Small Business Credit Card Processing: An Overview to Help You Get Started

As your business makes the shift to credit card handling, a basic understanding of small business credit card processing can be of great value. If the wrong provider is utilized, the transition can be both expensive and very difficult. It takes years of experience in processing customer charges to truly comprehend the ins and outs of the industry. The vastness involved with the credit card network can leave your business vulnerable to high rates from financial institutions and processors. Every percentage over what your business can handle will total thousands more in expenses each month. By learning the basics, you can avoid some of the common initial mistakes small business owners typically make when getting started.

Small Business Card Processing Fundamentals

Start by learning about the card network in general. The merchant bank, card issuer, consumer financial institution, and your business are all involved in handling this type of consumer payment. A merchant bank is the institution which processes your daily transactions. They perform this process by contacting the issuer when a payment is made for verification. The issuer may need to contact the consumer bank for approval depending on the type of card. After the transaction has been approved, it is completed by the merchant bank. They receive the money from the issuer, remove their fees, and then deposit it into your account. The steps are the same no matter who provides the service. Prices vary based on your monthly sales as well as the services utilized. Choose a quality service that matches your consumer sales volume to keep expenses low.

Fees may be charged by both the issuer and the merchant provider. Small business card processing charges are not determined by one condition but many varying factors. Rates will be lower if your sales volumes per month are higher. The type of industry, average chargebacks, and types of transactions all take part in setting overall risk. Chargebacks occur due to fraud, disputes, and business errors. Higher risk companies typically include internet retailers, gaming providers, and medical retailers among others. Chargebacks are commonly more extensive in these industries. The provider selects a fee by assessing these conditions. There is minimal gap for negotiating small business card processing charges. Transactions may be accepted online, by computer, terminal, phone, or mail. Every payment will have an associated fee no matter how it is taken. Fees may be reduced by increasing sales volumes or by limiting monthly chargebacks.

Various companies are available for small business credit card processing. Each one can assist with consumer credit transaction acceptance. A provider will often perform this service for many companies at the same time. This makes them able to negotiate lower fees for their business customers. These providers also have specific knowledge for reducing monthly chargebacks as well as the pull to get more risky businesses accepted for credit processing. Banks can perform this service but a processor can traditionally supply lower overall fees. Their experience also ensures the most appropriate services are set up to properly advance this new business direction.