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Accepting credit card payments is crucial for any small business’s success. However, choosing a credit card processing solution that aligns with your business needs can feel overwhelming with so many options available. In this article, we’ll guide you through selecting the most suitable credit card solution for your small business.

How credit card processing works

Before shopping for a credit card processing solution, it’s important to understand how it works. Credit card processing goes through the following steps:

1. The customer swipes their credit card through a card reader or enters their card information into a virtual terminal.
2. The merchant sends the transaction data to its payment processor — i.e., an intermediary between the merchant’s bank account and the customer’s bank account.
3. The processor relays the transaction information to the credit card network — e.g., Visa, Mastercard, American Express, and Discover.
4. The credit card network sends an authorization request to the issuing bank — i.e., the financial institution that issued the credit card to the customer.
5. The issuing bank verifies the card details, checks for sufficient funds, and sends its approved or denied response back to the credit card network.
6. The credit card network relays the issuing bank’s response to the payment processor.
7. The payment processor sends the issuing bank’s response to the merchant’s payment portal.
8. The merchant receives the issuing bank’s response — approved or declined — and issues a receipt to the customer, completing the transaction.

Understand your business needs.

Understanding your business needs will help narrow down the options and ensure you choose a credit card solution that meets your specific requirements and goals. Here are some questions to ask yourself:

Do I need a payment processor for in-store or online transactions?

Evaluate whether you need a simple card reader for in-person transactions or a more comprehensive online payment system for e-commerce. Most payment processing companies can provide these two solutions if you require both. Still, their services can vary, so ensure you research companies that tailor to the nature of your business, your volume of transactions, and the expected growth in sales.

Am I a high-risk merchant?

When signing up for a payment processor, they will create a merchant account for you, which allows you to receive funds from your customers’ transactions before transferring them to your business bank account. To get an account, you must provide your business and tax information and undergo a credit check to assess your potential risk. Processors will most likely set you at high risk if you have poor credit, a history of chargebacks, a limited time in business, or operate in a risky industry. This means you’ll have to pay higher fees, have a longer contract, and deal with other factors that could increase your costs.

Are you a B2B or B2C business?

Certain payment processors may be more suitable for business-to-business (B2B) companies that send client invoices. These payment processors usually offer free online money-wiring services. Many other payment processing services are ideal for business-to-consumer (B2C) companies. They typically charge monthly fees as well as fees per transaction. The higher the number of transactions, the more advantageous the transaction fee becomes.

Pricing and fees

Regarding credit card solutions, the cost is a significant factor for small businesses. Evaluate the pricing structure of each solution, including transaction fees, monthly charges, setup costs, and any extra charges for additional features. Also, look for transparent pricing models that suit your budget and offer flexibility as your business grows. Remember that the cheapest solution may not always be the most suitable, as it might lack the necessary features or compromise security.

Here’s a quick rundown of the fees you may expect from credit card processing companies:

• Setup fees are for installing the hardware and software needed for processing credit card transactions.
• Interchange fees: This fee is a percentage of the transaction value usually set by the credit card network. It’s used to cover the cost of processing, authorization, and settlement of transactions.
• Early termination fee: If you terminate your contract early, you may have to pay a fee
• Monthly minimum fees: Some credit card processing companies require you to pay a minimum amount in credit card processing fees each month.

Features and Functionality

When looking for a credit card processing solution, consider the features and functionality it offers. Some key features to look for include:

• The ability to accept all major credit cards
• Support for mobile payments
• Integration with your current POS system or e-commerce platform
• Option for recurring billing

Also, consider if the solution provides inventory management, invoice template customization, and reporting features that can streamline your business operations. Ultimately, you want to prioritize the features that align with your business requirements and can help enhance your customer experience.

Security and Compliance

Protecting your business and customer data should be a top priority because it helps build customer trust and mitigate potential financial risks. Ensure that the credit card processor you choose complies with industry security standards, such as Payment Card Industry Data Security Standard (PCI DSS) compliance. Additionally, look for services that offer encryption, tokenization, EMV chip card capabilities, NFC contactless technology, and fraud detection solutions to safeguard sensitive information.

Customer service

When choosing a credit card processor, it’s important to prioritize reliable customer service. Be sure to select a provider that offers responsive assistance through different channels like phone, email, and live chat. This will help resolve any technical issues or concerns you may have quickly. It would help if you also considered how easily the credit card solution integrates with your existing systems and platforms. A seamless integration process will minimize disruptions and ensure a smooth transition to the new solution.