Stop Losing Sales! Understanding Credit Card Processing And Merchant Accounts

The more payment options you offer your customers, the more you increase your chances of making a sale. Larger purchases of goods and services very often take the form of credit cards. Being able to accept credit card payments will put more clients within your reach, and thereby cause your business to grow. There are many different credit card processing services available to choose from. Here are some essential elements of electronic payment processing that will help you make the best decision on which credit card processing company to select.

Average Approval Rating
This is a percentage based rating that reflects how many business applicants get accepted for credit card processing by a given company. The speed and fee of the application are also taken into account. Good processing services typically show high approval ratings. However, just as it's important for merchants to really check out different processing companies, merchants are often surprised to learn that this scrutiny goes both ways . Credit card processing companies can investigate the personal credit history of the applicant. This is understandable when you consider that setting up a merchant account is similar to taking out a loan. In the event a customer disputes a charge, credit card processing service must reimburse the customers bank and then turn to the business owner for the charged back money. If the small business owner has a low credit rating, then statistically the processing company has a lower chance of being reimbursed. As a result, business owner's personal credit is a factor in being approved for credit card processing services. So as a general rule, providers with high Average Approval Ratings are the best services to try first.

Fees
When a credit card is swiped, the transaction gets relayed to the credit card company, which then transfers the funds into the merchant's account. This is a great, convenient service that enables a high volume of transactions to execute quickly and efficiently. Your credit card processor is the intermediary between the customer's credit card bank and your own bank account. This is a substantial service that they perform, shielding the merchant from the complexities of secure electronic fund transfers. Like all services, this comes with fees attached. Too often these fees are bunched together so it's unclear which core services you're actually paying for. Let's get all these items out in the open.

Gateway Fees
This is fee for using a secure server such as http://Authorize.net to approve and process transactions. Depending on arrangements with the payment gateway processor, your credit card merchant account may include gateway processing fees as a separate line item or as part of the monthly processing fee.

Discount Rate
A credit card processing fee charged to process each transaction, based on a percentage of the transaction's dollar amount. The rate is based on risk associated with the transaction and will likely be different for each type of credit card transaction you process. An online transaction processing fee, for example, is generally a higher discount rate than the in-person retail rate because the associated risks are higher. Look for credit card processors that have a low discount rate.

Fixed transaction fees
In addition to the discount rate, flat fees you pay for every credit card transaction processed. Look for transaction fees below 20 cents.

Monthly Minimums
This is a "floor" on the amount of credit card processing fees you pay for your merchant account and applies if other fees total less than the minimum.

Cancellation Penalties. Additional processing fees if you cancel your merchant account.

Chargebacks / Reversal Fees
Additional credit card processing fees if your buyer protests a charge and it is subsequently reversed and/or if a transaction is reversed for other reasons.

This might seem like a lot for a small business owner to take on. But every week, hundreds of small businesses across the country set up credit card processing services after doing a cost-benefit analysis and realizing that in the long run, the benefits of credit card processing - increased client volume and higher per-ticket sales - far outweigh the expenses attached. Hopefully, this information will present a clearer picture for those considering this type of business upgrade.