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There’s a lot of homework and research involved when deciding on a credit card processing company. And if you’re new to the process (or haven’t looked at your current terms in the years since you first signed up), there’s a lot of information to wade through and a lot of terms to decipher. If all of that wasn’t enough, not all credit card processors are upfront about their business practices – they’re not outright lying (most of the time), but like a lot of businesses, it’s not in their best interest to tell you everything.
But in the already-confusing, often-expensive world of credit cards, what you don’t know can really hurt you, and cost you hundreds or thousands of dollars in fees, lost productivity, and PCI compliance fines. The more you know going in, the better choices you’ll be able to make and the more money you’ll be able to save. So what is it that other processors won’t tell you?
How much you’re “actually” paying
Even if you had the most forthright, honest credit card processor and were paying flat fees based directly on current rates, your bill at the end of the month would be confusing. Between assessment fees, costs that go to your processor, and the huge array of different interchange fees based on the cards your customers are using (and how you process them), your monthly statement can be very intimidating. This doesn’t even include setup*, maintenance and equipment costs.
Credit card processors know this, and altruistically “simplify” the process for you. Maybe you just see one flat rate for all of your charges, or have a tiered “qualified” plan and see just three. What they’re not telling you, however, is that along with this simplification comes added costs for you. There are dozens of standard interchange rates (which depend on the type of card your customers use, how you process that card, and other factors) – “simplifying” them into one (or three) categories means that while you might pay less for some transactions, you’ll pay much more for most others. You can be sure that this obfuscation doesn’t exist to save YOU money – tiered pricing is a major money maker for many credit card processors.
How can you fight through the confusion and save yourself the most money? Choose a credit card processor that is clear and forthcoming about its fee structure and other costs. Make sure you are fully aware of all the fees, how much each fee is, and when the fee is charged. If you’re still confused, be sure to ask questions about any charges listed on your bill that you may not understand. If you are unable to get a clear answer, keep looking for another provider – any company that makes it difficult for you to see exactly what you’re paying isn’t a company you want to work with.
How data security is handled
Go to any credit card processor’s website, and one of the first things you’ll notice is the focus on security – buzz words like “PCI Compliance”, “Encryption”, and “EMV”, often peppered with exclamation points and bright graphics. They’re not lying about offering these security solutions – all processors must comply to basic standards in order to stay in business. But the buzzwords, graphics and exclamation points, while impressive, don’t give you the whole picture, and many processors want you to believe the bare minimum is good enough.
Just like with your processing fees, it’s important to ask questions about security – whether data is stored locally or remotely, what kinds of encryption is used, and whether they employ tokenization for an added layer of protection. There are many steps between the bare minimum and expert-level, rock-solid security. Learning the basics and asking the right questions will give you a better idea if your processor can keep yours and your customers’ data safe. And again as with your fees, if you don’t like the answers you’re getting, or if your processor isn’t willing to give you the details, it’s time to keep looking.
How much you can save with integration
Credit card processing companies have a lot to sell in in addition to basic credit card services – physical terminals, Point-of-sale systems, and a host of web-based tools that may or may not be helpful to your business. But for the most part, there’s not a lot of integration at work here. Sure, your POS system connects to your terminal, but unless your processor is well ahead of the technological curve, none of these systems hook into your accounting software, ERP system, or back-end office at all. The systems that do, however, will save you a considerable amount of both time and money.
Where do the savings with integration come from? They’re twofold – First and foremost, using an integrated system is a time saver. No more manually entering credit card into two systems or reconciling invoices and payments after-the-fact. Pulling together your systems will save you time in even more ways once you start using it in your day-to-day business operations. In addition to the money saved in person-hours and increased productivity, the true monetary savings from an integrated system comes from decreased credit card processing fees. The same integration that consolidates your workflow also lets you get the lowest rates possible for your credit card transactions.
So why don’t most processors highlight the ease of use and money savings that go along with integration? Very simply, most of them don’t do it well, if it all. Back-end integration with software such as QuickBooks, Sage or Microsoft Dynamics NAV takes both software expertise and industry know-how – it’s much easier for companies to offer credit card processing, and be done with it. If there was something your company didn’t do very well, you’d probably hide the benefits of that service from your customers too.