There are many considerations when choosing a credit card processor. A good processor can save you a lot of headaches and money. A poor processor can cost you too much money, and can even freeze your account if you do an unusually large amount of business in a short period of time. Having a good credit card processor is crucial to good business.
What Determines the Pricing of a Processor?
Typically, you should be paying between 2-3 percent for online transactions and telephone transactions. For typed-in credit card number transactions, gambling or adult entertainment transactions, which are considered “high risk,” you can expect to pay 5-8 percent. Credit cards that are physically swiped can be 2 percent or less.
Within each category, the actual fee can vary quite a bit. It depends on your business/personal credit history, how long you’ve been in business, what industry you are in, how much volume you are doing, and your average transaction size.
The main reason all these factors come into play is that the credit card processor needs to consider all kinds of factors to ensure fraud isn’t occurring.
Find a Credit Card Processor in Your Industry
If you know others people in the same industry, ask them which processor they’re using. There are many benefits to using a processor who is familiar with your industry.
The primary benefit is that they understand the tides of your business. The Halloween and toy industries, for example, earn more in one month than they do in the entire rest of the year. Many credit card processors would shut down your account for irregular activity if that happened.
That’s why it’s so important to have a processor who understands your business and knows not to be alarmed when it is really just a regular business cycle.
More Tips on Choosing a Great Processor
As a general rule, don’t use your bank as your credit card processor, as banks tend to charge a premium rate for this service.
If you need international credit card processing, try to find a processor that specializes in international payments.
Make sure you talk to your credit card company about integration. How are you integrating the processing into your online shopping cart? If you’re using Authorize.net, ask whether they will work with Authorize.net as their gateway. If you are making physical sales, ask whether they can work with your existing equipment.
Also, be certain to ask them about the lag time, which is the time between their receiving a payment and it appearing in your bank account. This time can be between 1-5 days, depending on how fast their fraud prevention department works.
Most importantly, make sure you compare at least five different companies to get a good grasp of what kind of rates and services are available to you.
