14 Jun 2018, 09:42 — 5 min read
Summary: E-commerce can boost sales considerably. However, a retailer needs to be vigilant as mistakes with credit card processing can lead to losses. Arpit Joshi shares 4 mistakes to avoid when choosing a credit card processor.
When e-commerce was first introduced, it was expensive as well as complicated and difficult to implement. However, today it has become a common way to do business. For a small business, e-commerce has proven to be one of the most important developments. Small businesses can reach customers in the virtual market whom they could not in the physical world. Even opening a merchant account is not as difficult as it used to be. However there are certain aspects one must be vigilant about especially in case of credit card processing. Issues like hidden cost/fee, unclear or confusing contract must be perused carefully. It is therefore important to have a good understanding of the merchant processing agreement before getting into it.
This article will arm you with knowledge about common mistakes and how to avoid them when choosing a credit card processor.
1. Carefully read the terms and conditions
There are very few business owners who read the terms and conditions carefully before signing the agreement with a credit card processor. It is lengthy and at times very confusing. This is the main reason why most entrepreneurs avoid going through it without realising the impact of such a decision at a later stage. It is advisable to take some time and go through it very carefully without missing any part of it. If there is something that you don’t understand or find something suspicious, do not hesitate to ask your potential processor about it and get a clearer picture about everything written. Make sure that all the issues are resolved and clarified before signing the contract.
2. Information about the fee charged
Every credit card processor charges a nominal fee for its services but there are some processors who will try to slip in hidden charges or additional charges without the merchant being aware of it. Although fees are a reasonable and normal part of credit card processing, it is wise to ask for breakage of the same in order to have a clearer picture of it and avoid paying more than the actual fee. Study the pricing table (can be provided by card processor when asked for) very carefully and ask as many questions as you can regarding it to have the complete understanding of the fee structure. If you think that you don’t understand something clearly or feel confused, either you can ask the processor or look for a new credit card processor.
3. Signing for volume required
If you are starting a new business or you already own a small or mid-sized business, it becomes difficult to predict your sales from month to month in advance. But if you want to get a credit card processor for your business, you will come across few card processors who will require the merchant to sign an agreement with minimum sales requirement on a monthly basis. And, if your business fails to fulfil this condition, extra fees will be charged as penalty. Although these kinds of charges are unfair especially if you own a small business, to make a profit, credit card processor will impose them on you. So it is important to read the agreement completely to find such loopholes and avoid them if possible.
4. Search for options
It is a good idea to look for options available in the market and what they have to offer you before signing the contract for credit card processor. Do not make the mistake of signing for merchant payment processing with the very first e-commerce payment processor you come across. By doing so you will never have an idea about what other payment processors have to offer you. It will be beneficiary to read the reviews and talk to processors personally rather than merely going for one based on a recommendation. Take your time in choosing the right credit card processor for your business but make sure that whichever processor you chose should be affordable, transparent and responsive.
If you take these measures, you will never regret the decisions you have made.
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Posted byArpit Joshi
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