Tips for Finding the Best Credit Card Processing Rates

Merchant Warehouse |

December 7, 2010

Try finding a bargain for the lowest credit card processing rates amongst the many competing merchant service providers and you might just have a little trouble seeing the forest for the trees. The big picture of credit card processing for merchants needs to be seen before you can make sense of the flashy, attractive processing rates and account services that a potential service provider might offer to new clients like you to open an account.

It can be a little tough, however, to compare all of the different merchant service providers operating in the market today. There is a seeming labyrinth of processing fess, operational charges and complex billing structures that make it a tricky course to follow when shopping around for a merchant account provider for your particular business. In the end, you have to be happy with the services that your provider will give you but, more importantly, you have to be able to afford the rates that they charge.

Be Persistent

It is always good to look around and reach further than you are used to doing while shopping for a merchant services provider. Reach further than your personal bank or friend’s recommendation. Start by finding at least a half-dozen of the most reputable merchant service providers in your area. These institutions can include credit unions or even online banking companies that may easily sign you up for a merchant account.

In order to sign up for an account, there is an approval procedure, standard in the industry, which you will follow. In order to process your merchant service application, a few of the following things must be in order to you to ultimately be approved. Your company must have a clear, concise and reasonable business plan that identifies who you are, what you understand about the business that you have entered and what you intend to do in order to not only survive, but flourish. The bank wants to make sure that you understand what you are doing and have a clear enough plan to be able to pay them adequately for the important services that they’ll be providing you, services that sustain your business.

Furthermore, account providers and affiliated financial institutions are also keen on taking on a client with a clean credit history, one that has borrowed wisely and paid back its loans completely and on time. They also need you to prove that your business will be able to pay all of the charges related to your merchant account for the long haul, even when the chips are down and business falls off during slower times of the year.

Research and More Research

Another important thing to do that will help you and your company greatly is to research the pros and cons of the fee structures charged by each of your prospective merchant service companies. There are several merchant service providers out there who fail to completely disclose their terms and conditions until you actually have signed up for the account itself. So what you should do is ask them for a copy of their terms and conditions right away. Then you are able to understand just how much it will cost you to sustain that merchant service account. Make certain that you totally comprehend the service provider terms and conditions before committing to that company.

There are a few things that you’ll want to be wary of. The first thing is something known as a variable or introductory discount rate. The discount rate is one of the most significant numbers on your monthly statement and is the deciding factor as to what you will pay to accept credit cards in your business. Be absolutely certain that your discount rate is a constant, not a variable that changes over the course of time. If the discount rate is made on a sliding scale and can be altered, with or without notification, then do not go with this service provider. Also, beware of what service charges you can actually cancel, in the event you don’t later need the service offered. If there is a charge to cancel these services, find out about the agreement term and other important details.

Be Cautious

In the event that you are offered free or substantially discounted merchant service equipment from your service provider – such as credit card processing terminals – be sure to find out what their return policies are. If you are given refurbished equipment, you may pay little or nothing if your terminal is damaged for any reason, however, if your equipment is brand new and must be returned because of merchant error, then you may pay full market value for such items.

With all of that in mind, now it is time to shop around for the very best credit card service rates available. The options are abundant. Good pricing plans and many incentives are available for setting up a merchant bank account. Many of these incentives are specific to your industry and will work best for you, so find out which one suits you and your operations. Some companies waive the installation fee, but others have a single overall fee and throw in other miscellaneous fees at no charge at all. Every merchant service provider charges a discount rate that ranges from one to five percent on up, based on the type of account that you have. A normal transaction fee, that ranges from five cents up to thirty cents, is normally also included, though can be waived or replaced by a flat fee, depending on the size and volume of sales that you make.

If you want to land the very best deal on credit card processing rates, you will, of course, have to do your homework. Thoroughly search for the least expensive terms and conditions. Of course, also make certain that the merchant service company has a very good reputation. As a merchant, you certainly don’t want to become locked in with a company that lacks in the customer service department, particularly when your money, reputation and business is on the line.

Don’t Hurry or Worry

You have to make many considerations when looking for a good merchant services company. These things include the average number of credit card sales transactions that you have per month, your average profit margin, your average order size and the number of times that your company will be taking credit cards from your customers instead of other forms of payment. Of course, retail businesses with a great deal of sales volume will focus on lowering their discount rates and per-transaction fees as much as possible above their monthly fees. On the other hand, small businesses with a significantly larger order size, but smaller transaction volume, are able to be a bit more flexible with the discount rate and transaction fees and instead focus primarily on lowering their monthly minimum fees.

So, look around, do careful research and talk about merchant service providers and good credit card rates with your business peers in your industry. Be sure to contrast their opinions with the research you’ve done into your prospective merchant providers. Taking credit cards should be a choice that ultimately helps you make money above spending it on the services that support your business.