Checklist for selecting a credit card processorIf you are a small business owner looking to sign up with a vendor, here is a checklist for selecting a credit card processor. 

Selecting a credit card processor for your business is one of the most critical decisions that you will need to make. The following nine considerations should be explored and checked off to enable you to make the best choice for your business. 

Checklist for selecting a credit card processor: 9 things to consider

1. Cost structure: the transaction fee, the markups, the annual and monthly fees, While you can expect credit card transaction fees to stay about the same for each credit card processor, the structure they use to assess them can vary. The other costs associated with using different processors — those that are categorized either as markup fees, annual fees or monthly fees — can also vary widely. 

2. Equipment: renting/leasing of equipment versus buying, Deciding whether you want to lease your credit card processing equipment or buy it outright can make a difference in the processor you use. Some provide the option for leasing which means you have to pay a monthly fee. You also need to consider if the machine will work with other processing companies. Purchasing such equipment outright means a more substantial outlay of funds initially, but it can also provide you with more freedom and flexibility. 

3. Interchange rates: reimbursement of interchange rates in case of refunds. These interchange rates are paid by the merchant service provider to the bank that issued the credit or debit card. Not surprisingly, the cards that offer consumers rewards of some kind also charge interchange rates that are higher than cards that have no such benefits, such as debit cards. During a refund, some providers return the interchange to the merchant while others keep the interchange and add in additional fees as well. 

4. Rate creep and increases: Rate creep, and additions are tactics that credit card processors are noted for employing. Read the fine print of your contract to determine if it offers you protection from rate creep and increases for its duration. 

5. contract duration: Regardless of which credit card processor you choose, you will probably need to sign a contract. The length of that contract can be a crucial factor. For a business that is a startup, for example, being locked into a contract once your company goes belly up means additional fees for something that you can no longer use. 

6. Cancelation/early termination fee: The charges for canceling a contract or early termination are typically spelled out within the terms of that contract. Additionally, your state laws may afford you additional protection from these fees under certain circumstances. If you are seeking to end a contract due to your business failing, the terms of your contract could allow your fees to be waived if certain conditions are met. 

7. Chargebacks: Refunds are a part of every business. When your customer pays with a credit card, though, it is essential to know how your credit card processor handles these refunds. Some processors follow a pretty straightforward method and refund the charges back while charging a small processing fee. Others keep the fees that they have been charged — such as the interchange fee — and tack on additional fees for processing. Still others process chargebacks using a method that falls somewhere in between these two extremes. The differences in these methods can range in the hundreds of dollars — all on a sale that you made no money off of. 

8. Pricing structures: Pricing structures vary widely with the interchange plus composition of the fee being the most transparent. Because it provides an itemized list of charges, it can be daunting to decipher though. Bundled plans can make it more difficult to figure out which fees you are paying and can lead to excessive fees being imposed. Subscription-based models are becoming more popular as their payment structure is transparent. It separates the transaction fees from the markup fees. Blended pricing strategies take all the fees and apply one consistent charge across the board. 

9. Currencies accepted: If you are a local business that is researching for a new credit card processor once your current contract ends, and you do not have an online presence, you might not care if your processor only accepts currency in your country of origin. However, the move in the business world continues to embrace its global aspects. Many small businesses are based solely online and are searching for ways to tap into markets that include those that are halfway around the world. Be sure that your credit card processor will accept those currencies in question. 

Keeping this checklist for selecting a credit card processor close at hand while you are doing your homework on credit card processing companies can help you organize the data you find. Having this data in an easy to read format makes it easier to compare the different companies. 

Beyond this checklist for selecting a credit card processor, if you need additional help, some consultants can assist you in the evaluation and selecting of a credit card processing company.