Your relationship with the company that processes your credit card transactions can be a confusing one. Understanding some of the most common misconceptions about these merchants can reduce your stress level and keep more money in your wallet where it belongs. Have you believed any of the following myths?
- Credit and debit cards charge the same fees. In fact, many companies use a tier structure in which it costs much less for customers to use a PIN with a debit card than a credit card, particularly one that offers rewards. Your company is required to disclose all fees before you sign the contract.
- Only banks can process credit cards. In fact, third party companies are often cheaper and usually only take an extra business day to process your transactions.
- A “minimum charge” means that you will pay less if your charges are lower than that amount. In reality, if you have a minimum charge of $25 per month and only charge $10 in transactions, you will still be expected to pay the remaining $15.
- Charge backs are common and unavoidable. In fact, you can minimize the times when your customers dispute your charges. Reduce the risk of fraudulent transactions by always verifying that a card is present and signed and asking for identification. Furthermore, the chances of charge backs are low if you offer standard merchandise that is not high-priced and is used quickly. This is why car rental agencies, gas stations and restaurants get the most favorable merchant rates.
- Always choose the processing company with the lowest rate. In fact, you’re better off looking at your overall set of needs before you make this decision. If you will be accepting a high volume of cards, a discount rate might be best. On the other hand, you might win in the long run with a different provider offering a lower debit card rate if most of your customers will pay in that way.
Choosing a credit card processing company can seem daunting. However, you can avoid most of the pitfalls. Read all information thoroughly and carefully examine your needs and priorities before you sign on the dotted line.