Important Questions to ask about your Credit Card Processing Service

If you're in business, you know that you must accept credit and debit cards for payment. The numbers by industry sources for 2007 have indicated that "payment for goods and services utilizing credit/debit cards, has exceeded that of cash and checks". Like most merchants, you are most likely solicited by phone, fax, email or in person, several times a month. So how do you make a wise choice regarding which provider to go with. The best advice I can give you is to ask lots of questions. Get a feel for the person presenting to you with their knowledge and willingness to openly discuss everything with you. Don't be focused only on the quoted rate that the provider seems to be focusing on. It's not a simple task to weed thru all the hype and nuances of this service but, with proper education, you'll be successful in making a wise choice.

First, let's talk about rate a little bit. Here's the things to know up front and these are the kinds of things the provider should be asking you:

1. What is your average monthly volume

The larger the volume, the better the rate should be

2. What is your average transaction size

This helps to determine if you should have bundled or unbundled rates

Also, if you have a lower average ticket (say under $50), you should be considering 4 Tier pricing in order to take advantage of lower signature debit card rates.

In addition to lower signature debit card rates, consider a pin-pad for pinned based debit transactions that could cost you even less. Many debit networks have CAP maximums.

3. How do you transact business (card present or card not present). Merchants that process 80% of their transactions card present will get most favorable processing rates.

Here's some crucial questions you need answered. Ask the rep what your rate will be for:
* Card-not-present or hand-keyed transactions
* Rewards Cards (there are Visa Rewards 1 and Visa Rewards 2....ask for both)
* Commercial Cards or Business T & E cards
* World cards (especially important if you're in a tourist type area

This is an area that is crucial for you to understand because these cards are charged
a higher interchange rate and if you don't ask the questions up-front, the provider won't
likely volunteer the information because this is where they can really get in your pocket.

4. Retail businesses are pretty straight forward when it comes to rates. However, certain industries can be provided with preferred pricing. Some of these would be, restaurants, grocery stores, petroleum dealers, service industries, utilities, etc. Ask if there are any special concessions for your type business.

5. A good way to get a handle on your current "real" rates is to determine what your
Net Effective Rate. Do this by taking your total fees for the month and divide it by the
total monthly (Visa/MC, do not include Discover and AMEX) volume you processed.
Don't forget to add in any annual fees that you may pay. For example, if you pay $120 in annual fees, add in $10 to your monthly total in order to get an accurate NER.

6. If you're allowing a new provider to quote you numbers based on your current statement,
make certain they are doing a line-by-line comparison. This way you can properly compare
your current NER with what they say their's will be.

Okay, now that you've been able to zero in on rates more effectively, it's time to ask some other questions that often get overlooked by merchants.
* Are there any monthly minimums and if, so, how much are they?
* Are there any annual fees?
* How about any set-up, application or programming fees?
* How long is the contract term (typical is 3 years)
* If I decide to terminate early, what is the early termination fee?
* Are there any batch total fees? If so, how much are they?
* Is there a statement fee?
* How much for the occasional Address Verification Fee?
* What do they charge for Chargeback Handling should they arise?
* How about Voice Authorization and referral fees?
* If you're utilizing Pin-based debit, is there a monthly debit network access fee?
* Are supplies FREE or available for a nominal charge?
* What about terminal replacement? Do they have a plan for that?

There may be other questions that I haven't addressed here. Consider your own experience
with merchant providers. Were there any charges or fees in the past that caught you off guard? Ask about them as well.

The bottom line is simply this...you need to accept debit and credit card transactions in your business. You want to do it as smoothly and efficiently as possible and do so with the most reasonable rates you can negotiate. All providers operate from the exact same cost basis which is referred to as Interchange. So, what dictates rates is simply, how much they feel they need to make off of you or how much they can take advantage of you.

I hope this article has been helpful. However, to further expand your knowledge and total understanding of this industry, check out my informative website. I promise, I'm not just another provider trying to solicit your business. Thanks for reading. Here's my site.

www.creditcardprocessingknowledge.com