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How To Choose A Payment Processor

Jul 16, 2008
Choosing a payment processor for your business requires more than a casual glance at features on a brochure. It's a decision that can have a long-lasting effect on your business. Most merchant account providers require you to sign a contract. If you decide to switch providers before the contract expires, you could be subject to a sizable termination fee. That's why it's important that you take the necessary time to uncover the right payment processor for your business. Below, we'll provide you with a blueprint of how to select a merchant account provider.

Where To Look For A Merchant Account

Merchant accounts are available from a few different sources. Most small business owners first approach their bank. If you have an existing relationship, your bank may be able to offer a package that's designed to grow with your business. If you're unable to secure a merchant account from your bank, you can use an ISO (Independent Sales Organization). An ISO is a broker. They usually represent several different credit card processors. Alternatively, you can often find a trade organization which offers credit card processing services to its members.

Shopping The Fees

The amount of fees you'll pay for each transaction should be a primary factor in choosing a payment processor. While the fees seem small, there are many of them. They can easily add up to a staggering amount. Try to identify the merchant service providers' fees for each transaction. They're often disguised behind the discount rate. They can play a major role in the profitability of each transaction you process while your contract is in effect.

There are many other fees that you should ask about while researching providers. They include authorization fees, statement fees, batch fees, customer support fees, chargeback fees and an early termination fee. You may be surprised by how different they can be amongst several providers.

Track Record And Customer Service

There are thousands of companies who would like to sell you a merchant account. Some of these companies are far better than others. Before you sign a contract, you should find out how a payment processor's track record compares to its competitors. Have they been providing the service for years? Do their customers tend to renew their contracts?

Also, note their level of customer support. Try to contact a few of their current customers. In the event that you have an issue with your payment processor, you want to have confidence that the issue can be resolved quickly.

Don't Lease The Equipment

Often, a merchant service provider (or a salesperson who represents one) will encourage you to lease the credit card processing equipment. They'll make the offer sound attractive, but you should consider buying the equipment. The terminal and software required will likely cost under $300 to own. A leasing contract on the same equipment is often designed so you can't terminate the contract without paying a large cancellation fee. In the end, you may pay nearly $1,000 for the equipment.

Getting A Good Deal

To find a reputable payment processor, identify and compare individual fees amongst several providers. Look closely at their track record and customer support. Contact a few of their current customers to ask them whether they're satisfied with the service. Finally, avoid leasing any of the equipment you'll need to process credit card transactions. With due diligence and a little effort, you can find a payment processor that will work with your business rather than against it.
About the Author
This article is brought to you by PaySimple, a leading provider of ACH services.
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