Running a small business can seemingly require you to become an overnight expert in a number of diverse areas, from tax accounting to flat rate merchant services to online merchandising agreements. As a result, you may find your business is inadvertently slow to adapt to changes in the marketplace when it comes to its credit card processing services, potentially costing you money. Read on to learn more about the importance of frequently investigating credit card processing reviews, as well as what you'll want to consider when evaluating the value your current processing service adds to your business.
When (and why) should you review your business's financial software and processes?
With more and more consumers choosing to use plastic in lieu of cash, having the ability to accept credit or debit cards can significantly increase your potential client base. This is even more true for businesses that offer delivery services or make house calls (like plumbers, cable installers, and interior design consultants), as being able to swipe a card on the go can free up cash flow for your business days sooner than waiting for a check to clear.
However, paying high swipe fees or utilizing software that is out of date can cut into your bottom line and cause frustration on all sides of the transaction. Because credit card processing services generally take their fee off the top of each purchase rather than sending you an invoice, it can sometimes be easy to lose track of exactly how much you're paying to process credit and debit cards each month -- and with rapid advances in technology and data encryption, it's important to turn a critical eye to the services you're utilizing at least once a year to ensure you're getting the best value for your money.
What should you consider when selecting a credit card processing service for your business?
Certain credit card processing services may have better reviews than others -- but there's no such thing as a perfect system, and what may be ideal for one business could be ill-suited for another. (This is another reason why periodically reviewing your services is so important, as gradual changes in your business's goals or marketing efforts may necessitate a switch to a different type of system), There are a few questions you'll want to ask yourself when selecting a new processing service or evaluating your current service, including:
- Is predictability of pricing more important than the bottom line?
In low-margin businesses like grocery or convenience stores or fast casual restaurants, every penny can count -- and giving up several percent of your profit on a transaction the moment you swipe a credit or debit card may be enough to put you in the red for certain items. If this is the case, you may be willing to deal with some variance in swipe fees between transactions in exchange for the lowest possible rate. This is most often found in tiered pricing, which utilizes a number of different rates based on the size of the transaction and the number of separate transactions performed during each billing cycle.
On the other hand, businesses that have a high volume of transactions involving relatively low dollar amounts may be better suited to an interchange plus pricing model, which sets a specific cost for each transaction and allows you to much more accurately predict exactly what you'll pay in swipe fees every time. Interchange plus rates are viewed by most retailers as more transparent than tiered rates, and can give you the predictability you need without compromising your profit.
Other flat rate credit card processing services may also be able to ensure you'll pay a steady fee per swipe without building in additional charges that aren't always apparent on the face of the bill.
- What reporting services will make my life easier?
With the variety of processing services available and the dizzying array of features offered within each one, it makes no sense to purchase additional software to perform reporting or tax accounting functions that are already available through your current credit card processer for no extra charge. On the other side of that coin, it may make little sense to pay for a top-of-the-line service that includes a number of features you have no plans to use; you may instead want to investigate your lower-priced, simpler options.
When evaluating this factor, you'll first need to determine exactly what reports you need -- whether a simple end-of-the month accounting of all credit card sales or a more in-depth profit and loss statement that can help you identify areas of your business in need of improvement. Once you have a list of reports (or at least data you'd like to track), you'll be in a better position to evaluate the pros and cons of specific credit card processing services.
- How insulated am I from customer disputes?
Another important factor to consider involves merchant protection from allegations of dissatisfaction, fraud, or billing error. For a consumer, disputing a transaction can be as simple as calling an 800 number, and you may find yourself scrambling to defend yourself and avoid paying a refund. In these situations, taking advantage of a credit card processing service that includes merchant protection or dispute defense can be money well spent -- both by helping you avoid charge-backs and by saving you the time and effort of investigating the circumstances of the disputed transaction on your own.
Fortunately, by staying on top of developments in the online payment processing industry and remaining in touch with your business's needs, you should be in a great position to maintain peak efficiency when it comes to the processing of credit and debit transactions.