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Whether your business is or isn't accepting credit cards, it is known that more and more people are taking advantage of the convenience debit and credit cards offer at point of purchase.  Additionally, the credit card companies continue to find innovative ways to improve convenience, such as offering key-chain sized cards, mileage credits, cash-back bonuses and many other perks.  As a result, consumers have less incentive to pay with cash or checks. As a self described penny pincher myself, many small-business owners find it difficult to accept the idea of giving away a percentage of each sale, which is what you have to do when you process a sale on a credit card.   

Each merchant processor has different fees, but in general you will have to pay a fee (monthly or upfront) for the processing terminal, fees for each transaction and other fees like a statement fee or monthly minimum processing fee.  But keep in mind, these fees are just part of the costs of doing business, and offering your customers the convenience of paying by credit card can potentially improve your cash flow.

The merchant processor will automatically deposit money collected directly into your checking account each night which leads to improved cash flow and fewer trips to the bank to make deposits.

Your average transaction amount could actually increase since credit cards make it easier for consumers to spend more at checkout. If they aren't carrying enough cash or don't have enough cash in their checking account, a credit card makes it easier to spend.

If your competitors are accepting credit cards, you could be losing sales if you aren't offering the same service.

If you are worried that the transaction fees will negatively affect your bottom line, you could increase your prices slightly or offer an incentive discount for those who pay cash.

Add-on services such as the ability to verify checks or sell gift cards can also improve your business. Offering gift cards can be very lucrative for all kinds of businesses, and most processors offer these on their menu of services.

It seems that everyone is selling merchant card systems these days.  I've been supporting client groups (banks, associations and corporations) with merchant solutions for over 10 years and not a day goes by without a merchant telling me how many calls or visits they receive from sales people.  Merchant card sales people are compensated for getting the initial business and most are paid commissions (a small %) for every transaction  processed. It's no wonder these sales people are so aggressive!

Locating a reputable processor and finding the best rates can seem overwhelming, but it's worth a little time to investigate your options. Here are some places to look first:  

1. The bank where you do your business banking. This can be a good option, though not all banks will offer merchant services to brand new businesses. If you have been in business for less than a year, your bank may not be willing to help you until you are more established. Don't take it personally; it's standard practice.  

2. Trade associations. If you belong to a business association or any industry-specific trade association, check to see if they have negotiated rates with a merchant processor.  

3. Vendors or Corporations.  National and regional vendors serving business customers may have programs they offer to their customers that provide pre negotiated rates with a merchant processor.    

4. Referrals from peers. If you know people in business in your general area, ask them who they use and if they are satisfied with the service.  

5. Apply for a business license. When you get your business license, you will likely end up on mailing lists and will receive enough offers to make your head spin! 

6. Internet.  Be Careful!  I've heard horror stories about merchants entering their name in one of those so called "we'll find you the best rate" site.  They just opened the floodgates to receiving nerve racking telemarketers calling day and night.  Best of all, they all have the best rate.       

It's a good idea to get quotes and compare rates from several companies. Here are some general questions you should ask:  

~ What is the transaction fee and percentage for credit card purchases?  Be sure to get specific rates for each kind of card including Visa, MasterCard, American Express and Discover.  Each may have different rates.  There are many rate categories especially for Visa and MasterCard.   
                                                                                                                                     ~What is the transaction fee and percentage for debit card purchases and what is your mark-up?
                                                                                                                                      ~What is the monthly lease fee on the equipment and replacemnt policy?

~What would it cost to purchase the equipment outright versus lease?  Or do you have FREE terminal programs and what happens to processing fees if I select the FREE terminal program?   

~Are there additional monthly fees?

~Can the system be programmed to automatically settle transactions each evening?

~How often and how long will deposits be made into my checking account and what are requirements for 24 hour funding?

~How long is the contract term? Many will try to lock you in for three-five years. This is one point where you can negotiate a shorter term or trial period.

~Why would I choose your company as my merchant services provider over the competition?

~How long have you been in business?  Do you have references in my area?
                                                                                                                                               ~What kind of customer service do you provide and what are your hours of operation?

~Can I process cards manually in the event of a power outage?

~You might also want to ask about gift cards and check processing if this is relative to your business. If you operate a web site, also inquire about online processing.  

Compare the answers from several providers side by side. The fees for these services can vary greatly, so it would be in your best interest to interview a variety of companies before you make a decision. I'm a big believer in gut instinct, so if you have any doubt about a company, move on to the next. There are many companies offering merchant services so you should have plenty of options. 

Also ask for a sample contract and READ THE FINE PRINT. This gives you the opportunity to review the company's basic policies before you decide to sign on the dotted line. And keep in mind that everything is negotiable. If one company offers you better rates or terms than the next, use that as leverage to negotiate a better deal. 

The bottom line is that you want to find the best offer – one that will improve your business. Don't be bullied by pushy sales people. Be prepared to negotiate and ask tough questions. Soon your sales could be soaring and your only regret could be that you didn't implement card processing sooner. 

Robert Warrick is President of WMS Companies, Inc., a merchant processing sales and marketing firm providing professional and objective merchant processing outsourcing solutions to banks, trade associations and corporations.   WMS uses multiple marketing strategies and processing platforms to supporting its clients.     


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