|Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.|
Accepting Credit Cards? 5 Questions to Ask When Choosing a Merchant Services Provider
The internet has evened the playing field for small businesses that want to compete with the big boys. As more and more purchases are made through online retailers, a business needs to accept credit card payments if they want any chance at capturing a share of the billions of dollars consumers spend online. The statistics are very clear in demonstrating that businesses that accept credit card payments see a dramatic increase in sales and repeat customers.
So, the question isn’t whether to accept credit card payments, its which questions to ask when choosing a merchant services provider (MSP):
What are all the fees associated with your service?
One of the confusing aspects of a merchant account is there can be a multitude of fees but some fees are not applied equally to all accounts. Most MSPs charge a discount fee per transaction to cover the processor. Additional fees could include over-limit fees, voided transaction fees, and debit card fees. There is also a monthly minimum formula which could trigger a fee if your transaction totals are below a minimum threshold. It would be important to ask the MSP how all of these fees might be applied in your particular business situation.
How do your services help me to set up my website to accept credit card payments?
All your website needs is a separate order page. The MSP provides access to its secure server, which allows you to display a secure server certification on your website. The MSP should also provide you with a payment collections toolkit that includes a digital shopping cart for completing orders and making payments. It would be important to know whether the MSP outsources any of these tools because that would be a red flag.
How are payments handled?
The MSP provides you with an electronic terminal or access to an online processing tool that connects to the credit card authorization centers. When a transaction is entered and is authorized, the funds are held for your account. When you close out the day’s transactions, the funds are released and transferred to your bank account within the next one or two business days.
What are the costs for equipment and software?
Prices for terminal equipment of online processing software ranges from free to as much as $1000 for each. When pricing equipment be sure to find out what add-ons may be required that are not included in a basic package, such as printers, check readers, or pin pads. Some MSPs offer a lease plan which may appear attractive if you don’t have the funds up front; however, the total lease costs are typically much higher than for an outright purchase of the equipment.
Why should I choose your services?
Working in your favor is the highly competitive nature of the MSP industry. MSPs must continuously work to add value if they expect to win and keep your business. Don’t limit your search criteria strictly to pricing because customer service, service upgrades and technical assistance can make the difference between a good MSP experience and a great one.
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