A woman employee handing a customer their credit card back.

Questions to ask credit card processing companies

Saturday, December 05, 2015

Critical considerations for business owners using payment processor tools

Card payments have become the norm across businesses of all sizes and many industries. As cash payments have decreased, small businesses have increased reliance on merchant services that make credit card transactions efficient, reliable, and user-friendly. Merchant account providers offer payment solutions, such as credit card processors, that can accept credit card payments ( Visa, Mastercard, Discover, American Express, etc.) or debit card payments from customers.

Business owners should be aware that there are many credit card processors available on the market. When selecting the solution to process payments at your business, it is necessary to ask the right questions to make sure your business needs are getting met.

Business leaders should consider how the processor can integrate with point-of-sale (POS) systems, if there are processing fees or other additional fees (such as compliance fees, hidden fees, or cancellation fees) that come with a contract agreement, and how the funds will be transferred to the business bank account. Moreover, if your business operates in a brick-and-mortar space as well as an e-commerce space, you will want a system that can offer functionality for an in-store customer as well as an online shopper.

This article will provide an overview of the most important questions to ask when considering a payment processing provider. It is necessary that business leaders understand the payment card industry and the minimum security standards to provide to their customers during the transaction process. Service providers can offer many different services, so it’s important not to rush the process and ensure that you find the right fit for your type of business.

What is credit card processing?

Credit card processing is a multi-step process that completes payments made with a credit card. Typically, the processing steps include several entities (including the business, the financial institution, the payment gateway, etc.) so that funds are properly moved between accounts. Credit card processing can take place over several business days, depending on the speed of the processing, the card type of the customer, and the credit card company used in the transaction.

It is important to recognize that there can be transaction fees for using payment processing at your business. However, some processors charge low rates, flat rates, or monthly fees that can help you plan out what might work best for your business operation. Credit card processing can take place in person, online, or over the phone, enabling businesses to receive funds in a variety of ways.

Questions you should ask credit card processing companies

Below are some ideas for questions you should ask a credit card processing company before agreeing to a contract or agreement.

  • What is the length of the contract? You should be clear about the terms of the agreement before signing a contract. You will want to know if you have a long-term contract or a monthly term contract.
  • What types of customer support do you provide? You or someone on your team may need assistance with running the payment processor. Knowing if the merchant provides ongoing support to your team and how additional assistance can be accessed is helpful.
  • What are the integration options? The best payment processors can integrate with other useful applications that you use for your business. For example, if using a POS system at your business, can the payment processor integrate with your accounting software so that sales data and accounts receivable information can be easily generated?
  • What hardware do I need? You should understand what types of hardware are required to run the payment processor and if the company provides these tools or if it is something you need to purchase to make the payment processor system run smoothly.
  • How long do payouts take? You will want to know how long the transaction process will take from start to finish. Having this information will help you in preparing cash flow projections and the time it will take for various payment methods to fully process.
  • How do chargebacks work? Some customers may want to dispute a fee on their card, either from fraudulent activity or in returning a product. You should have a good understanding of how the payment processor can provide chargebacks to customers, especially understanding the process and length of time this might take. You should also inquire about chargeback fees.
  • What fees exist with your platform? Learn about the fees and pricing associated with transaction volume or per transaction fees for payment processing. As discussed, payment processors can impose various fees that you may or may not be aware of.Moreover, some companies may have hidden fees or requirements for monthly fees, depending on their business structure. Asking about all fees will help save your business money and time, especially from the get-go if there are installation fees to get started. On the customer end, it may be helpful to know if there are different fees associated with different card types or payment types (for example, if a customer is using Apple Pay).
  • Can the gateway help with tax compliance? You should inquire about any tax benefits that the processor supports, especially regarding compliance and reporting requirements for your business. For example, if the payment processor can generate reports for specific filings, this would be a huge advantage of a particular system.
  • What is their expertise in fraud management? Fraud is an increasing issue when it comes to information being taken during transactions. Thus, you should ask about fraud prevention measures that the processor has built into their system for ongoing prevention.
  • What security options are available? Tokenization or EMV (Europay, Mastercard, Visa) options increase the security standards for your customers. Tokenization generates a one-time code used during the transaction process and cannot be replicated again for other payments. EMV is a chip card that provides additional protection for customer account information. If you want to offer additional security during payment processing, exploring these options with your prospective payment processing system can be helpful.

Selecting the right processor for your business

Choosing a suitable merchant processor is a lengthy task that is detail-oriented and specific to the needs of your business. Taking your time will ensure you find the right fit. By asking the right questions, you can position your business to have the right system that will enable efficient business transactions. When these processes are automated and streamlined, you can focus on running your business, building customer relationships, and ensuring overall profitability.

Next steps

Are you ready to incorporate payment processing at your place of business? Do you need additional support in finding the right credit card processing company to work with?

Heartland is ready to help.

Heartland helps nearly 1,000,000 entrepreneurs make and move money, manage employees and engage customers with human-centered technology solutions that allow them to rise above the daily grind and lead their businesses into a brighter future. Learn more at heartland.us