Mistakes That Merchants Make When Choosing a Credit Card Processor

Mistakes That Merchants Make When Choosing a Credit Card Processor

Every business can benefit from being able to accept credit cards as people these days use them to make many of their transactions. However, choosing the right credit card processor is not exactly as easy as it sounds, and many merchants end up making costly mistakes by going with the wrong company. The following are pitfalls that people should avoid when they are deciding on a merchant account for their business.

Choosing Based on Price

Business owners are constantly trying to reduce their costs as much as they can while still getting the same quality of service. Unfortunately, the lowest prices for processing credit card payments are generally offered by smaller, less established companies. While this may seem to be fine, it pays off in the end to go with a credit card processor that has an established reputation as newer or smaller companies may not have the capabilities to keep customer information safe. This can be a very serious issue, and it may even end up with merchants being held at fault if customer data is stolen.

In addition, less established companies are much more likely to charge hidden fees, and this can make a huge difference in the amount that merchants pay every month. Going with a company that has a good reputation and has been in the field for many years will also allow people to check reviews and see what others have to say about them before signing up for service.

Not Getting the Right Features

Many people make the mistake of assuming that certain features will be included in their credit card processing agreement by default. In reality, this is often not the case, and merchants may end up having to pay extra in order to get the type of functionality that they need. Business owners should think about whether they will need to process online or mobile payments or store customer data so that they can make recurring purchases without having to give the company their information multiple times. It is always best to ask a credit card processor about this before a person signs up for one of their merchant accounts.

Not Asking About Cancellation Policies

Many of the less scrupulous credit card processors will charge exorbitant fees to cancel an account. Business owners should always be sure to ask about a company’s cancellation policies to avoid being hit with a large bill when they decide that the service is not for them.

The Need for a Mobile Swiper

Many of today’s companies are coming to find that convenience is the most important thing going. In order to compete in today’s business world, you have to do more than just be willing to take credit cards. In addition, you have to be willing to take cards on the go. Mobile swipers are all the rage today, giving business people the opportunity to take payments quicker and not be tethered to a credit card processing station. With the good security measures today that protect customers from subsequent fraud, it’s easier than ever to instill confidence in consumers with mobile swiping.

Ease and convenience

One of the best things about mobile swipers is that they allow for much more ease and convenience. No matter what kind of business you run, you can allow your staff to take payments anywhere within the business. Mobile swipers open you up to quicker processing, bringing down the wait times for your customers. This, in turn, will allow for much more turnover. Whether you are a restaurant looking to get more people in and out or you’re a store that’s trying to sell more shoes, this kind of convenience can be helpful.

Cost-effectiveness

It’s important for businesses to save as much money as possible with their credit card processing systems. If your merchant accounts cost too much, then you’ll have a difficult time providing value to customers. The nice thing about mobile swiping is that it provides a cost-effective way to process credit cards all over your business. Installing multiple credit card terminals is inefficient and costly. Mobile swiping systems cost very little and can be used with smart phones of all kinds. Now that almost every person has some form of smart phone, it is becoming much easier to use mobile swiping systems without breaking the budget for your business.

Ultimately you have a number of options when it comes time to process credit cards. You can use highly involved credit card process machines that take too long and are prone to connection problems. You might also choose mobile swipers, the popular choice for credit card processing today. These are helping businesses do more with less.

How Credit Card Swipers Have Changed in the Past Few Years

Credit card swipers have been one of the many building blocks that businesses dealing with credit card processing rely upon. They make transactions quick, convenient and, in a perfect world, secure.

The interesting fact about these swipers is that they haven’t always been so sophisticated. They had meager beginnings that allowed them to evolve into the same machines that countless parties use to act as a link between merchant accounts and consumers during the process of transactions.

Let’s explore how credit card swipers have changed before examining how they will change in the near future.

The Beginning of Credit Card Machines

When credit cards were first introduced, only the largest and most profitable companies could afford machines to process them. They require dedicated lines and large machines.

If a business didn’t have one of these swipers, they would be forced to take credit card details down and charge the card manually. This could create a bounty of problems, which is why credit cards were not accepted on a regular basis until credit card swipers became more accessible to business owners.

When credit card swipers did become accessible, they were just swipers connected to telephone lines for data transmission.

The Modern Credit Card Machine

It wasn’t until various features were added to credit cards themselves that credit card swipers began to evolve.

For example, the ability to add a pin or to verify a card’s zip code required a pad to be added to machines. Prompts that asked for cash back were another feature that simply worked its way into these machines.

To further bridge the gap between merchant accounts and the accounts of customers, credit card swipers were upgraded to allow for more compact data transmission while becoming that much more reliable. This reduced the number of duplicate transactions, which in turn made the cost of using credit card processor cheaper for business.

The Future of Credit Card Swipers

While the future is hard for anyone to predict, there are some indications as to where the future of credit card machines is headed.

With the large breaches that started with poor credit card swiper security, machines that utilize chips in cards to create unique transactions will likely become commonplace. New features that increase the safety of such machines will help both business owners and customers alike.

Another possibility is that credit card machines will move to become less reliant on the act of swiping. Cards may move to chips that need only be held within the proximity of a machine to conduct a transaction, though this technology does have a few security concerns.

The bottom line concerning credit card processing machines is that they will likely change for the better of consumers, businesses and credit card processors. This will result in more cost- and time-efficient services, which in turn will foster more business overall

Why Cash Only Businesses are a Risk to the Business Owner?

Consumers nowadays are excited about tap-and-pay mobile apps, relegating credit cards and checks to a deep cave of the wallet or purse. With that being said, more than 50% of small businesses still live in the stone age—forget mobile applications, they don’t accept credit cards period, or anything else other than cash. What are they leaving behind? Roughly $100 billion in annual sales. What does your business have to gain from obtaining a merchant account?

Increased Sales

Industry research shows that providing a form of credit card processing can increase revenue by up to 23%. Expanding your payment options also makes your products and/or services more available to current and potential customers. Furthermore, a shrinking number of consumers carry cash on hand, and an even lower number prefer to pay with it. Giving your customers another option when they don’t have cash affords them a convenience while improving your bottom line.

Faster Checkout Process

Electronically processing transactions will significantly increase the speed of your checkout line. Some credit card processing systems are almost instantaneous, depleting the time and risks associated with cash being counted and exchanging hands. Furthermore, you will get your money much faster because you won’t be forced to wait up to 90 days for checks to clear. Funds resulting from a credit or debit card transaction are often deposited into your bank account within three days. Electronic payments also improve cash flow, which leads to lower billing overhead.

Customers will Spend More

Getting a merchant account will also boost your average sale. Customers tend to spend more freely when paying with a credit or debit card than with cash or check. They are actually more likely to spend around 20% more per transaction. This increased ticket size will more than cover the small fees encountered from making this much needed investment.

Increased Credibility

Like it or not, not accepting credit cards is a red flag for new customers. Many consumers associate your ability to accept credits with your credibility as a business. Current customers will also start to spend more once you offer more convenient payment options.

A Better Customer Experience

Offering credit cards as a form of payment shows that your main goal is to service your customers any way you can and it will translate into customer retention. Furthermore, new payment technologies made possible by smartphones and other devices are on the path of rendering physical credit cards obsolete- so just imagine the future that lies ahead for cash.

Which Credit Card Types to Accept For Your Business?

When you are searching for a merchant account or credit card processing service to use for your small business, you understandably want to find the right processing service to use. Credit cards are among the most popular forms of payment among patrons in a wide range of establishments, and you may miss out on business from some of them if you only accept cash or checks as a form of payment. However, a credit card processing service can be expensive to use if the right service is not selected. Because of this, you want to make sure that you select a processing service that is highly affordable and beneficial for your company. One key factor to consider when making your selection involves which types of credit cards to accept.

Credit Cards That Your Patrons Use

There are two key components to consider when making the decision about which credit cards to accept. The first involves consumer convenience. The fact is that accepting credit cards as payment is a convenience for your patrons, so you need to consider which types of cards most of your patrons use. The majority of consumers will have at least a Visa or Mastercard in their wallet, and some will also use other credit cards like American Express, Discover and Diners Club. If your company only does a small amount of business, the number of consumers who wish to pay with a Diners Club card or another related card may be minimal, and it may not be worth your effort to accept this. If you process a larger number of transactions, accepting additional types of credit cards may be financially feasible.

Service Fees

Another factor to consider involves the service fees for the different types of accounts. Each merchant processing service has different fees, and you may find that those that accept only Visa and Mastercard are more affordable than those that accept American Express and other types of credit cards. It is important to weigh the pros and cons of each processing service before making a decision that is best for your business.

If you are comparing credit card processing or merchant accounts services today, it is imperative that you also consider the types of credit cards that you will accept. These two factors go hand in hand. Your main goal should be to find a cost-effective service that provides the convenience of credit card payments to your customers.

Do You Need a Terminal or a Virtual Gateway?

Determining the best way to process your customer’s credit cards can be difficult. There are hundreds of processing companies, but really only two methods; via terminal and via virtual gateway. Picking which method is right for your business is one of the first steps to determining how you will process your customer’s credit cards.

Of course, the first step to solving this problem is understand what each method is. Terminal processing is the traditional method that many established brick and mortar stores use to accept credit cards. This method involves having a terminal or “swipe machine” installed at each registar in your business. As customers come in and make purchases, they simply swipe their card and the transaction is processed over a phone line.

Virtual gateway is a way of processing credit cards without a terminal. Most commonly, cards are swiped or the credit card number is entered into a computer program or mobile app. From here, the transaction is processed over the internet.

There are advantages and disadvantages to both methods. Terminals have been used for decades and are very familiar to a lot of consumers, making them very easy to use. They are ideal for high-volume businesses that are comfortable having a credit card reader permanently installed on their premises. They are unable to be moved, however, making it possible to process credit cards only at the location that the terminal is located.

For this reason, many businesses that perform services in multiple locations or who make sales outside of a single location like the flexibility that virtual gateway processing gives them. This method allows employees to process credit cards anywhere that they can get an internet connection. This means that a lawn service company can accept credit cards for services immediately after doing the work; they don’t have to wait for a check to clear the bank or the customer to come to the shop to pay the bill.

Of course, some customers have questions about the security of virtual gateways. Because it is a new technology, this is to be expected, but these transactions are just as safe as terminal transactions. In fact, many programs for virtual terminals are more secure than terminal processing.

Deciding When to Hire a Firm to Audit Your Financials

For a business of any size, maintaining accurate financial records is very important. All businesses should be organized enough to generate a current and accurate income statement, balance sheet, or cash flow statement at a moment’s notice. While most companies are able to do their own accounting, it would be a good idea for a company to have a full audit completed at some point. There are several situations in particular when it would be a good idea to hire a firm to audit your financial records.

The first situation when you should hire a firm to audit your financial records is when you are looking to potentially sell the company or find additional investors. When looking to sell or get new capital, the buyer or investors will base their decisions largely on your historical financial performance. Having an audit completed will ensure that you have a clear and accurate picture of what your recent income statements have reported and that your balance sheet is cleaned up and accurate. Having an audit prepared to show the potential buyer or investor will also give them comfort that the financial statements that you are preparing are accurate and properly prepared.

Another situation when you should consider hiring an outside accounting firm to audit your financials is when you are looking to hire a credit card processing firm to handle your merchant accounts. When you have merchant accounts through a credit card processing company, the company will be ultimately extending you a line of credit which normally ensures that you get paid from the credit card processor before they are paid by your customer. Since the merchant account provider will be taking on some risk, they will want to ensure that you are financially solvent.

If you are considering taking out a loan from a bank, you will also want to have an outside firm complete an audit of your financial records. Similar to investors and buyers wanting to review your financial records, most banks will want the highest quality financial statements to analyze before they make a decision based on whether or not they can provide you with a loan.

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