What to Look for When Comparing Credit Card Processing Providers

 
Navigating the world of credit card processors can be an overwhelming feat. For young business startups, this decision can be costly if not investigated thoroughly. The right decision offers freedom of transactions and easy-to-navigate customer service. However, an inferior decision will inevitably lead to frustration, wasted time, and money leakage. These resources are—of course—better invested into other avenues of a small business’ growth.

Thus, a small business owner must be well-educated on the different factors which go into choosing a credit card processing provider to ensure their assets are well protected.
 

Types of Providers:

 
There are two leading types of payment processing providers on the market as of 2019: PSPs and Traditional Merchant Accounts.

PSPs (Payment Service Providers) – are by far the least expensive route to go. Providers like Paypal offer young upstarts the opportunity to enter into low account fee options. However, these services are aggregated. This means that an individual entity is pooled into a list of clients rather than being issued an individual merchant ID.

All purchases made from the individual entity will be the property of the individual entity. The drawback of taking part in an aggregated service comes into play with account accessibility. With PSPs, the slightest hint of fraud will result in your account being frozen or shut down. This causes a big problem when it comes to cash flow, especially if this payment processing service is your only provider. Getting your account set up again takes time and energy, and PSPs are not known for having the swiftest customer service response time. For that reason, we don’t recommend businesses to enter into relationships with PSPs if their aim is to grow and prosper.

Traditional Merchant Accounts – offer small businesses a merchant identification number that is specific to the individual entity. This number lowers the overall risk of fraud by identifying you to processors, banks, and credit card associations. At the end of the day, having a merchant ID number makes you more credible in the eyes of your creditors and allows for scalability of your transactions.

However, this improved stability does not mean your account will not be held for unknown reasons. Often times when large transactions are completed, banks will put a hold on your account to verify the validity of the transaction. However, merchant account providers are more swift in their customer service response time and offer a variety of services to help avoid account freezes in the future.

With Merchant accounts, business owners will also end up paying less fees in their processing rates, to ensure that more profit is going into their pocket.

Merchant accounts can be more expensive at the beginning, but over time, they pay for themselves.
 

Factors to Consider:

 
Before choosing a credit card processing provider, there are several factors to take into account.

1. Pricing and Transparent Rate Structure
Pricing is a big factor in any service. Low price does not always mean best product. Therefore, business owners must have a list of services in mind to help them weigh the price against the value.

A transparent rate structure (such as Interchange Plus Pricing) allows business owners the opportunity to see exactly what each fee pays for. This detailed statement is ideal in planning which credit card processor to choose, but is also great for keeping tabs on just exactly where money is being funneled.
 
2. Contract
Due to the ever-changing nature of the payments industry, entering into a long term agreement with a credit card processor is not recommended. Business owners must ensure that whatever provider they choose, there are no early termination fees in case the contract is not everything they thought it to be.
 
3. Hardware
Free equipment is a huge benefit when choosing a provider. Ensure that they will not only take care of the electronic side, but also provide you with physical card swipers and other machinery as part of their service.
 
4. No Hidden Fees
This goes back to the transparency clause. Ensure that any provider you choose is completely and utterly open with their transaction costs. If they do not offer a transparency statement, read the fine print of the contract to search this out.
 
5. Good Customer Support
Solid customer care is the backbone of a good credit card provider. Ask questions about customer care, and call the line once or twice with different questions or issues to flesh out what their services are like. At some point, every business’ account will need some tweaking or resetting. Be sure this is an easy process by scoping out the individual competency behind the phones.

In addition to our list of recommended payment processing companies, we also offer information on other processors here in order to deliver deeper information for our visitors.