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Small Business Guide to Credit Card Processing
Whether you run a small restaurant or an Internet business, it's never been more important to accept credit cards. While some business owners will be turned off by the fees associated with credit card processing, the fact is that you will lose money by turning potential customers away. Credit cards have become the most popular payment method among consumers and many consumers no longer carry cash, so if you want their business you have to get with the times and accept credit cards.
Advantages of Credit Card Processing
Here are just a few of the most popular reasons that your company should accept credit cards:
- Attract More Customers - Customers want to pay with credit card, and many no longer carry cash, and will avoid businesses that don't accept credit cards.
- Receive Payments Quickly - You get payments much more quickly compared to invoices or other forms of payments.
- Avoid Potential Loss From Non-Payment - This is one of the main reasons to accept credit cards.
- Save Time - You don't have to waste your time or your employees time tracking down late payments.
Types of Credit Card Processors
There are many different types of credit card processors to choose from, here are a few of the most popular:
- Banks - Most banks can process payments for you, or they will set you up with a third party credit card processor.
- Third Party Processors - This type of payment processor has the advantage of not having to set up a merchant account. They handle billing, reporting, authorization and settlements.
- Independent Sales Organizations (ISO) - Registered credit card merchant brokers use third party processors similar to banks. Unlike banks they are not as selective and they are also held to fewer regulations, which is why it's a good idea to do thorough research before choosing an ISO.
- Associations - Trade associations and small business organizations often offer merchant services to their members at discounted rates.
- Off-Shore Merchant Accounts - A good option for small businesses that can't work with other processors due to poor credit, their location or other factors.
Credit Card Processing F.A.Q.
Small business owners typically have many questions when it comes to credit card processing, here are a few of the most commonly asked questions:
What Are Typical Credit Card Processing Fees?
Processing fees usually range from .40% to 3% depending on the credit card company and the type of business. There is also often an additional fee of $0.10 - $0.50 per transaction depending on whether or not the card is present. Processing fees are more expensive if there is no physical card present (online businesses).
Why Are Fees Higher If There Is No Credit Card Present?
There is a greater risk of credit card fraud if there is no physical credit card present so they have to charge higher transaction fees.
What Are the Most Popular Types of Credit Cards?
The most commonly used credit cards are Visa, MasterCard, American Express and Discover.