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June 22, 2014

Choosing the Right Credit CardProcessor & Understanding Fees

In the modern world of small business, accepting cash only has become increasingly untenable. Customers prefer the freedom of being able to pay with a credit card. In 2011, over $15 trillion was sent through credit, debit or prepaid cards managed by credit card networks. In this age of credit card dominance, customers expect a choice of payment options. In order to retain customers, it is important to offer them a full range of payment options for any type card available.

If you are a merchant interested in allowing customers to pay by credit card, you can choose from a wide variety of services available to facilitate this goal. Online businesses, brick-and-mortar retailers and food service providers all face different challenges in providing customers with a satisfying experience while paying by credit card. And various types of credit card processors claim to be the best to meet those challenges. Each offers a different structure of rates and fees that may or may not be explained to merchants interested in using its services prior to their signing a contract.

A merchant’s choice of credit card processor can significantly influence its ultimate cost of doing business. Saving money in processing costs could be the difference between eventual success or failure. However, the relationship between advertised costs and actual costs for a given credit card processor can be somewhat counterintuitive.

Big considerations for choosing a processing company

The most important consideration in choosing a credit card processor is their standing. Are you looking at a reputable credit card processor? A bit of research can sometimes identify businesses engaged in unsavory practices. It is also important to read all contracts and forms very carefully and make sure that everything written down agrees with any verbal assurances made by your salesperson. Ultimately, it is the written contract that will be enforced. Be sure your sales agent is polite, and thourough when helping you understand the features and rates they have to offer. At MBN we love our agents, and ensure they get the best training in order to best provide service to our merchants. We were honored to recently be named the best agent program among top credit card processors

One important consideration in choosing a processor is assessing the full range of credit card transaction fees. Warning! Don’t fall for the lowest rate offer. A processor can claim to offer a low rate merchant account, but the reality may be somewhat different. As with most things in life, there is always a catch if it sounds too good to be true. In particular, businesses which claim to offer the lowest discount rates are often hiding something. If a processor claims to offer rates below one percent, it is quite likely that hidden fees will ultimately more than make up for the apparent savings.

The key factor in evaluating a credit card processor is transparency. Is the processor open about the details of its credit card transaction fees? A transparent system of fees tied to an account with fair rates is infinitely better than a low rate merchant account weighed down by onerous fees kept hidden from merchants interested in using their services.

Demystify the fees please!

If there is any confusion about the nature of the fees being offered by a credit card processor, the best solution is to ask questions. Do rates vary depending on which brand of credit card is used? How much initial cost is required for necessary equipment? Is this equipment sold or leased? How convenient is a particular piece of equipment for customers? Are merchants charged a per-transaction fee in addition to the discount rate? For a merchant with a typical sale of $20, an increase in 20 cents of the per-transaction fee is equivalent to a one-percent increase in the discount rate.

In addition to all of these fees, a host of additional hidden fees can be offered by a disreputable credit card processor and be left unmentioned until the first transactions start to take place. Are there a monthly minimums or monthly statement fees? Are there additional verification fees? No one charge is necessarily a bad sign, and any particular fee could be used by a reputable credit card processor. However, a reputable processor will distinguish itself by its response to these questions. An honest and transparent processor will welcome the opportunity to illuminate every detail of the process, while a processor looking to trick businesspeople into signing on the dotted line will speak in generalities and avoid answering questions.

Ultimately, looking closely at the numbers and asking questions will help you as a merchant ensure that your credit card processor is both reputable and well-priced. Here at MBN, we pride ourselves with offering no hassle pricing, with personalized service you simply can’t beat. Another important consideration is the long-term relationship between you and your processor. Processors engaging in deceptive practices are not merely reducing the profits of the merchants who use them, they are devaluing themselves and all who are associated with them.

Choosing a credit card processor means entrusting customers’ most sensitive information to an outside company. In order to establish and maintain the bonds of loyalty and trust that are crucial in the long-term success of any business, it is important to choose an honest, stable credit card processor as a partner to work with for years to come.

Not to toot horns of any kind, but if feels like a good place to mention…MBN has been treating merchants with respect, and integrity for over 20 years. And we take security of your cardholder information so serious, we even have our own private cloud data center to ensure your customers data is protected. Call us today if you have any questions about your current merchant account or need help understanding any aspect of your options as a merchant. We are here to help! 1-877-871-4629.

Happy Processing!

Your MBN Team