Credit Card Processing Basics

The Basics of Credit Card Processing
You've decided to start a small business and are excited about all of the money-earning potential your new business has. But no matter how good your business idea is, you won't actually be able to make any money until you are able to accept payments for your products and/or services. And in today's market, most people want to pay for those products and services with a credit card.

What Kind of Credit Card Processing Do You Need?
There is more than one type of credit card processing and you will most likely be charged differently based on the kind that you need. So, before you even start looking for companies that can provide you with payment processing, you need to decide where, when, and how you will be taking credit card payments. If you're opening a retail store or a corner café, many of your payments will be happening on-site. Not only will you need a merchant account provider, but you will also need card processing equipment to be able to swipe the card and process the transaction on-site. If your business includes or is primarily an internet business, then you'll need to process those credit card transactions without the actual card. To do so, you'll need a payment gateway, in addition to your merchant account, to provide your customers with a way to securely enter their credit card information.

Other Types of Payment Processing
While most people do pay with credit cards, you do want to be open to any form of payment so you don't have to turn any customers away. Most merchant account providers can also provide you with the services necessary to process debit card payments, gift cards, and deal with electronic check verification. If you know that you want to accept any of these types of payments, make sure you get the appropriate merchant account and the appropriate equipment before opening your doors.

The Fees Associated with Credit Card Processing
There are a variety of fees that are associated with processing credit card payments and the first thing you need to do is shop around for a merchant account provider. That provider could be your local bank, but there are also independent merchant service providers who might charge less than a bank would. The fees you need to be aware of are the monthly charge for simply having the account, the fees that occur every time a transaction is made, and the monthly minimum that you will have to pay if the transaction fees don't surpass that minimum. The two primary transaction fees are the discount rate and the per transaction fee. The discount rate is a percentage of each transaction and the per transaction fee is a flat charge, usually in cents. In addition, you'll need to take into account the cost of any equipment you need to process payments.

Accepting credit cards is a smart business move, but there is a lot to consider before you take that step. Once you understand the basics of credit card processing, you can open that merchant account, start accepting credit cards, and fulfill your money-earning potential.