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How to Evaluate Credit Card Processing Companies
Having difficulty finding and choosing a bank or financial organization to process charge card sales for you? You're not alone. Although there are a number of financial services now offer merchant accounts tohomebased, mail order and Internet businesses, finding the right one for your small business is still a difficult task, fraught with many pitfalls, both before and after you get the account. For starters, many banks won't offer merchant accounts directly to small businesses, nor are they in the business of credit card processing. Instead, the banks use a third party provider to secure a merchant account for you and often pay higher rates than if you went directly to a Merchant Service Provider likeElite Merchant Systems. To complicate matters, if you are processing orders online, there are severalonline gateway systemsto process credit cards. Whatever shopping cart software you choose has to interface with these gateways. Not all shopping carts work out of the box with all gateways. Thus you need to be sure the shopping cart you plan on using will work with the merchant card you choose. Rates and feesMany factors can influence the discount rate and other fees you pay for the privilege of accepting charge cards:The length of time you have been in businessThe percentage of your sales that are made over the phone or the InternetThe type of business you are inThe number of years you've been in businessYour personal credit ratingThe average dollar amount of each sales transactionThe total dollar amount of sales per month.Service fees tacked on by the third party providers, your bank or by their sales people, can also add to your costs. It is best to choose awholesale credit card companythat gets their rates directly from Visa and masterCard. Typically, however, discounts rates ranged from 2.25 to 3 percent for home and small businesses that accept mail order and phone orders. For retail businesses, their rates can range from 1.75 to over 2 percent. Plus, an additional transaction fee of 20 cents and more for every credit card transaction. Find out how to get the lowest rates in the industry of 1.59% and .19 cents per transaction. Call to see if you qualify for 1.5%! Some companies were charging as much as 5 percent discount rate. While poor personal credit or the type of business you run might possibly cause you to have to pay that much, do not agree to such a high a discount rate until you have personally determined that no other company will process your charges at a lower rate. Even though banks in many parts of the country still don't want to deal with home and small business merchant accounts, it is not as difficult as it once was for new, home mail order businesses to get merchant status - at least not if the owners have good personal credit and aren't "adult" products or services. Some companies advertise discount fees less than 2 percent. Usually these lower fees are for swiped transactions (sales made by running the customer's credit card through a machine). Therefore, in comparing processors, be sure to find out what all of the fees will be. Compare not only the application fees and the discount rate, but also the initial cost of equipment, transaction fees (the fee you pay on top of the discount for each transaction you process), monthly minimums, voice verification charges, address verification (if extra) fees, monthly statement fees, and any other costs you will incur. A difference of 10 cents on the transaction fee is equivalent to a one-half a percent on the discount rate if your average sale is $20. Some companies require you to maintain an account in their bank in order to process cards. Read all such agreements closely to determine under what circumstances the bank can put a hold on your account, and how much of the account it can hold back. Find out how often you can withdraw money from such accounts, and check with your own local bank to find out how long it will take to clear checks drawn on the merchant bank. Pay close attention to the cost of equipment or software for processing the charges, too. Identical software and comparable hardware varies in price by as much as $600 or more depending on who you use purchase it from. Many companies also offer free credit card terminals! If at all possibledo not lease equipment or software.Buy it at the start. By leasing it you often set yourself up for three or four years of noncancellable lease payments and wind up paying thousands of dollars more than necessary. Be sure to read ALL applications forms and contracts mailed to you carefully. Read all of the small print. Several companies will charge you if you want to stop processing charges through them in less than two to three years. That cancellation fee is separate from any noncancellable lease clauses for equipment. If you are planning to sell via mail order, look for information on the application form and contract about the percent of transactions you can process as phone orders (non-swiped). What the salesman says on the phone may NOT be what the application actually says. If there's a dispute, what will stand up is what is on the printed contract you get, not what you say the salesman told you. Check to see under what conditions the company can terminate your account, and, whether there are monthly minimums or maximums. The Application Process: What to ExpectSome companies will want the right to send a representative to your place of business (including your home if that's where you do business) to take a photo of your office. This is to verify that you are at the location you say you are. Some will accept a photo of your office instead of the onsite visit. Depending on which company you are dealing with, you may have to provide any or all of the following: copy of your business license or certificate of doing business (dba); profit and loss statements; copies of previous years' tax returns; photo of your office. All will require two-way access to a your bank account if you are accepted. This allows them to deposit funds into your account and also allows them to withdraw them if there are charge backs. ...read more
By Elite Merchant Systems August 14, 2009
Small Businesses Dissatisfied with Credit Card Processors
New survey shows small businesses are dissatisfied with their credit card processing arrangements. The results of the survey indicates many small businesses have little trust or loyalty to their credit card processor (also known as a merchant account provider). Major findings of the survey include: • 33% of respondents say they have “Very Little” loyalty to their credit card processor / merchant account provider • 25% reported having “Little” loyalty, while 26% reporting “Some” • Only 16% report having “Lots” of loyalty to their credit card processor • 40% would require less than $50 / month savings to switch to another processor / merchant account provider The respondents of the survey indicated as reasons for their dissatisfaction: “hidden costs and fees”, “high costs”, “poor customer service” and “unforeseen rate increases”. The survey was drawn from a MarketTools / Zoomerang random sample of small business owners and was completed by 283 respondents. Respondents included a wide sample of small businesses, including those ranging in size from 1 to 40 employees, those focused on selling to consumers as well as those selling to other businesses, and those providing products and services on the internet as well as those providing products and services in person and multi-channel businesses. Quote, attributable to John Kline,Elite Merchant Systems:“It’s not surprising that small businesses are not loyal to their credit card processors because most business owners perceive credit card processing as a commodity. Additionally, there is a lot of confusion over the pricing, hidden fees and type of cards and fees associated with them, which can be frustrating.” About Elite Merchant Systems Elite Merchant Systems is a family owned business with over 125,000 satisfied clients. With our industry exclusiveguarantee (If we can't beat your rates and save you money, we'll give you $500), we have been able to save most companies at least 30% on their currentprocessing fees. We explain every type of credit card, the fees associated with them and provide them with money-saving ideas when a customer uses a credit card for payment. There will be no hidden fees......EVER! With our 24/7 customer service, we are pleased to assist with any questions you may have while processing with us. John KlineElite Merchant Systems(888) EMS - 7551 John@EliteMerchantSystems.comhttp://EliteMerchantSystems.com ...read more
By Elite Merchant Systems March 07, 2009
Read The Latest Newsletter from Elite Merchant Systems
We've just published a new edition of our newsletter! You can check it out on our website and get the latest information from Elite Merchant Systems. Let us know what you think! Read It Now Here ...read more
By Elite Merchant Systems March 05, 2009