5 Things Your Payment Processor Doesn’t Want You To Know

Picking the right processing company can seem like a daunting task, and it doesn’t help that credit card processing is such a shady business. Between hidden fees and an industry-wide lack of transparency, dealing with processors can be intimidating for even the savviest business owner. However, in today’s fast-paced world, running a cash-only business is nearly impossible. Unfortunately for business owners, the necessity of accepting credit cards as a form of payment means that many merchants are left at the mercy of massive processing companies. There is some good news, though: There are ways to ensure that you aren’t getting swindled into paying more money than is absolutely necessary.Here are five things you should know that your payment processor may not tell you:

1. Rates are negotiable.

Just like you would with any other big purchase, make sure to shop around at different companies for the best possible rate, and don’t sign on to anything until you’ve compared at least three processors. Use the rates at each processor to negotiate with the others. Every penny counts when you’re running your own business, so it’s important to save money wherever you can.

2. Interchange rates are readily available.

Becoming familiar with and understanding interchange rates can seem like a daunting task, but at its core, interchange is simply the base cost of completing a transaction.  Banks and credit card companies set these rates, which are universal, regardless of processor. However, these rates do vary between different card types. Knowing your customers, and particularly what types of cards they use can be very useful in assessing payment processing options.Many processors charge pure percentage (or flat percentage) pricing. Pure percentage pricing assumes that all customers will act similarly; regardless of what business they are dealing with. Knowing what kind interchange rates you’re dealing with will allow you to gauge how your processor’s charges compare to the actual costs of completing transactions. Keep in mind that unless your business sees a lot of high-level rewards cards, pure percentage pricing probably won’t be the best fit for your business.

3. Contract lengths are negotiable.

When it comes to contract lengths, most processors are going to try to lock you into at least a three- or four-year commitment. However, that doesn’t really benefit you at all. Do your best to negotiate a shorter contract, but always make sure that your agreement specifies that they can’t increase their rates during the time of your contract. The last thing you want is to be stuck in a three-year contract with a company that continuously raises their rates, forcing you to pay more and more.

4. Hardware is affordable.

Many processing companies offer their own branded hardware to their customers in addition to their processing. Some companies will say that it’s free, while others will try to lease it to you for a monthly rate. Although this may seem like a good deal, the fact is that processing companies really only offer these products to prevent you from making a switch in the future and will often provide hardware that is locked to their service. A better option would be to simply buy your own terminal. Basic terminal systems start at only $60, so it really isn’t necessary to rely on your processor to provide hardware for you.

5. Switching isn’t as hard as you think.

The idea of switching credit card processors can seem like a lot of work for little pay-off. A lot of people think that switching processors means a complete and total overhaul of their system, but that just isn’t true. Although switching processors can be time-consuming, your current hardware and POS are most likely able to connect to hundreds of processors, which means that there is no reason for your business to suffer at the hands of the wrong processor.Next to all of the other moving parts that go into running your own business, taking the time to ensure that you’re really getting the best possible deal from your processor probably seems somewhat inconsequential. However, by really putting in the work, you may be able to save a sizable chunk of money each month.