How to Choose a Payment Card Processor

Accepting payment cards gives your customers more options—and your business more sales. To select a payment card processing company, here are some questions you need to ask yourself—and the processor.

Ask yourself:

• What types of payments do you need to accept? If you run an ecommerce site, you’ll have different needs than a restaurant owner who wants to swipe cards on a mobile device. Will most of your payments be taken in person, by phone, online or on the go?
• What is the standard in your industry? If you own a restaurant, you might want to take payment by swiping a card on a smartphone. If you own a retail store, customers typically expect a point-of-sale register.

Whether you’re looking for online, mobile or standard POS processing, ask the processor:

What are the fees?

• Interchange fees are fees the processor pays to the card-issuing bank for every transaction you process. Fees are determined by various criteria including the size of the transaction, the type of card (debit or credit) and how the payment is accepted (online, in-person or over the phone).
• Application fees: Some processors charge a fee to apply for their service.
• Setup fees: There may be a setup fee for getting you the equipment you need to accept payments.
• Gateway access fee: A “payment gateway” transmits data about each transaction from your payment system to the card issuer. This fee is charged per month.
• Monthly minimum: The processor may set a “fee minimum” and charge you this minimum regardless of whether your actual fees reach that level.

Most credit card processors let you choose a pricing tier based on your revenues. However, prices also vary depending on the card the customer uses. The phrase “interchange plus” means the company is adding each card’s rate onto its base interchange rate so you can compare apples to apples.

A newer trend, used by processors such as PayPal and Square, is to charge a flat per-transaction fee. This can be a good option if your company doesn’t have a lot of payment card transactions.

Is there an early termination fee? These fees can range from a few hundred to thousands. Try to find a processor that doesn’t charge one and, even better, offers month-to-month service vs. a long-term contract.

What types of payment does the processor accept? Ideally, you want a processor that accepts all major credit and debit cards. Depending on your business, you may need the processor to accept prepaid cards, electronic benefit transfers (EBT) or gift cards from your business.

The payment industry is changing rapidly, with digital wallets such as Apple Pay or Google Wallet gaining wider acceptance. Look for a processor that is up-to-date with the latest technology so you can accept these forms of payment if you decide to. Also make sure the processor is prepared to handle the transition to the EMV chip card standard starting in October 2015.

Who provides the equipment and how? If you need a credit card processing terminal to use the processor’s services, do they provide it for you, and are you leasing or buying it? In general, buying is cheaper in the long run.

How quickly can I get set up? Some processors (such as mobile card processing services) are generally easy to set up yourself, while others (such as traditional retail POS systems) are more complex. Ask how long it will take to get set up to accept payment, whether the processor or you will handle the setup, and what type of support the company provides. Can you talk to a live person or do you have to wait for an email? Is support available 24/7 if you need it (for example, if you have an ecommerce site?).

Where can I find payment card processors? CMUSA has partnered with CardFellow, an online marketplace that makes it easy for small businesses to compare a wide variety of payment processors. Participating processors agree to provide transparent, competitive pricing. Visit CardFellow to learn more.