As a small, local, or multilocation business with a storefront, you probably already understand the importance of being able to take credit card payments. In fact, one Intuit-sponsored survey found that 83% of small businesses that started accepting credit cards reported increased sales. However, choosing from the many credit card processing companies out there isn’t always easy.
Not all providers are honest, and there are some common pitfalls small businesses should arm themselves against. In this blog, we’re going to share some advice on how you can avoid being taken advantage of credit card processing companies in order to find a payment processing provider that helps your business thrive.
There are a variety of ways you can accept credit card payments, and a credit card terminal or POS system is perhaps the most familiar. Many small and local businesses are reluctant to invest in this kind of hardware, and for good reason: it can be expensive and outdated credit card processing systems are susceptible to technical issues.
So, when credit card processing companies offer to rent hardware to you directly, it may initially seem like a bargain. However, it’s not uncommon for businesses to find themselves locked into long-term, non-cancellable contracts with these payment processors.
Sure, renting a terminal for $30/month might sound like a good deal, but if you unwittingly get trapped in a 3-year contract, that’s over $1,000. Much more than you would pay had you bought the terminal. You may have heard horror stories about companies like Northern Leasing Systems and its subsidiaries, which used unethical tactics like this to take advantage of merchants and faced legal consequences for it.
Our advice: if a credit card processing company tells you that leasing is the only option, run.
On a similar note, always read the fine print.
It’s not uncommon for credit card processing companies to deceive you with low rates or charge you fees that are altogether unnecessary. Here are a few of the most common ways credit card processing companies play games:
*Psst! Are you worried about fraud? Read about 3 trends in credit card payment processing and how they can affect your business.
It’s a fine balance: You want to avoid credit card processing companies that have a bunch of fees and charges, but you also want to be alert to anything that seems too good to be true.
For example, you’ll want to steer clear of any provider that offers a “price assurance guarantee.” If a provider is willing to match any quote, it’s likely they’re overcharging you in the first place. There’s also no guarantee that they won’t raise rates back up after a few weeks or months (again, read the fine print).
Choosing the right credit card processing company is a challenge, so it’s important for businesses to understand a little bit of the payment processing industry and how it works. If you’d like to understand the mechanics of payment processing at a glance, we invite you to download our free fact sheet What Is Payment Processing?