Are you a franchise owner? If so, then you know that running your business is hard enough. So why add the headache of figuring out how to accept credit cards for your company when it can be done with ease? Before we dive in, it is essential to note that many factors should be considered when purchasing credit card processing software for your small business, including cost, customer service, and the overall "ease" of use. Understanding these concerns will help you to save time and money in the long run. Here are some things to consider before buying:
This is, without a doubt, one of the most important questions you should ask yourself at any point in time. You must select a plan within your financial means while also providing adequate coverage for your family (this could mean safeguarding against a high percentage of charge-backs or other losses).
Once you know your monthly revenue, you'll also want to have an idea of how many credit card terminals you'll need. Keep in mind, not all businesses require the same number. A restaurant may require more terminals than a hair salon, for example.
Hardware: A hardware system is the physical credit card machine connected to your computer or mobile device. Hardware devices are different for each company, but some might require multiple pieces of equipment for every register.
Mobile vs. Stationary Terminals: Stationary terminals are always connected, meaning that any transactions made on these machines will require an internet connection. Mobile terminals can operate either online or offline and allow you to process transactions without an internet connection. However, not all mobile devices may be supported by your chosen provider.
Software: This is the software that connects your credit card processing network to your business. This software will be used on all of your store's computers and processes orders through the Internet, phone apps, or POS systems connected wirelessly. Software companies are constantly changing their features and prices, so make sure you are thorough in exploring these changes. Look for deals on software, especially if you are buying for multiple stores.
Customer Service: There will always be glitches in technology, so it's essential to have a reliable customer service team ready to help fix problems. If your software is updated daily, plan accordingly since changes might affect your processing. Make sure the company has phone support, email support, and web-based support.
Flexibility: Downgrade your software to save money if your franchise is growing, or bigger franchises might ask for better pricing. Also, look into PEO's that will handle payroll, insurance, and taxes, so you don't have to worry about managing these chores yourself.
Accessories: When buying credit card processing equipment, a few accessories might be needed, such as a receipt printer and cash drawer. Make sure you check compatibility with your software.
Mobile Apps: With mobile payments on the rise, it's important to incorporate them into your business. Mobile apps make it easy to manage transactions wherever you are and create new opportunities for repeat customers.
Payment: Nowadays, there's more than just credit and debit cards. Discover and AMEX are processed through a different network than Visa and Mastercard, so ensure you know who will service your customers best.
Contract: Contracts can be confusing, and it might take a few phone calls to understand the terms fully. When signing up for processing, ask to see the actual contract. Keep in mind that contracts can be changed. Ask if you can get out of your agreement early without paying fees.
Account Access: Your business will need quick access to funds, so make sure no holds on deposits or other account issues. You should also be able to view your statements online at any time and not have to create new accounts.
Customer Accounts: If you must set up customer accounts, find out how easily customers can be added and removed from your file. Unless filing bankruptcy, all businesses should have the ability to use credit card processing without setting up an account.
Rates: Perhaps the most important question to ask when buying credit card processing for your franchise is "what are my rates?" Generally, there are three types of rates you need to know before making a purchase. Interchange fees, discount fees, and assessments are examples of these. Interchange fees are your processor's costs for each transaction, based on the Federal Reserve's set rate. Discount fees are incurred when a customer uses a credit card with an incentive program, such as cashback or rewards points—the company issuing the credit-card sets these rates. Lastly, there is an assessment fee. This is the money your processor charges to use their payment network in which they process credit cards.
1. What is the difference between a merchant account and a payment gateway?
A merchant account is a financial institution that holds the funds from your customer's credit cards for you until you can deposit them back into your bank account. Typically, this is done through electronic payments networks. A gateway easily converts transactions between different computer systems over the Internet to allow easier access and authorization of cardholder information for point-of-sale terminals (POS).
The differences in these two terms live in how they operate and who they serve. Merchant accounts are geared towards larger businesses, while gateways are made with smaller companies because they don't hold funds on sites like PayPal or Square do.
2. How do you know which to choose?
There are a few factors to consider when choosing between a gateway or merchant account. First, who is your company? An e-commerce site will need a different type of service than a restaurant that takes credit card payments in person at the register. Second, what do you plan on selling? What options would you like to allow for customers? Third, how many customers will be using cards? If you want to accept a large number of credit card payments, having a merchant account is typically the best way to go.
3. Is there a cost difference with either option?
Typically, there is no difference between a gateway and a merchant account. The interchange rates will be the same for both options.
4. Do you need to purchase any software or hardware upfront for either type of solution?
Gateways are online payment options that require no upfront costs. On the other hand, Merchant accounts may require you to purchase credit card processing hardware or software.
5. What is the difference between swiped and keyed transactions?
Swiped transactions allow customers to use their cards as they normally would by running their cards through a card reader attached to a computer or mobile device. Keyed transactions are made manually by entering the card information into a website or mobile application form.
6. Would this company process international credit cards and domestic ones, if that's something we want to allow?
Most companies in the industry will be able to process both domestic and international cards. However, it's a good idea to check with your provider to ensure that they have experience working abroad. With the currencies and payment methods, you'll need to work within.
7. Who can sign up for these services, and what are the eligibility requirements?
Merchant accounts are typically only available to businesses that will be processing a large number of credit card transactions. It is also required by law for you to have a physical presence in the U.S., which means you must have a brick-and-mortar location or storefront.
8. What other charges might I incur once I've signed up for one of these solutions, such as transaction fees or monthly fees beyond setup costs?
Processors charge a small percentage of each transaction as well as monthly fees. Each company has different rates and different costs, so it's important to do your research before committing to one solution or another.
9. Can I try them out before I decide, and if so, what's the process to sign up?
Most credit card processing companies will allow you to sign up for a trial period. This allows you to test out the service yourself before committing long-term.
10, What are potential alternatives if I decide this isn't the right solution for my company?
If your company is best suited for a gateway, many other online payment options can meet your needs. If you aren't looking to make many online transactions, Square is a great option.
11. Will they be able to provide an example contract for me to review before signing on?
Typically, credit card processing providers do not offer contracts for their merchant accounts. This is because it's a month-to-month service and the fees are very small. However, some providers will give you an idea of what to expect during your free trial period so that you can decide if this solution is right for you.
These are just some of the questions one should ask when shopping around for credit card processing. Many questions will vary from business to business, but don't get overwhelmed. You should treat this as a learning experience, take notes of what you need to ask, know your worth, and make sure there are no hidden fees or costs associated with operating your credit card processing for your franchise. There is no one-size-fits-all credit card processing solution, so make sure you know what your business needs and how it will be affected by each solution presented.
