5 Proven Tips for Choosing the Right Credit Card Processor

Whether you’re starting a new small business or hoping to expand an existing company, choosing a credit card processor can be challenging. While there are now 100s of credit card processing firms and payment service providers that offer transaction solutions to businesses in the United States, it’s critical to narrow down which processors match your business’s needs.

With credit cards and debit cards making up 70% of all payments in the United States, your business needs an affordable processing partner. In this blog post, we take a closer look at five key tips on how to choose the best payment processor for your business. Read ahead if you’re ready to take advantage of better processing rates!


1. Assess your credit card processing needs

First, assessing your business’s credit card processing needs is critical. Let’s explore some examples of questions you should ask yourself during this process:

  • Does your business need in-store credit card processing?
  • Does your business need online credit card processing?
  • Do you want mobile credit card processing (for smartphones and tablets)?
  • Do you need industry-specific processing tools?
  • Do you also need a POS solution?
  • Do you already have the hardware, or do you need to purchase processing equipment?
  • Do you want to accept all types of major credit cards and brands?
  • Do you need extensive chargeback prevention tools?

Understanding your credit card processing needs will help you access a provider with tools tailor-made for your business. For example, if you operate in an industry prone to fraud, you will need a credit card processor with robust authentication tools.

Likewise, if you conduct most of your business online, you need a credit card processor with affordable online processing rates (these often vary from in-person rates). 

2. Shop around

Next, one of the biggest mistakes your business can make is choosing the first credit card processor you find. Comparing multiple processors or providers of merchant services will help you find rates and features that align with your needs. 

Fortunately, you don’t need to go door-to-door or speak directly with sales representatives to compare products. All the information your business needs is available online. Prioritize working with payment processors that are transparent about their pricing, features, and other core details — if a company is being vague, it’s not confident about its product. 

Likewise, you can compare credit card processors using consumer watchdog groups like the Better Business Bureau (BBB) and Consumer Affairs

3. Consider the different types of processing fees

Many business owners make the mistake of assuming all credit card processors charge the same types of fees. However, there are three major types of credit card processing fee structures — let’s explore them in more detail below:

  • Flat-Rate Pricing: Flat-rate pricing is a pricing option popular with many payment services providers, such as PayPal and Stripe. This type of pricing charges merchants a flat rate, regardless of which card brand (Visa, Mastercard, American Express, etc.) the customer uses. This doesn’t mean you will pay a flat rate for all types of transactions; there may still be a different rate for online transactions and in-person transactions. However, all online transactions will be charged at the same rate, regardless of card brand and other factors. 
  • Interchange Plus Pricing: This type of pricing charges you the interchange fee (a fee from the issuing bank) “plus” a charge for the acquirer and the card network (in one additional fee).  
  • Interchange Plus-Plus Pricing: This type of pricing charges you the interchange fee (a fee from the issuing bank) “plus” the acquirer’s fee “plus” the card scheme fee (in two separate fees). Essentially, Interchange Plus-Plus pricing is the most transparent fee structure, as the merchant has visibility of all three fees they’re being charged. 

While a flat-rate fee is the easiest to understand, it’s often hiding a higher markup cost. As a business, you will be paying for the convenience of flat-rate pricing. The other types of processing pricing are less predictable but often offer better value over the long term and more transparency.

Square is one example that offers a variety of hardware options and a simple, flat-rate pricing structure for small businesses.

4. Check if a credit card processor offers any hardware deals

If you’re searching for a new payment processor, you may also be on the hunt for payment processing hardware. Many processors will offer discounts to clients whether it’s POS terminals, credit card readers, receipt printers, barcode scanners, or any other payment-related hardware.

In some cases, a payment processor may partner with a POS provider to offer hardware deals to merchants. On the other hand, if you already have the hardware, such as iPads, iPhones, or other tablets, it’s best to search for a payment processor or POS provider compatible with your existing infrastructure.

5. Receive transparent quotes before making any commitments

Lastly, asking for full quotes is critical before entering into any agreements. While it’s always best to avoid long-term contracts with payment processors, if you are planning to sign a multi-month contract, you must have all the processing fees, penalties, and stipulations listed upfront. Let’s look at some of the fees you should request during the quoting process:

  • In-person transaction fee
  • Card-not-present transaction fee
  • Online transaction fee
  • International transaction fee or surcharge
  • Chargeback fee
  • Account initiation fee
  • Early account termination fee
  • Card verification or authentication fees
  • Payment gateway fees
  • Any other fee that may be relevant to your business’s payment needs!

Always read all the terms and conditions before you sign a contract. If you’re unsure about a specific clause in the terms, reach out to the company and request clarification in writing. Never accept a processor’s word unless it’s been formally documented.

Bonus: Prioritize Fraud Protection and Data Security

In today’s digital landscape, fraud and data breaches pose significant risks to businesses of all sizes. A robust credit card processor should offer advanced fraud prevention tools and stringent data security measures to safeguard your business and customers’ sensitive information.

Look for processors that employ cutting-edge technologies like tokenization, end-to-end encryption, and real-time fraud monitoring to detect and prevent fraudulent transactions. Ensure they are compliant with the Payment Card Industry Data Security Standard (PCI DSS) and have robust protocols in place to protect cardholder data.

Additionally, inquire about their chargeback management services. Chargebacks can be costly and time-consuming, so a processor with efficient dispute resolution processes can save you significant headaches and expenses.

By prioritizing fraud protection and data security, you not only mitigate financial risks but also build trust with your customers, fostering long-term loyalty and growth for your business

Verdict: Always Take the Time to Find the Best Processor for Your Business

Now that you understand the best way to approach finding a new processor for your business, it’s time to begin the process! Taking your time to assess different payment processors and their services will help you avoid signing commitments with the wrong provider.

Always steer clear of payment processors that pressure your business into signing long-term contracts — taking time will save you money!


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