Choosing the right payment processing service is a critical decision for small business owners. A bad processor can lead to predatory fees that eat into your profit margins and even drive you out of business. Additionally, switching processors can result in costly penalties. So, where should you start when it’s time to find the right payment processor for your small business? Here are some SEO-optimized tips to help you make the right choice.
What is a Payment Processor?
A payment processor is responsible for handling all the technical aspects of accepting credit and debit cards from your customers or clients. They facilitate the transmission of information between your bank, the customer’s bank, and ensure that funds are available for the payment. Payment processing typically takes just seconds and includes fraud checks and accountability measures, such as handling returns and chargebacks.
5 Steps to Choosing a Payment Processor
1. Ask Yourself Questions
Before you start your search, determine what features you need for smooth payment processing. Consider whether you are an on-site swipe merchant, an e-commerce merchant, or more mobile-based. Also, estimate the volume of payments you expect to process.
2. Seek Out Recommendations
Ask other small businesses for recommendations and feedback on their processors. You can also search online for independent sites that review payment processors.
3. Investigate Equipment
If you require a credit card terminal for in-person payments, understand how this will work with different processors. Some companies offer equipment rentals, while others may offer options to purchase the equipment.
4. Read Before You Sign
Once you’ve found a processor that meets your business needs, carefully review the agreement contract. Pay attention to terms and early termination fees. Ideally, look for a month-to-month agreement with no early termination fee.
5. Demand Security
Ensure that the payment processor you choose has top-notch security features to protect your online payment transactions. Stay updated with the latest security features to mitigate risks.
Key Factors to Consider when Choosing a Payment Processor
Consider the following factors as you evaluate payment processors:
1. Available Transaction Types
Choose a processor that can handle all payment methods your small business accepts, including mobile transactions if applicable.
2. Pricing Information and Fees
Look for a payment processor that transparently displays its pricing information and offers affordable fees. Watch out for additional costs such as PCI compliance fees, chargeback fees, and monthly fees. Interchange-plus pricing models are often more affordable than flat-rate options.
3. Card Readers, Apps, and Point-of-Sale Hardware
Ensure that the payment processor offers card readers compatible with EMV, contactless, and magnetic stripe capabilities. Check compatibility with both iOS and Android for contactless mobile payments. If you need point-of-sale hardware, confirm that it is compatible with your existing system.
4. Accounting Software Integrations
Confirm that the payment processor seamlessly integrates with your accounting software, automating the inclusion of transaction data.
5. Next-Day Deposit
Minimize the time it takes for funds from transactions to reach your accounts. Look for a payment processor that offers next-day deposit or same-day deposit for a fee.
6. Contracts and Cancellation Fees
Consider the contract terms and cancellation fees associated with the payment processor. Month-to-month contracts offer flexibility, but read the terms to ensure there are no surprise fees.
7. Customer Support
Choose a payment processor that provides support during your company’s operating hours. 24/7 support is especially important for online payments and businesses that operate on weekends or across time zones.
Other Funding Options for Your Small Business
If you need additional funds for your small business, consider applying for an SBA loan. SBA loans offer low rates, long terms, and low monthly payments. Visit SmartBiz® to determine if you qualify for an SBA loan in just five minutes.
Choosing the right payment processor is crucial for small business owners. Follow these steps and consider the key factors outlined above to make an informed decision that aligns with your business needs and ensures smooth payment processing.
