4 Questions To Ask Payment Processors Before Signing a Contract

When you sign your businesses up to work with a credit card processor, it’s pretty much a guarantee that you’re going to get the short end of the stick. Whether it’s through high transaction fees, hefty cancellation fees or some other sort of fees we don’t even know about yet, your card processor will always find a way to take more than its fair share of your revenue.

Unfortunately, while the current structure of the payment processing industry puts small businesses in a less-than-ideal position, that short stick we mentioned can quickly become even shorter if business owners forget to thoroughly interrogate their payment processor before they sign a contract. After all, a payment aggregator isn’t going to bother telling you about its fee schedules if you don’t ask. So if you’re thinking about opening your business’s doors to the world of credit, save yourself a lot of grief and remember to ask these four questions before you commit to a processor.

1)    Will you be able to handle my online checkout? If your business sells its products over the Internet as well as in-store, it’s important to make sure that your payment processor is up to handling both tasks. Due to the complexity of maintaining a payment gateway, some card processors refuse to operate online. That’s not going to fly if you’re trying to run an online checkout. Additionally, the card processors that do operate payment gateways will most likely charge you a premium for the service. You should expect to pay between $10 and $25 per month on top of your standard fees.

2)    How big are your buckets? Many payment processors will lure merchants in with a rock-bottom “qualifying” interchange rate, such as 1.8% per transaction. But what they don’t tell you is that very few of your card transactions will actually qualify for this rate. In reality, many payment processors use a tiered system of fees to charge businesses extra for arbitrary things, like “processing a rewards card instead of a standard card.” This practice is known as inconsistent bucketing.

Since bucketing tends to be widespread in the industry, you should demand that your processor disclose their fee “buckets” before you sign a contract. You might find that some of your top choices aren’t nearly as affordable as they seem.

3)    What other fees will I have to pay that you aren’t telling me about? In addition to payment gateway fees and transaction fees, your payment processor might charge you an annual subscription fee, a monthly minimum penalty, a statement fee and more. These hidden fees might be unavoidable, but you should still ask to see them to make sure that your company isn’t overpaying for all those perks. If it looks like you’re going to have to pay more than $200 a year (or $300 a year if you run an online checkout), find another service to work with.

4)    Do you have domestic customer support? When your credit processing system crashes, the last thing you want is to dial that 24/7 support line and discover that you’ve been transferred to a help center in a foreign country. Your payment processor should offer domestic support for both you and your customers. With all due respect, processing infrastructure problems are just easier to talk about with a native speaker. It’s the fastest way to solve your crisis, and outsourced support centers just can’t compete. When you’ve got customers waiting to swipe their cards for your product, time really is money.

Shopping for payment processing services is a lot like shopping in a used car lot. Company reps are happy to tell you whatever you need to hear to persuade you to purchase their clunker. That’s why every business owner should ask their processor these four important questions before committing to a contract. You might not be able to avoid the fees, but at least you’ll avoid getting ambushed with fees cooked up by the devil himself. A phantom $500 charge for processing a red credit card instead of a blue one? Probably only a few years away.

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