Have you ever thought about accepting credit cards for your business? The days of only accepting cash, checks and money orders are gone. Our guest author, Phillip Parker, shows how easy it can be for you to start taking credit cards as a form of payment for your business today.
The Card Acceptance Reality
“Cash Only.” Every time I see a business with those two words displayed, I can’t help but think about how out of touch that business owner is with today’s consumer spending habits. It’s like saying to your customers that you don’t want their business unless they are paying with cold hard cash, or essentially, that you don’t want their money. Few businesses have the privilege of turning away paying customers. Yet, a “cash only” sign does exactly that; it takes someone from an eager buyer and turns them into a rejected patron who spends his money at one of your competitors.
Like it or not, the majority of people prefer to pay by card and business owners are being forced to adapt to this fact. Unfortunately, the credit card processing industry is also aware and is capitalizing on it as much as they can. Business owners are caught in the middle and often bear a great deal of risk and expense to accept card payments; however, with a little education and research, merchants can reduce the cost and liability to much more tolerable levels. Below are some tips on what to look out for when you are looking to begin accepting card payments from your customers.
Determine Your Processing Needs
Your business type will be the driving force behind the type of card processing services you will need. For instance, an e-commerce business has completely different needs that a retail store and mobile business has different needs than a non-profit. Before you begin talking with processors, you will need to know the answers to a few questions such as: Will the credit card be present during the transaction, or will you be typing it in most of the time? Do you need to accept credit cards online? Do you need mobile processing? Do you have repeat customers or recurring transactions?
There are many different services available that will cater to your particular needs, so it is important to understand them so that you can match up with the right processor.
Often the biggest complaint about accepting credit cards is the cost. This industry loves fees and if you are not careful, you will come to fully understand just how true this is. There are fees for nearly everything that can happen with your account and the transactions that go through it. Although I wish I could go into detail about each and every fee you may encounter, it is impossible to do in this post (it took 26 pages in my ebook “Fee Sweep” to fully explain them). Be sure to do your research on the cost of accepting credit card payments so that you won’t be unpleasantly surprised when you get your first statement. You will also need to consider the costs of buying or leasing equipment, if needed.
Research the Processors
Before you sign up with any credit card processor, be sure to research the company. Surprisingly, this industry is lightly regulated and mostly self policed. There are several processors that are only interested in bilking you out of as much money as they can, and they should be avoided at all costs. Somehow these shady operations manage to stay in business even though they get hundreds of complaints. If a processor has been mistreating its merchant costumers, there will be numerous posts about them online. Try searching phrases like “(processor name) review,” “(processor name) complaints,” and “(processor name) scam” for each processor you are researching. Most processors are going to have a few complaints. But if one seems to have an overwhelming amount, it’s probably best to avoid doing business with it.
Understand the Contract
Merchant accounts come with contracts, just like cell phones. And like cell phones, you usually have to agree to a few years of service. Cancel your service before the term is up and you will likely be slapped with an early termination fee ranging from $200 to $1500, or more. Not only must you understand how long you are agreeing to a processor’s services, but you must understand what you are agreeing to in fees. The merchant account agreement must list all the potential fees that you may incur and the processors don’t always make it easy to interpret. If you have any questions about a fee, be sure to ask the agent. If the agent doesn’t seem to provide a clear explanation, or is dodging the questions, you may want to consider a different processor. It is also highly advisable to consult a few seasoned business owners on the costs and risks of credit card processing. Anyone who has been around for awhile will have some insight to pass on.
All in all, accepting credit cards can add a small amount of risk. But on the bright side you won’t be turning paying customers away, which can mean more sales overall. Whether you have been accepting credits cards for a long time, or you are just starting out, researching and understanding this industry is key to avoiding headaches down the road.