Every business needs to accept credit cards, but sometimes the costs and fees can hurt more than help. What do small business owners need to do in order to protect themselves?
Getting Your Feet Wet
For the novice business person, picking a credit card processor looks as easy as doing a Google search for just that, then picking the best one. This is, very simply, the best possible way to get ripped off, other than walking into a pickpocket convention with wallets stuffed in every pocket. To be sure, there are less painful ways to get ripped off. For instance, one might buy that great used car only driven on Sundays by a little old lady from Pasadena. Perhaps answering that nice letter from the poor widow in Nigeria having problems accessing her late husband’s Swiss bank account would do the trick. Alternatively, you could even set wads of cash on fire before flushing them down the toilet. It is, after all, your money and what you chose to do with it is the business of no one but yourself. However, if you want to find a good, reliable, secure and even trustworthy credit card processing company, it’s time to smarten up and follow some very basic rules.
Doing Your Homework
Always read the contract. Read every last bit of it. Even when it’s mind-numbing legal boilerplate and your eyes are glazing over, stay on it until you understand it enough to accept or reject the terms. A sales representative from a reputable company will not pressure you or object to sending you a copy of their standard contract to study. Then, when the time comes to sign that contract, make sure the one you are signing matches in every way what you previously agreed to.
Also of extreme importance is to study the fee schedule. Don’t be swayed by tempting offers, but buckle down and crunch those numbers like the life of your business depends on it. Credit card processing companies charge a fee for each transaction, typically a percentage of the sale, but can also tack on any number of fees. Typically, there is a gateway fee, which is a charge for accessing the payment service. There is also a statement fee, charged for the monthly accounting of transactions delivered to the merchant on a monthly basis. The average discount rate is the part of the transaction that the processing company keeps for itself.
After studying the terms and standard fees for simply using the account, things can get a little tricky, and this is where comparison shopping will save you some real headaches. One key item to watch out for is a term called Liquidated Damages or Termination Fees, according to merchantfeesavers.com. This nasty little hook simply means that should you cancel your agreement with your processor for any reason before the contract term is up, you have to pay up front all monthly charges for the remaining months in the contract. Leasing a terminal is also a fast way to bleed money. Your average credit card machine will cost you a one-time payment of $250-$350, so why pay even a so-called low fee of $30 per month for a 2-year contract? A mobile card slider is even less expensive than a countertop machine, and can be used with a smartphone or a tablet to take your business wherever you go.
Whatever way you choose for your business, take the time you need to completely evaluate the services offered. Compare services and read the fine print, and make every effort to protect yourself against the rip-off artists. After all, wouldn’t you rather be the success story than the cautionary tale?
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