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Credit Card Processing: The More You Know,The More You Grow

May 19, 2008
With years of experience behind you, your business should be running like a well-oiled machine, right? Actually, that's not always the case.

As a business continues to grow, we sometimes get so tied up in the day-to-day activities that we forget to step back and conduct a high-level review of how our business receives the money we work so hard to bring in. You should be reviewing your merchant account program and credit card processing to assess where changes and improvements can be made. After all, it affects the most important aspect of your business, your cash flow.

I speak with business owners everyday who spend thousands of dollars monthly on different marketing campaigns. Whether it's the yellow pages, online advertising, magazine advertising, or any other advertising medium, merchants display diligence attempting to reach out to their potential customer.

Many merchants expend large amounts of capital beautifying their business location, creating comfortable or specific environments for their customers, and creating a positive, professional, and valuable image for their business. Merchants are meticulous with most every aspect of their business, except for when it comes to their merchant account and what they are paying for credit card processing.

I ask some of these business owners, who their processor is, and approximately 59% do not know. I ask what they are paying to accept credit cards, and they do not know.

In many instances, when obtaining a merchant statement from a prospective merchant, during the analysis process, the first step is to open the envelope containing the merchant's statement. Honestly, most merchants have not even looked at their bill in months. This is not the standard process businesses use to evaluate invoices but credit card processing for some reason, is the exception.

It is unacceptable to not know what you are paying to accept credit cards. Often times merchants don't know and don't want to know.

It is important. It is very important. If you are in business today and want to be successful, it is imperative that you offer credit and debit card acceptance to your customer base. Whether you are a retail/storefront merchant, restaurant, online/internet merchant, business-to-business merchant or even a home based business, electronic payment capability is imperative.

However, it is not enough to just accept credit cards. Merchants must be sure the company they choose and the merchant account structure implemented for their business is suitable for their business type and transaction volume. Merchants must also be aware that their electronic processing vendor offers operational, and pricing programs specific to their business type.

If you choose the right merchant account provider, you will be able to utilize their products, resulting in business growth, greater efficiency, increased operational and back office coordination, and increased profitability.

Choosing the wrong merchant account provider will cost you thousands of dollars, wasted man-hours, frustration, and waste your time. After all, time is money.

How to Choose a Credit Card Processor

The most important factor when selecting a credit card processor is the company you choose. In appearance two companies may seem similar. However credit card processing companies, and contracts, can be as diverse as any industry operating today.

Here are a few pointers:

1)Is the company a Registered ISO of Visa and MasterCard? This means you are getting service from a vendor directly licensed by Visa and MasterCard to process credit cards.

2)Does the business name on the contract you are signing, match the business card of the representative that is signing you? (They should match)

3)What does the merchant processing company stand for?
What is the credit card processor's focus? If the processor focuses on corporate accounts, and you are a small business, it may not be the best company to handle your merchant account.

4)What is the merchant processor's customer service hours?

5)Do they charge for customer service?

6)What level of service are you going to experience? It may not seem that important in the beginning when you are signing up, but later on when you need assistance you do not want to be frustrated, put on hold for 20 minutes, hung up on, or have to repeat your story to four different people just to get assistance.

I don't pay anything to accept credit cards

To my astonishment I have come across many merchants who tell me they are not paying anything to accept credit cards. That's like saying they are not paying for phone service, or electricity at their business. Credit card processing is a service for your business. Visa, MasterCard, American Express and Discover charge every business that accepts their card a percentage of the transaction.

Merchant account providers who are registered by Visa and MasterCard are authorized to open merchant accounts for businesses to facilitate credit card processing.

What should I be paying?

Credit card processing rates commonly referred to as the discount rate depends on your business type and the method in which you run your transactions. Visa and MasterCard maintain the base rate. This rate depends on business type, and type of credit card you are processing. (I.e. debit card, rewards credit card, corporate credit card).

When it comes to electronic payment processing, the main objective should be to get the best available rate and fees for your business type, while balancing that with service, the product line and processing options offered by the company you choose.

It cost too much for a merchant account.

A merchant account does not have to cost a lot of money. If you feel it is costing you too much, it's time for a merchant account review.

The best way to maintain and control merchant account costs is to sign up with a company that does not have Contract Length Terms, Annual Fees, Membership Fees or Monthly Minimums. You also need to make sure your transactions are qualifying at the lowest possible cost for your business type. This may mean swiping all the transactions you can, and settling your terminal nightly.

Merchant accounts are supposed to bring money into your business. It should not cost you more money to have electronic processing capability, than the income the service provides.

Pay attention

Credit card processing is one of the most important aspects of your business. Credit card processing accounts for approximately 58% or more of all revenue that the average business brings in. Make sure your business is processing with the right company and has the right merchant account parameters set up for your business type. Electronic processing can either help to grow your business or contribute to excessive overhead, often without your knowledge.
About the Author
Gregory Cancryn is founder and President of Payment Transaction Systems, LLC a registered ISO of Visa and Mastercard. Payment Transaction Systems offers credit card processing to small and medium sized business nationwide with an emphasis on integrity, service and low Cost.

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