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What You Need to Know Before Choosing a Merchant Services Provider |®

What You Need to Know Before Choosing a Merchant Services Provider


Accepting payments in the form of cash and checks has worked out well for your business for years. Maybe occasional customers would ask about paying with a credit or debit card, but they always take the extra step of walking next door and using the ATM so they can pay for their purchase with cash.

Over time, though, you’ve noticed that some of these customers aren’t returning. And when the ATM is down, you’re forced to turn away valuable business time and time again. That’s when you come to the realization that maybe it’s time your business starts accepting credit and debit card payments.

Where is the best place to start? What should you look for in a provider? How do you know you’re getting a good deal? Here are some tips for selecting the right merchant services provider.

Analyze Customer Payments and Business Needs

Start by defining your business needs and understanding the details of your customer transactions (e.g., calculate your monthly sales volume and average customer sale). Depending on the type of business you have, a good potential payment provider should be able to use this information to help you estimate what percentage of monthly sales may be electronic transactions. Knowing more information about how your customers make purchases can help your provider recommend the best rate plan to help you keep costs down. It’s a little like choosing the right mobile phone plan � if you watch movies on your phone, it’s better to know up front so you get the right data package.

Identifying Potential Providers

Start gathering your list of potential vendors by asking other business owners, or even a neighboring business, about their experiences with payment service providers. A good merchant services provider should offer a variety of options to ensure that not only your current needs are met, but your future needs as well. Just because you only need to take in-store payments today, it doesn’t mean you won’t need to take payments on mobile devices, PCs or even your Web site as your business grows.

Once you have a shortened list of merchant service providers that you know can meet your basic needs and offer your business flexibility and guidance, further research these top choices. Many reputable Web sites, such as the Better Business Bureau, offer transparent and detailed reviews. Assessing this information and thinking about it in terms of your own business can help you to make your final decision on payment services.

Understanding Fees, Terms and Support

Now that you’re ready to begin conversations with a potential provider, you’ll likely hear a lot about the variety of payment service options available. From every provider you’re interested in, request an itemized list of the provider’s services. Be sure to note any mention of free trial offers, rebates or other incentives to be sure they’re included in your final documents. And if something is unclear, don’t hesitate to ask for additional explanation.

Remember, if this is your first time exploring these services, a good provider should have no problem ensuring you are comfortable with all aspects of their service before moving forward. As you look over your notes and potential service agreement, be sure you have clear answers for the following:

Rates and Fees

  • What is the percentage (or “discount rate”) to be charged on each transaction?
  • Is there an additional “transaction fee” for each credit/debit purchase?
  • How quickly will money be deposited into the business account?
  • Is there a contract term and does it protect from price increases?
  • What monthly, quarterly or annual fees will be charged?

Needed/Supported Hardware and Equipment

  • What equipment will be needed to support all requested services?
  • Is the suggested equipment expandable (i.e., can more services be added later)?
  • What are all the options for purchasing equipment (i.e., leasing vs. buying outright)?

Support and Security

  • What type of support is available and when (i.e., 24-hour technical support)?
  • Is security compliance training and guidance offered?
  • Can new customer EMV security cards (mandated in 2015) be accepted?
  • Are there any additional account restrictions or ongoing requirements your business must meet?

Next Steps and Account Setup

  • What is the application process and timeframe?
  • Are there any setup or “application fees”?
  • Is there a cancellation fee, often referred to as a “deconversion fee”?

If you’re confident you’ve found a good fit, but are still unsure of making any long-term commitments, look for a provider that offers no-contract processing, extended trial periods and satisfaction guarantees. Like any new addition to your business, it is important to be comfortable with your decision, but with a little research and satisfactory answers to the questions above, it doesn’t have to be an addition you may regret.

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