As consumers are shifting more and more to digitalized transactions using credit cards, debit cards, and apps on their smartphones, existing and new business owners need to ensure they have card processing solutions in place in order to accept these types of payment methods. Otherwise, they are at risk of losing customers who are not able to purchase goods and services, and pay for them using their preferred payment method.
Before you sign up with a card payment processor, there are several key questions you need to ask. Above all, avoid the temptation to simply choose a processor offering a promotional low rate, as this does not always include other fixed and variable costs, which could end up costing you more per transaction.
- Are flat rate and interchange-plus pricing options available? For most new business owners, where they have less than $3,000 per month or which average $10 or less per transaction, flat rate pricing is normally the best option. As the business grows and expands, eventually monthly transactions could exceed $3,000 and/or $10 per transaction. Once your business reaches this level, then interchange-plus pricing tends to cost less than sticking with a flat rate plan.
- Is there an early termination/cancellation fee? Make sure to read through the fine print of any payment processor agreement and see if there are any additional fees if you decide to cancel the service for any reason. Just be aware: Some card processors do charge early termination fees.
- Does the agreement auto-renew? In certain cases, your agreement may auto-renew if it is written this way in the original agreement, locking you into an additional period. Again, make sure to review the agreement and, if it is there, request the auto-renewal is removed from the agreement.
- What fees does the processor charge? In addition to the fees for processing each transaction, for which you should request a breakdown from the processor, some processors also charge various other fees, such as compliance fees, regulatory fees, statement fees, and so on. These additional fees should only cost between $200 and $300 per year and, if these are significantly higher, then it is recommended to find a different card processor.
- Can the processor handle both brick and mortar and online transactions? Initially, you may strictly run your business out of your home and online. Later, as it grows, you might want to open a physical retail store. On the other hand, you may decide to open a retail store first, and then take your business online later. It is important to choose a card processor that is able to process both types of transactions.
Last, ask the card processor what equipment is available, and remember to compare the costs to purchase it versus leasing it. For further assistance, or additional questions about establishing a card processing solution for your business, please feel free to contact Leap Payments at 800-993-6300 today!
