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Choosing the best merchant processor for your business

Choosing the best merchant processor for your business

An essential part of any business is getting paid. Whether your company accepts payments online, in person or over the phone, you need a financial partner to process the non-cash transactions.

This partner – typically known as a merchant processor – serves as the link between your business and banks, card issuers and card networks. With many options to choose from, your challenge is to find the one that best meets YOUR business needs. As with any major financial decision, it’s wise to compare your options. Here are some questions to consider.

What types of payment does the processor accept?
You probably don’t want to turn away a paying customer. That’s why your business will likely prefer a payments processor that accepts all major credit and debit cards, as well as prepaid and gift cards, electronic benefit transfers (EBT) and contactless payments, such as Apple Pay.

What will it cost?
Merchant processor fees can vary depending on volume of transactions and amount of revenue generated, as well as the payment method, equipment costs and fraud risk, among other factors. Purchases made from an online shopping cart often carry greater fees, for example, because you – the merchant – cannot see the actual card, heightening the risk of fraud.

Take time to understand your processor’s fee structure; a company that promises the lowest rates may have hidden fees or limited service capabilities. Choose a credit card processor whose fees align with your business volume and projected growth. Common fees include:

  • Interchange fees: This is the fee paid by the merchant processer to the bank that issues the credit or debit card. It typically ranges from 2% to 3% of the transaction.
  • Application and setup fees: You may be charged a fee to apply for the service or set up the equipment needed to accept credit cards.
  • Monthly minimum fee: Some companies charge a minimum fee if your card transactions fall below this threshold.
  • Early termination fee: If you cancel your contract early, you may be responsible for a few hundred to thousands of dollars, depending on your contract.
Does the process use the most secure processing technology?
Most new credit cards feature EMV chip technology, which helps protect your business from fraud. Not all point-of-sale credit card equipment, however, is updated to accept payments via the chip. Also consider the tech-savviness of your customers. If they are part of the mobile payment revolution, you might choose a payments processor with the technology to accept digital wallets.

What other security features should I look for?
Some processing systems are more secure than others. When comparing options, look for those that comply with:
  • PCI DSS (Payment Card Industry Data Security Standard) regulations, which stipulate that a merchant's payment ecosystem must be inventoried, documented and secured.
  • SSL certificates and CVV2 verification – processors must support these card features if selling products online.
  • P2P encryption—this security feature protects consumers by encrypting data transmissions at every stage.
How is the customer support?
No-frills service may cost less if you never need customer support. But most businesses do. Credit card machines malfunction. Online purchases may trigger questions. System downtime can translate into lost revenue. For peace-of-mind, look for merchant processors that offer in-house support.

The bottom line:
The time and money you spend researching the right processor will be far less than the extra surcharges and fees that you might incur if you don’t do your homework. Look for a good value, which includes reasonable cost, options that address your needs, strong security and excellent customer support.

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