Vital Points Business Owners Need to Understand About Credit Card Processing

Business owners who plan to accept credit card payments must first understand important details before plunging ahead.

Credit card processing may not be as simple as many business people think. For small enterprises, there are some concerns such as obtaining approval for merchant accounts, paying exorbitant fees and using sophisticated technologies. The bottom line is accepting cards as payment can be difficult. There are important things to keep in mind to cope with these issues.

Understand the Ins and Outs

Start-ups should understand how their finances are transferred and who takes care of actual credit card processing. Majority of business proprietors with limited resources are more concerned with setting up the system and its components.

The merchant bank is responsible for providing merchant account services to expedite consumer purchases to business owners’ bank accounts. There is a significant difference between merchant banks and payment gateway aggregators like PayPal. These facilitators set up merchant accounts and process card transactions although aggregators are not banking institutions.

In credit card processing, the processor is a third-party that serves as go-between assuming tasks of merchant banks, facilitating transactions and forwarding card information to the proper merchant accounts and payment gateways. Issuing banks provide consumers with credit cards. There are also various credit card trademarks like MasterCard, Visa and American Express.

Vital Points Business Owners Need to Understand About Credit Card Processing

Credit Card Processors

Merchants need to get the right processor. Options in credit card processing are not limited for small-scale entrepreneurs. This will depend on three factors:

  • The type of your enterprise
  • Location of the business
  • The logistics required to make operations easier

You can choose a mobile processor if you want to accept payments anywhere. On the other hand, e-Commerce retailers should go for a POS or Point-of-Sale system capable of integrating transactions with Customer Relationship Management (CRM) and accounting software programs. This platform can combine online and offline sales data.

Data Security

Data security is crucial to credit card processing. Standards and risks are the same for large corporations and small stores. The vendor must have the appropriate security measures and compliance in place to prevent falling victim to cyber criminals. Some of these standards include Secure Sockets Layer or SSL; Payment Card Industry Data Security Standard; Card Verification Value; and, End-to-End Encryption.

Revenue Prerequisites

It is quite hard for a small enterprise to meet vendor obligations. Some credit card processing firms turn down applications of businesses that do not have large revenues. Look for the credit card processors that cater to start-up companies. These processing services provide customized solutions for companies of all sizes.

The fees for credit card processing vary. Budding entrepreneurs should take note of fees that usually add to transactions. These are the payment gateway fees; statement charges (from $5 to $10 per month); monthly minimum fees; transaction fees; average discount rates (percentage of sales that goes to the processor); and, address verification fee which is charged for authentication of customer’s address or details.

Once the vendor understands all the details, it is now time to find the best provider of credit card processing.

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