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How to Find the Best Credit Card Processing for Small Business

December 13, 2019 / Posted in Credit Cards

Whether you are just starting or you already have a few years of work experience behind you, it is not easy to find the best credit card processing for a small business. Are you lost among the vast number of online reviews and recommendations that are confusing and do not seem genuine? You do not know how to find the right merchant service that will benefit both you and your clients? Do not worry – we are here to help.

It is important to mention at the very beginning that what is great for everyone else does not necessarily have to be the right fit for your niche or field of business. Also, going for the most popular or first thing you find on Google is so easy and promising, but it may not be the best solution.

Finding a reliable partner company that will provide payment processing requires a bit of time and research because there are many companies offering various terms, contracts, services, and prices. And you want nothing but the stellar service for your enterprise and your clients, right?

It is a dilemma that all owners of smaller companies have at some point. They are aware that they should only benefit from it, but at the same time, they are afraid of hidden costs and long-term contracts. Although it seems like a risky situation, it is nothing like that. And we are going to provide you with all the information, so you do not feel lost once you decide to take this next step.

Rules for Choosing the Best Credit Card Processing for a Small Business

Although there are no mandatory things you need to do, or rules to follow, we prefer using the term “rules” just because people take things more seriously when they are marked as rules, instead of recommendations or tips. It is up to you to obey or disobey them, but we find them extremely important because with these things, people tend to get disappointed easily, or afraid that someone may trick them again.

1. The Best Credit Card Processing Services Are Transparent

Many entrepreneurs believe that all merchant service providers that offer payment processors have some kind of a hidden agenda against them, to trick them into paying more. And it is not a secret that some companies deserve this bad reputation, but not all of them are like that. A company that has nothing to hide will be extremely transparent and clear about fees and terms. It is essential to understand and be able to tell the difference between fixed costs, which are determined by Visa or Mastercard in most cases, and the markup, or costs of pass-through.

2. A Merchant Should Always Seek Value

Regardless of your business philosophy, there are some things you should not compromise on. If you want to keep your clients and build a trustworthy relationship with them, then you have to put their safety and needs in the first place. By that, we mean that you need a reliable partner who will provide secure payment services. Cheap offers are tempting, but they usually offer only the barebone service. Of course, your budget plays a role as well, but just keep in mind that the cheapest option is usually not the best one.

 3. Carefully Read the Contract

If you are not sure about the contract terms, it is better to consult someone, for example, a lawyer before you sign anything. You should not feel pressured to sign anything, but if you do, take it as a red flag. Another thing is that you should avoid long-term contracts. You do not have to commit to one company for years, and you should have the freedom to move on if you are not satisfied, or you have found a better merchant service provider. It used to be a standard to sign 3-year contracts, but not anymore.

Three Different Models of Payments

You should know that there are three types or models of pricing for processing plastic money, and they all come with their pros and cons. Most smaller businesses go for interchange-plus, but on the other hand, processors will always try to sell a tiered model of payments because that way, they will make more money.

  • Tiered pricing is probably not so transparent as the other two types. It combines assessment fees, interchange rates, and markups, by sorting them out in tiers. However, it does not disclose which rates go to which tier, that is up to every processor, so merchants do not really know how much are they (over)paying the processor. However, this may be a good choice if most of your customers use debit cards.
  • Interchange-Plus is particularly suitable for smaller companies. Markups are separated from interchange and assessments, and you can see the processors markup, so it is all very transparent. Also, the markup stays the same regardless of the type of plastic your clients use.
  • Flat Rate is a very straightforward model. Processors who offer it will charge you a fixed percentage for every sale. It is the same for all types of cards, but they are usually slightly higher than the costs in the other two models. It is also a great option for businesses with lower monthly volume.

Additional Tips for Finding The Right Company (Even If You Are Not Tech-Savvy)

We are aware that running smaller businesses can be harder than running a large company because you often do not have enough people, you have to do all by yourself, you are always on a tight budget, etc. If all this is new to you, and you feel a bit lost, here are some extra tips for getting around.

Get to Know The Basics

Before you start negotiating about pricing, you have to know the basics. Some things, like areas of cost, are general, and they cannot be changed. Hence we differentiate interchange and assessments. The bottom line is that we all want to find the right partner and avoid any misunderstandings. Since these terms might be new to you, here is a brief introduction to some frequent terms.

  • Interchange. Interchange rates do not depend upon processors but on the card-issuing and processing banks, and they are non-negotiable.
  • Assessments. Assessments are also non-negotiable fees and rates issued by Visa or Mastercard, so the rates may vary from one brand to another. However, every processor will pay the same amount.
  • Markup. The part which is negotiable is the markup, and this can vary from one processing company to another, but it also depends on the type of your business and negotiation skills.

It is essential to understand these things because, for example, a company can claim that they offer lower interchange rates than others, which simply cannot be true because every processor pays the same. Also, a company can post a chart with interchange prices, but be aware that those are not the only costs you will have to pay to them.

Think Big

Owners of smaller businesses are sometimes very humble, unaware of their potential, or how competitive market works. But if you want to become successful in negotiating and get the lowest fees and excellent terms, you have to think, speak, and act like you are running something much bigger.

Volume is Negotiable

Another myth is that businesses need to acquire a high level of monthly sales volume to get affordable pricing. Perhaps you are not earning a ton of money now, but in a month or two, who knows, so do not let them eat you for breakfast with their high rates. Competitive pricing can be negotiated even when you are getting a few thousand per month in plastic money.

What Type of Payments and Services Do You Need

In general, the company which provides the service for you should allow you to accept all credit cards, or at least from all major associations because otherwise, you are losing profit and customers. See if they have EMV-compliant card readers, it will keep you safe from fraud, and you would not be liable in case of a security breach. Also, make sure you have 24/7 available customer support.

The Bottom Line

When running a small business, customer services and customer care should be high on the list of your priorities as a merchant because you need every single customer and their feedback matters. Whether you run a hairdresser salon, mechanic shop, family restaurant, customers today do not hesitate to leave a negative review just because you do not accept plastic money. And one bad review can cost you much more than a fee for using a POS terminal. Let’s face it, cashless payment methods are almost mandatory nowadays, and smaller companies can only benefit from implementing them. Nonetheless, they should have all the facts straight when picking a company to provide them with card processing.


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