Finding the Right Credit Card Processing Company for Your Business

There are big differences in what Credit card processing companies charge for monthly fees, transaction fees, and statement fees. Some of the fees are flat, per charge or per month rates, and some of the fees are a percentage of the sale.

You need to compare not only the fees of the credit card processing providers, but what cards they accept, and what type of service they provide. Your business may not be open 24 hours, but if you have questions or problems, you may want to contact the processing company after your business hours.

Then you need to access where and how you will be taking the credit card numbers from customers. If you have a physical store front or presence, and an online store, then you need to make sure the credit card processing company offers merchant accounts that give you the flexibility to do both. You may even want to use your cell phone to process a credit card if you ever go out to client’s homes or businesses.

One problem in finding the right credit card processor is that banks will often refuse to offer merchant accounts to the small business without having a third party handle the transactions.

Besides having different fees, these processing companies can also have slightly different rules governing the use and handling of credit card transactions. There are other steps involved if you have online credit card purchases. You shopping cart will have to interface with an online gateway system. So the shopping card you have or choose has to work with the online gateway system of the credit card processing company that you select.

Applying for a Merchant Account

To get an account with a credit card processing company you will have to apply. You may have to accept an in person visit to your primary place of business, whether that is your home, a retail store, restaurant, or any other type of business location. This representative of the credit card processing company may take a picture of your office to prove you are located at the address you have given them. Some companies will allow you to send them this picture instead of taking it in person.

Other things you may need to provide include:

• A copy of your business license or the DBA (doing business as) certificate
• Profit and loss statements
• A copy of your previous years’ tax return

All processing companies require both deposit and withdrawal access to your bank account once you are approved. This will allow them to make the deposits of all transactions and if there is a chargeback, it will allow them to withdraw the funds.

Credit Card Processing Machines

There are portable machines, wired machines, dedicated machines and dial up machines. There are apps and physical options you can add to your cell phone to process credit cards. You need to figure out when and where you will want to process credit card transactions. Then a quick look at processing offers will show that there are many companies that offer a free Terminal, free set up, discounted or free applications fees, and other options that include online reporting of the day’s transactions.

Summary

Finding the right credit card machine or terminal, means you have to first find the right credit card processing company to meet your business needs. There are many options available and understanding your business requirements will help you make the best choice. The credit card processing companies vary greatly in their rules, the fees, and their offered services. Besides comparing the pricing, the terminals or credit card processing machines, and the services, you should also look for reviews on the processing company to see what others say about the service they provide.

Once you have picked a processing company, you can see what type of machines they provide, if they offer any free or through a promotional discount. Some companies will allow you to purchase your own machine, but then they will not service the machine. The credit card terminal will go hand in hand with choosing a processing company.

Once the decision has been made if the business credit card requires a personal guarantee or not, then you can check out options as to percentage rate, promotions, or reward programs that are offered by different banks, in order to get the best small business credit card for your organization.

No Personal Guarantee

A personal guarantee means that the owner of the business guarantees that the business credit card payments will be made. This card is attached to and based on the owner’s credit history. If payments aren’t made, the owner promises to make the payments personally. If payments are late, then the owner’s credit history will take the hit.

Without a personal guarantee the credit card is based on and reported to the business credit history. The business is responsible for the payments and the bank can’t come back on the owner’s financials.

In order for a small business to get a credit card without a personal guarantee, there are several steps to take. Some of these steps you may have already completed, but many small businesses skipped straight to opening without actually setting up a business. This is especially true of home-based businesses or those who are freelancing.

It is important to note that the steps will take some time, often as much as a year to complete. You may need to get an interim small business credit card with a personal guarantee while you work towards completing these steps. To get a small business credit card without a guarantee you have to legally establish a business, and then establish some form of business credit before you apply for a credit card.

You can start this process long before you open a business or if you are already in business and have completed a few of the steps then just finish the process. If you don’t need a business card right now, then you might consider starting the process so that the card is available if you ever need it.

Here are the steps to separating your business from your personal financials so that you can get a business credit card without a personal guarantee:

• Incorporate Your Business – the business needs to be incorporated or your need to form an LLC. To view the options for incorporation or why you would form an LLC you can check online sites or speak to a lawyer. Without incorporating or an LLC, the business and personal finances are one and the same. This means any business loss or profit is reported on personal tax returns.
• Get an Employer Identification Number (EIN) – Once you have legally filed as a business, get an employer identification number in the business name. The EIN comes from the IRS. It makes it possible for you to file business tax returns that are separate from the owner’s personal tax return. An EIN is like having a social security number for your company. It proves to vendors and lenders that you are an established business and is an important step in getting a small business credit card without a guarantee.
• Get A Business Bank Account – Now that you have a legal name, and an EIN, open a bank account in the business name just as it appears on the corporate paperwork. Use the bank account to pay for business items and to deposit company monies.
• Get five merchant or trade accounts – by asking for small levels of credit, even $100, at local stationary stores for business cards, brochures, or even signs, at office supply stores, or other sources. You may be able to get the business cards cheaper online, but an online store probably won’t give you a credit account. Make sure you verify that the merchant reports payment history to credit bureaus. The whole point of doing this is to get a credit history built up under the business name.
• Check with Credit Bureaus – a few months after you established the vendor credit accounts, call and check with Experian, Equifax, and Dun & Bradstreet to ensure that they have your business listed and that the vendors have reported your payment history. The credit bureaus should be able to find you by business name or by your EIN. Track the credit reporting for a couple months. Make sure you pay the vendors early or on time.

Apply for a small business credit card after four or five months of credit reporting. You should be able to apply for and receive a business credit card under the business name. Check the bank where you have a business checking account and see what their requirements and options are for a business credit card.

Accepting credit cards has never been easier. Technological advances and the Internet has made it possible to accept credit cards through the Internet or have the credit card processing machine access the merchant network via the Internet instead of telephone lines. This makes processing the credit cards much faster than in the past.

Fees

Many small businesses avoid accepting credit cards because of the fees associated with the process. However, the number of people who use plastic solely and don’t carry cash mean that not accepting cards could be costing much more money than the fees associated with accepting cards.

Credit card processing fees range from 2.5 to 5.5 percent of the sale. This gap in the lower end of fees to the high end of fees means that the business owner must research the different credit card companies in order to find the one with the best rates. While this may seem like a negative aspect of accepting credit cards, there is no risk involved with credit cards such as having a check bounce or having to wait for the check to clear the bank in order for the funds to be accessible.

Getting Started

It is easier than ever to start accepting credit cards. There is more than one way to accept credit cards in today’s world. One is to use the typical method of a credit card terminal and having merchant status set up with the various credit card companies. The second is via the Internet and one of the many gateways that allow for credit cards to be processed and deposited into an account, such as PayPal.

The following information details the traditional methods of setting up merchant status. If the small business has a predominantly online presence then PayPal and other options can be easily implemented.

The first thing a business must do is acquire merchant status and have a merchant account at one of the many banks that issue certain credit cards, known as acquiring banks. This step can be done by either working with one of those banks or setting up an account with a credit card processing company, an option that eliminates some of the steps involved in getting started.

Setting up a merchant account is not simply a matter of filling out an application and everything falls in place perfectly. In much the same way that credit card applications are checked for credit worthiness, the merchant application is checked thoroughly to ensure that the credit card company is not going to lose money on charge backs.
The credit card companies will verify that the business is solid. This is simply to determine if the company has many refunds to customers which in turn would mean lost money to the credit card company.

Compare Merchant Accounts

It is important to compare merchant accounts when starting out. Many small businesses make the mistake of thinking they should simply stay with the bank that they do business with currently. However, the fees that are charged for merchant accounts may be much less at other banks. The services that are offered with the merchant account should also be compared. The business owner should be prepared to ask for better rates and negotiate with the provider.

There are some things that should be considered when comparing the offers, such as:

• Rate of the fees and how it is assessed.
• Software or hardware provided such as the processing terminal, paper for the machines, support should it go down, Internet access to the account and more.

The comparison of various services should be made and listed so that an overall picture is seen. This allows the business owner to make a decision that is based on facts and not guesses.

Integration with Current Programs

Small businesses considering credit card systems need to also remember to take into account their current accounting software and whether or not the system they are considering will work with it. This shouldn’t be a difficult part of the process since practically all business accounting software has built in components that are designed work with credit cards.

Watch Business Grow

Once a merchant account is established and the credit card company has set up the equipment, it is time to start accepting credit cards and watch business grow. Advertise that credit cards are accepted by putting the credit card logos on all marketing materials and invoices and business will increase dramatically. Credit cards are the number one form of payment in business and should not be overlooked when setting up accounting practices.

Small Business Cards vs. Corporate Cards

Corporate credit cards are more difficult to obtain than small business credit cards and so it is important that the small business owner research every available card to ensure that the one with the best rates and terms is chosen.

Small business credit cards are available from lending institutions as well as online. The process of being approved for a small business card is very much like applying for and being for a personal credit card and approval can be granted in minutes. There are many websites that allow small business owners to compare the different terms and rates available and apply online once they find the one that meets their needs and budget.

The Internet is also a great place to read various reviews on the credit cards that are offered. The small business owner can find out how other small businesses have fared using the various cards and if they ran into any unforeseen pitfalls such as rates that suddenly increased for no reason or the inability to have more than one card so that an employee could use it for gas.

Small businesses should look at more than the interest rate on the credit card they apply for; they also need to look at fees that may be incurred on the card and perk that are offered, if there are any. Some credit cards charge an annual fee and others do not. This is one of the reasons that the fine print on the cards must be read and the various cards compared line by line.

Reward Cards

Consumers everywhere know the value of reward points that come with using credit cards. Small business owners can cash in on these rewards as well. Many small business credit cards have reward points that can be accumulated and used for air travel on business trips or even supplies for the business. These reward points alone should not be the sole reason for using a credit card; however, if paid off on a monthly basis and interest is low enough, the reward points are an added bonus that can save money on pricier items such as airfare.

Multiple Cards for Employees

Corporate businesses are not the only businesses that need multiple credit cards. Often, a small business will want to give the marketing director or field salesperson their own credit card that belongs to the company. This is one feature that must be considered when looking at credit card companies because not all credit card companies offer multiple cards to one company.

Online Access

Most employers and small business owners want to be able to access the credit card account online. This allows them to keep up with the spending habits that are occurring within their business. This also allows small businesses to pay their bills online and keep from having to cut checks and spend postage to get the payment sent out.

Customer Service

It is vital that the credit card company selected by the small business have a customer service department that is responsive when needed. While it isn’t often that most businesses need to call their credit card company, it only takes one disgruntled employee or lost credit card to wreak havoc on the credit card. If the company is slow to respond to customer calls, the small business could lose money and time waiting for the situation to get corrected.

Security

Small business owners need to know that they cards they sign up for have security measures, such as daily credit limits that are only able to be broken by the owner or varying daily limits depending the card. For example, the marketing card could have one daily limit while the president of the company has no daily limit. This gives the business a better handle on the money that is being spent and keeps employees from going rogue and bankrupting the company with the credit card.

The best credit card for small business is the one that is able to offer the best interest rate with the best term. It will also be the card with the features that are needed by the company such as multiple cards for various needs, online access to accounts and excellent customer service. Once the small business finds the card that fits their needs they can apply for it and have it in their possession in a short time.