February 15, 2012
You’re a business owner and you realize that you need to accept credit cards for payment on your website. Your business might be a new venture, you have an existing business and now see the need to accept credit cards, or you want to move beyond PayPal type service. Many business owners do not spend the time they should to look into the service, only to find out later there are many issues that they either did not know about or now cannot change. Here are a few questions you should ask and information you should know, before signing up with a credit card processor.
Most credit card processors have a three year contract, but some are now moving towards a 1 year or month to month. This contract length is an important issue to understand before signing up with a service. If you sell your business, want to change processing companies or even have to close your business before the contract is up, many processors could charge your business a cancellation fee ranging from $100 to $1000 depending on their requirements. Make copies of the contract for your records.
Understand your charges
Credit card rates will vary depending on the brand and type of card you take using your ecommerce processing on your website. Many credit card processors promise the low rates, trying to catch an owner’s attention then fail to mention the other fees. Credit card processors usually have what is called mid-qualified and non-qualified charges that will charge an additional percentage on top of the starting rate. You should ask for all the rates that will pertain to you in every situation and card type, along with the transaction fee and monthly charge.
Flexibility of rates
As a business owner check to make sure you can review and have the ability to make changes to your rates annually with the credit card processor you sign up with. Credit card rates change and your business will change within a year or two, so you want to make sure the company you use has the ability to help you.
Find out who you will talk to once your credit card service is set up. You will have questions and need help at some point after you are using the service. If a processing company has local personal service this is always the best. At the very least make sure the credit card processor you use has a 24/7 help desk to call.
Depositing funds into your account
Check with the company you are using to see where the funds will be deposited when you make a sale. Unless your sales are very minimal, look for a processing company that deposits funds into your bank account and not their bank account like a PayPal. Normal deposit time for monies hitting your account should be two business days. When using a company that deposits funds into their own bank account this slows up your ability to get paid for your product, and give that company the ability to hold your money if they choose to.
Gateway for your website
Using a gateway will allow your customers to stay on your website throughout the buying cycle. What this means is your customer will be able to stay on your website when they click the purchase button and does not make them agree to move to another site to complete their purchase. This is what happens with a PayPal type service; customers many times do not like this and are worried about security. When looking to purchase a gateway that will link into your web hosting company, make sure you can use it with any processing company you chose and are not locked into the gateway you are purchasing it from. Most major gateways will link into your back end web hosting company you choose and the processor of your choice, but check first to make sure.
Don’t sign before understanding
Do not sign something just because the credit card processor tells you to. Ask for clarification on what you are signing. There have been cases where business owners have signed an equipment lease not knowing what it was, only to find this out later. The credit card processor should have no problem explaining what you are signing, so ask.
Payment Card Industry (PCI) Compliant
PCI compliance is now federally mandated by all processing companies and business owners. Before signing up check to make sure the credit card processor you are signing up with is PCI compliant. After you get set up with service, as a business owner you will need to become PCI compliant. There are many rules and regulations now in place in the card industry and both the credit card processor and the business owner have to adhere to them. You will need complete a questionnaire that will need to be done on an annual basis. There is usually a monthly fee associated with the pci compliance which does include fraud protection.
When going through the process to get set up to accept credit cards at your business, the key to understanding is asking questions so you can become educated on this important part of your business. The relationship with the credit card processor should be a business partnership, working both ways, they are in place to help the business owner be successful.