Choosing a financial institution to handle credit card processing should be similar to choosing any financial institution a business elects to conduct business with.  Shopping and comparing the terms of credit card processing companies is not only a necessary part of a business’s plan to accept credit cards but may very well be an overlooked task that can slowly impact profitability either positively or negatively.  The rate charged for processing, extra fees for ancillary services and the overall service of the institution should be evaluated.  For a business just starting out, the costs of a processing may not seem like much.  As the dollar amount of charge cards processed increases, the cost difference of .25% or .50% of a number that may be in the 10’s of thousands or 100’s of thousands of dollars adds up.  To determine what banks will be appropriate credit card processors, small business owners should consider several factors. 

1. Fees

It is very important that a business look at the base fees a bank charges for credit card transactions.  On average, most credit card processors will charge around 2 percent for each purchase made.  Yet, the business manager must dig deeper to fully see if they are getting a good value with a credit card processor.  The best way to do this is for them to request a typical statement showing all of the fees associated with a variety of transactions.

2. Time

A business need to know how long it will take for the money generated from credit card transactions to show up in their merchant account.  This timeframe is known as processing time.  The best processing time will be 1 day, while the worst lag time can be up to 5 days.  Sometimes, longer processing times can mean a credit card processor is taking extra time to make sure the credit card transaction was not fraudulent.
3. Equipment Costs

Credit card processing machines can be quite expensive, as they range from $300 to $800.  Additionally, businesses must also factor in the costs associated with connecting the credit card processing machine to the network.  This is done through a telephone line or through the Internet. 

4. Payment of Fees

The fees associated with credit card transactions can be paid in two ways.  The first most common way involves instant payment by deducting the money as soon as a transaction has been initiated.  The other way involves an entrepreneur paying for an accumulation of fees at the end of the month.  The latter may seem more annoying, but it allows for much easier bookkeeping.  It also does the obvious, which involves putting more money into an entrepreneur’s wallet, at least initially.

5. Gift Certificates

If a credit card processor can handle gift certificate transactions, business can expect an additional payment that ranges 25 cents to 50 cents for each purchase.  These expenses are not much, considering the automatic publicity boost gift certificates give businesses.  Gift certificates have certainly become a larger facet of consumer purchasing patterns over the past five years.  A factor that should not be ignored by any size business.

The most important factors a business needs to be on the lookout for when considering a credit card processor include: fees, service time, equipment costs, the method for which fees are paid and finally whether or not gift certificate transactions can be handled.  Many business owners might consider the bank associated with their business credit card to use as their credit card processor as well.  However, this may be faulty thinking.  Just because a bank offers a good value for business credit cards does not necessarily mean it will be the best credit card processor.  A business should analyze its needs, consider the needs of the customers and shop for the terms offered by the processors that can best meet these requirements.

Credit card services are becoming essential for almost any size business.  Just like consumers, a merchant can locate the best services for a credit card online.  There are numerous credit card companies that are eager to handle new business.  Search and compare all credit card offers and be sure to examine the needs of your business with the services of the credit card merchant to find the best deal.

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