Expert Tips: 10 Questions to Ask Your Credit Card Processor
Published: November 27, 2023
Credit card processing is the lifeblood of modern businesses, allowing them to accept electronic payments easily. Choosing the right payment processor is critical, whether you own a small or large business. It's not just about easy transactions; it's a critical step that can significantly impact your organization's financial performance.
To make the best decision, you must first grasp how payment processing works. When speaking with potential providers, you must ask the appropriate questions. This isn't just about having things operate smoothly; it's also about laying the groundwork for your company's financial success.
Choosing the proper credit card processing partner is like making a wise investment in the efficiency and growth of your organization. It's significant in today's environment, where electronic payments keep firms running. This blog article will list the top 10 questions to ask your potential provider before hiring them.
What Is Credit Card Processing?
Payment processing may seem simple at first glance. A customer walks into a business and swipes or types in their credit or debit card. However, payment processing involves a set of steps to enable money to move from a customer's card to a merchant's account. This transaction has four steps: permission, batching, clearing, and payment. Several parties are also involved in the process, such as the merchant, cardholder, issuing bank, and acquiring bank.
The 10 Questions to Ask Your Credit Card Processor
When comparing credit card processing companies, there is a list of things you should ask before signing on. Not every payment processor is in your organization's best interests, and if you're not careful, you might wind up sacrificing critical services, overspending, or even being cheated.
Ask the following questions before employing a merchant services provider.
1. What are the credit card processing fees?
Understanding the fees associated with credit card processing is paramount. Most providers charge a combination of interchange rates (paid to card-issuing banks), assessment fees (for card networks like Visa or Mastercard), and a markup by the processing company. Additionally, inquire about potential variations in fees based on factors such as the type of card used and transaction methods, be they in-store, online, or through mobile channels.
We recommend choosing a payment processor that provides a surcharge program. This program allows the payment processor to absorb the interchange fees charged by the credit card network. However, please note that this program does not apply to prepaid or debit card transactions or payments made by customers from Connecticut, Massachusetts, or Puerto Rico.
This clarity prevents unexpected charges from catching you off guard and enables better financial planning. Different payment processors employ various pricing methods. The three primary price systems are flat-rate, subscription, and tiered pricing.
2. Are there any hidden fees?
Hidden fees can be the bane of a merchant's existence. Scrutinize the fine print and ask pointedly about any potential additional fees that might not be immediately apparent. Examples include monthly minimums, gateways, refunds, or setup fees. Clear communication ensures you understand the actual cost of credit card processing.
Other processing expenses to be aware of besides transaction fees are compliance, chargeback, statement, cancellation, and gateway access fees. Not every supplier adds these fees, and some aren’t always upfront if they do, so ask questions.
Interchange fees set by credit card companies are non-negotiable, but additional fees might be negotiable if discussed with sales representatives.
3. Is there a contract, and what are the terms?
Some credit card processors require merchants to sign long-term contracts, which may involve early termination fees if you decide to switch providers. Understanding the contract terms, including the length and any associated penalties, is crucial for budgeting and flexibility.
Before signing a contract, reviewing its duration and termination policies is important. Consider the difficulty and cost associated with terminating the contract before its end. If the cancellation fee is reasonable, it may not be an obstacle.
4. What security measures are in place?
In this day and age of electronic transactions, safety is paramount. Inquire about your potential provider's security standard measures to safeguard your business and customer data. This includes encryption protocols, adherence to PCI compliance standards, EMV compliance, and additional security features.
For example, if you intend to sell online, you should ensure that the processor offers SSL certificates and CVV2 verification. A robust security framework protects your business from potential threats and enhances customer trust in payment processes. You'll need this protection, especially if you own a small business.
5. How long does it take to set up the system?
Time is money, and a lengthy setup process can disrupt your business operations. Ask about the timeline for setting up the payment processing system, including installing hardware (if applicable) and activating online or mobile processing capabilities.
6. What customer support is available?
It's important to know how to contact customer support and what level of support they can provide, including response times. This is particularly important when dealing with technical issues that could affect your ability to accept payments.
Talk to the potential providers to find out how they treat potential customers and deal with customer service issues. You should also contact current or former customers and read online reviews to see how they treat the businesses they work with.
7. Can I accept international payments?
If you run a business that operates globally or plan to expand internationally, your payment processing provider must support international transactions. Make sure to ask about currency conversion fees, processing rates for international cards, and the provider's ability to handle transactions from around the world.
8. What integration options are available?
Integration with your existing systems is essential for a seamless payment process. Whether using a point-of-sale (POS) system, an e-commerce platform, or a mobile app, ask the provider about the integration options available. Compatibility with your existing tools can streamline operations and enhance efficiency.
Additionally, ask about the credit card reader they provide; Square, for example, offers a free magnetic stripe card reader and a solution that requires only your iPhone for tap-to-pay transactions. Other service providers could charge you for an EMV chip and a contactless reader. The card reader and app fees are added to the entire service cost.
9. How often are funds deposited?
Cash flow is crucial for businesses of all sizes. Clarify how often the credit card processing provider will deposit funds into your merchant account. Some providers offer daily deposits, while others may follow a weekly or monthly schedule.
When selecting a merchant services provider, ensure that their transfer times meet this standard; you don't want to be trapped with long waits when you need your money. In addition, specific payment processors may require you to deposit payments into a designated account. If you prefer, ask whether you can use a bank account of your choosing.
10. What happens in the event of a dispute?
Credit card disputes can arise for various reasons, including chargebacks or discrepancies. Understand the provider's dispute resolution process, including the documentation required and any associated fees. A transparent and efficient dispute resolution mechanism is essential to protecting your business interests.
Choosing a credit card processing company is a crucial choice that directly influences your organization's financial health and consumer satisfaction. You can make a responsible selection that meets your company's needs by knowing the mechanics of credit card processing and asking the correct questions.
In summary, prioritize transparency when it comes to fees and contractual obligations. Ensure that the provider's security measures meet industry standards, and consider the flexibility and efficiency of their setup process. Responsive customer support and a straightforward dispute-resolution process are invaluable during both smooth operations and challenging times.
Remember, your choice of a credit card processing provider is not just a transaction but a partnership that influences your day-to-day operations. With careful consideration and the right questions, you can navigate the payment processing landscape and empower your business for financial success.
Discover the ideal credit card processor for your business with our expert comparison, review, and blog pages. Benefit from the most reliable and secure payment processing services on the market today.