Selecting the right credit card processor (CCP) might not sound super exciting, but trust me, it’s a big deal! Picking one CCP instead of another could seriously impact how much money you bring in each month for your business – we’re talking potentially thousands of dollars here.

The thing is, credit card processor stuff can get pretty complicated and confusing. It’s like they’ve taken something simple and made it into a puzzle with a bunch of unnecessary pieces.

When it comes to picking a credit card processor, it’s like a big puzzle with lots of pieces to think about. But you know what? Many folks just look at the flashy numbers they see upfront. They don’t really think about whether those numbers will work for their business, and they forget to think about other important stuff that could either slow them down or end up costing them a whole bunch later on.

Let’s dive into three common slip-ups people make when they’re choosing a credit card processor.

Mistake No 1: Incomplete knowledge of pricing

In the United States, a common issue arises from processing agreements that include a significant volume commitment. This means you’re required to achieve a certain number of sales using the payment processor. If you don’t meet this target, the initially low rate is voided, and you’ll be charged a significantly higher fee for each transaction.

However, the rate you pay isn’t solely influenced by volume commitments. The merchant industry is riddled with complex terms, and an unscrupulous salesperson can exploit this complexity to their advantage. They might mislead you into signing up for a service that ultimately ends up costing you much more than you initially anticipated.

A significant challenge arises due to the varying costs associated with processing transactions from different types of cards. The fee imposed by card companies like Visa or MasterCard, known as the interchange rate, differs depending on whether the card is a debit card, credit card, rewards card, or other types. Payment processors are usually unable to control these rates and often transfer these costs to you. Few processors offer a fixed, uniform pricing structure.

Salespeople sometimes exploit these variations as a misleading pricing strategy to lock you into unfavorable contracts. They might provide you with an exceptionally low rate that’s based on the assumption of using a specific type of card in a specific scenario.

Mistake No 2: Not reading the terms and conditions properly

Beyond the intricacies of pricing structures lies another concern in the fine print. Numerous individuals have found themselves facing substantial penalties when attempting to sever ties with a payment processor that no longer suits their needs, only to discover that they are bound by a lengthy contract.

Contracts usually span from 1 to 5 years, and attempting an early exit often results in hefty cancellation charges. Prior knowledge about the terms and duration of your commitment is essential to avoid such situations.

Keep in mind that your contract might include various undisclosed fees, charges, and regulations. These could involve fees related to chargebacks and unsuccessful transactions, along with potential transaction limits or minimums. Moreover, distinct pricing structures might apply to payment types that currently aren’t widely used but could gain popularity in the near future.

Rather than simply glancing over and signing the contract, it’s crucial to treat it seriously and ensure you understand its terms and conditions thoroughly.

Mistake No 3: Not considering security first

Don’t underestimate the strength of those sneaky fraudsters, hackers, and data snatchers. They’re a real worry, and you’ve probably heard about their mischief on the news a lot. Cyber-attacks and data leaks seem to happen all too often. If you don’t put security first, those sneaky folks will take advantage.

So, what you really need is a payment processor that’s got your back on security. Are all transactions locked up tight with encryption? How do they handle and store customer info? Are they totally on board with the security standards (PCI compliance)? Do they shout about their top-notch fraud protection? You want to partner up with a company that’s as trustworthy as your best buddy. After all, they’re holding the keys to your business’s safety and your customers’ private stuff.

Bottom line

We understand that there was a time when owning your own business seemed unlikely, yet here you are. Now, consider a similar situation with your chosen credit card processor (CCP). We’re here to advise you that even if these three concerns may not be a priority for you currently, neglecting them could lead to regrets down the line. It’s essential to conduct thorough research to ensure a smooth and successful business journey.