The fine print on personal credit cards can drive a person crazy, and the language for accepting credit cards for your business isn't any different. While you don't need to be a contract lawyer to understand the terms and conditions from your credit card processor, you do have to thoroughly read the contract so you understand how it (and the processor) will affect your business and its bottom line.
From confusing credit card processing rates to lengthy service contracts and complicated compliance issues, accepting plastic as a payment method leaves some small business owners' heads spinning. To help you make sense of it all, here are some of the most confusing things about accepting credit cards and how to make the process simpler.
Pricing Models
Credit card processing pricing also often confuses business owners because of the many different pricing models.
There are several different pricing methods, but the two most popular are tiered pricing and interchange plus. In tiered pricing, merchants qualify for different vendor-determined rates, while interchange plus uses rates set by the credit card brand, such as Visa and MasterCard.
Interchange plus is a much more transparent model of pricing, but it also leads to more confusion if the business owner does not understand what the pricing entails. Businesses should determine the type of pricing credit card processors offer and whether they can afford those fees, given their cash flow and their customer base. Business owners should get as much specific information as possible about the processor's rates to avoid surprises later on.
Contract Terms
No one likes to read lengthy contracts, but it's a necessary evil of doing business. It's also one of the most important and confusing aspects of signing up with a credit card processor. Failure to completely understand your service contract could lead to some unpleasant surprises.
These contracts can be very long, so unless the business owner takes the time to read through every line, they may be caught by surprise.
There is really no regulation to be an agent for a merchant service provider, so there are agents out there telling a small business owner what they want to hear rather than speaking with knowledge and integrity. By not reading contracts themselves, business owners risk the shock and hindrance imposed by hidden fees and service limitations. In particular, businesses should ask how long a contract lasts and whether they are leasing the equipment. Watch out for fees, including early termination, annual, setup, monthly, monthly minimum and Payment Card Industry (PCI) compliance fees.
PCI Compliance
Credit card processing security is no joke. Failure to protect customers' data won't just harm a business's reputation, it can cost the company significantly in terms of government and banking fines, lawsuits, and more. One area of confusion for business owners is PCI compliance, which consists of a set of credit card processing security standards.
The problem is that business owners either trust or don't know enough about security, so they don't verify whether their credit card processor is compliant or not.
Verify PCI compliance with the processor you are considering using.
As with pricing and fees, the best way to prevent any confusion is to ask questions. Business owners should find out from vendors if their terminal and software are in fact PCI-compliant.
E-Commerce Capability
Technology lets merchants conduct business anytime and anywhere – both a blessing and a curse. This ability creates several types of confusion for processing credit cards. This is because not all credit card processors are compatible with different merchant services.
Some business owners need to know that their merchant account will work seamlessly across all sales channels like retail, e-commerce and mobile. It can get confusing trying to make sure all channels can play well with each other.
This is particularly the case with accepting credit card payments at self-hosted online stores.
Until recently, accepting credit cards for online payments has been a surprisingly complicated and painful process.
It required setting up a merchant account with a bank, signing up with a payment gateway and then using any number of payment software solutions to integrate with your software
meant multiple applications, fees and accounts just to get set up.
Looking for the right credit card processor for your business?
We would love to help you.
Call Lauren Duane or Melanie Golomb, our Business Deposit Team,
to find out more.
570-752-3671 Ext. 8506
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