to accept payments that help reduce or eliminate the potential risk of not getting paid, by using a merchant service that confirms transaction approval and pays out quickly.

Having this sort of service at your disposal will give you the confidence to compete against larger organizations without having so many concerns about not getting paid on time when dealing with customers you haven’t met or dealt with before.

2. A cost-effective solution

Not all merchant services are equal and some may impose much higher card processing charges and fees than others, so it pays to shop around and look for a merchant account provider who offers low rate guarantees.

3. Keeping fraud at bay

You will have to accept that there are going to be fraudsters out there who will try to commit fraud when attempting to complete a purchase transaction and there is also the issue of chargebacks that you have to contend with.

A good merchant account provider should be able to provide you with guidance and solutions on how to avoid these difficult scenarios and what to do to limit losses. Every card brand handles disputes differently, so it’s also a good idea to educate yourself on the differences between how an American Express, Visa and Mastercard chargeback is handled.

4. How it works

There is actually a lot of work that goes on behind the scenes with a credit card transaction and it is worth understanding the basics so you know what is going on.

The first aspect of the card processing cycle is to determine whether there are funds available to complete the transaction using the card information provided and once this is done the credit card processor confirms the transaction.

This often takes less than fifteen seconds to complete the checks and process the payment.

Online payment processing

5. An online payment gateway

If you sign up for a merchant account you will get a terminal and a card reader that you use for taking card payments in person or over the phone.

Another service that is often offered is a merchant services online payment gateway.

This does what it says on the tin and gives you the ability to take payments online via a portal linked to your website, that directs customers to the gateway provided by the merchant.

If you are running an eCommerce business or want to add this dimension an online gateway is essential.

6. Ask about point of sale systems

What point of sales systems provide is an ability to get more detailed data about your card transactions.

This means you can identify which employee processed each individual card transaction and you can often run a whole series of reports, to help you reconcile tips and commission payments, for example.

Ask your merchant provider about these options.

7. Different pricing structures

It is a good idea to ask your prospective merchant services provider what their charging structure is.

The most common option is to charge a flat rate, which is typically going to be a certain percentage rate of the overall transaction cost, together with a small flat fee for processing.

Check whether you are going to be charged one fee that encompasses everything, or two separate charges.

Other charging structures are interchange plus, which reflects the amount the merchant provider will pay to the card distributor for each transaction, with a small markup on top.

Tiered pricing might be offered to you, and this entails a pricing structure based on your volume of transactions that you are going to be putting through.

Work out what sort of volume of card payments and value you expect to have and talk to your provider about the best deal they can give you based on those numbers.

8. Monthly service fee

Ask your provider what they will be charging as a fixed monthly service fee for providing the card processing service to you.

You should not normally expect to pay anything other than a nominal fee for having this facility as the provider will be making most of their money from a percentage take of each transaction.

Paying with smartphone at coffee shop

9. Monthly minimum payment fees

Be aware that some merchant providers might want to charge a monthly minimum payment fee, which is basically a penalty for not putting enough business through in that month.

It is fairly easy to find a provider who doesn’t penalize you in this way so shop around if this is being suggested to you.

10. PCI compliance

If you are processing card payments you will be handling and processing sensitive and personal data.

This situation is covered by the Payment Card Industry Data Security Standard (PCI) and you will likely to have to pay an annual fee for subscribing to this code of conduct through your merchant services provider.

Finding the best merchant services provider for your business is a process of elimination and you should take into account the fees each provider is proposing and the services they are offering to you.

If you need to be able to offer online payments, for example, you will want to find a merchant that can offer you a payment gateway.

Take your time choosing the best fit and you should be able to grow your business with the comfort of knowing that you have your payment processing requirements taken care of.