What Small Businesses Should Know About Credit Card Processing

Payment systems must be put in place in order for your company to be able to accept the payment of customers. There are numerous different types of payment systems available, but no matter what type of system you’re looking at, you may want to consider accepting credit cards. If your company has decided that it’s time to accept credit cards and begin processing this form of payment, there are some general things you should know about the process. At first glance, credit card processing appears to be un-complex. You set up a merchant account for your business and purchase and set up the equipment and everything is ready to begin. However, small businesses that decide to accept credit cards realize quickly that this decision has a unique set of needs associated with it. Small businesses have a harder time getting approved for a merchant account, could end up losing money to fees, and face challenges when using the same technology and equipment as a larger corporation. This can make the process to begin accepting credit card payments difficult, to say the least. However, there are things that can help lessen the disadvantage faced by a small business and help keep them ahead of the game.

First of all, you should be knowledgeable in the lingo. When you decided to accept credit cards this meant you would have to learn a new vocabulary in order to completely understand how, when, and by whom your money is being moved around. For most small businesses, the focus is on setting up the system rather than the details and industry jargon involved because they have less resources than larger corporations. Learning the lingo and known what goes on behind the scenes can prevent future headaches. There are four key components in processing credit card information. The merchant bank is the financial institution providing the services to facilitate transactions between bank accounts. The processor is typically a third party credit card processing company that takes on the responsibilities of the merchant bank, facilitates credit card transactions and routes card information where it needs to be. The issuing bank is the financial institution who issues the credit cards to buyers. The card payment brand are companies like Visa, American Express, Discover, and MasterCard.

Next, it’s important that your company finds the right credit card processor. Because you are a smaller business, your choices are limited. Everything is dependent on the type of business you run, how and where it is conducted, and how much streamlining is needed. Talking with companies can make this process easier, because representatives can give you the feel for what the company is all about.

Next, think about revenue requirements. Even though there are numerous credit card processing methods available for you to choose from, small businesses often run into the difficulty of meeting vendor requirements. If your business does not make enough revenue, the processing company could completely reject your application. Revenue requirements differ from place to place, but most expect at least ten thousand dollars a month to be made in revenue. If your company doesn’t meet these requirements, just keep digging. There are several processing companies that specifically cater to smaller businesses and offers customized solutions designed to fit the needs for retailers of all sizes.
Data security should also be considered. Small businesses still have to meet the same standards for security that large corporations do. You are responsible for ensuring the vendor has correct security standards in place and that they are in compliance with these standards. Standards that must be included are the three digit card verification value, secure sockets layer protocol, payment card industry data security standard, and end to end encryption.

Finally, think about the processing fees associated with credit cards. The process of learning the costs associated with accepting credit cards can seem complicated due to the numerous fees involved. Fees are presented as anything from percentages to dollar amounts and vary based on transaction and processor type. Small businesses quickly learn that these fees are extremely important when they are concerned about credit card processing costs cutting heavily into the bottom line for their company. Some fees that small businesses should look for are gateway fees, statement fees, monthly minimums, average discount rates, transaction fees, and fees associated with address verification. 

Even though the process of setting up credit card processing can be difficult, it is important to understand and know all of the steps involved in the process. Learning about the previously mentioned elements can help greatly when trying to begin accepting credit cards and deciding how to process credit card information and payments.