Condensed Guide to Small Business Credit Card Processing

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Small business credit card processing is not a cheap investment. There are often a lot of hidden fees, and the start up charges tends to be exorbitant.  Below is a brief guide to keeping these costs low for your business.

Types of Credit Card Processing

The first step is deciding which type of merchant account you will open. There are three main types: retail, Internet, and phone or mail.

Retail merchant accounts are made for businesses that swipe the card right in front of the employee. So if you are opening a store, this is probably the best choice for you. Internet merchant accounts are for companies who utilize internet credit card processing. This could also fit a small business model, if you are opening a home business that is online ordering only. Lastly, a phone or mail account is similar to an Internet account in that the credit card number is charged through the web. The difference is that the client gives the merchant their credit information over the phone, fax, or mail, and the merchant charges the card through the web. If you are opening a business that provides equipment to other businesses that would order through fax or phone, this could be the choice for you.

Brief Overview of Fees

Credit card processing companies have lots of fees attached, and the amount and types vary depending on your merchant account.

For all accounts, there is an application fee and a debit or credit card set up fee. Unfortunately, these tend to be high- unless you can find a reliable company that works with small business owners to make it more affordable. After this, the fees tend to differ with the type of account. In addition, some credit card companies, such as American Express or Discover, might charge an extra set up fee to allow charging of their card.

For a retail account, there is a transaction fee that is either a percentage of each transaction or a set amount. This fee will be taken out of each transaction that is done in your store. For an Internet account, there are more fees, since there is a higher risk of fraud involved. There is a web processing fee, a programming charge, and also a charge for the software to include on your website that provides an encrypted page and shopping cart for the customers’ safety. For a phone or mail order account, there is an additional charge for accepting checks, as well as the Internet fees (since it is still input online).

Although it seems pricey, credit card processing is the future of business and can help garnish you more sales. So don’t overrule it yet.