Choosing a Credit Card Processing Company? 3 Things You Should Know

When choosing a company for your credit card processing, there are three important questions you need to ask before signing on the dotted line.

1. Do they require a long term contract and charge cancellation fees? Most credit card processing companies require the merchant to sign a 2-3 year contract and will charge an early cancellation fee of $200-$500 dollars if you cancel your account before the initial term is up.

Just because the sales representative with whom you are speaking does not bring this up during their sales pitch doesn’t mean they don’t charge this fee. Be sure to specifically ask about it - and check the termination section of their merchant contract as well.

2. Do they charge an annual fee? Many credit card processing companies will charge you a yearly fee to maintain an internet merchant account with them. They’ll call it an annual fee, risk assessment fee, or a membership fee, and it can range from $30-$200 per year. Also, credit card processing companies that claim to give you a free retail terminal are notorious for charging $200 annual fees - so be sure to ask about annual fees if it looks like a really good deal or you’re getting something for “free”.

3. Do they charge a monthly minimum? This is very important if your business is new. Most credit card processing companies will charge you a $25 monthly minimum in addition to the other fees. If your m discount rate fees do not add up to a minimum of $25 in a month, the processor will charge you the difference. You need to process approximately $1200 a month in Visa/MasterCard transactions in order for the monthly minimum to wash out. For a new business, especially an internet business, it takes a while to get up and running, so these monthly minimum charges can add up over time.

There are plenty of cheap merchant accounts to choose from if you shop around and ask the right questions. And remember, just because the sales rep fails to mention any cancellation fees, annual fees, or monthly minimums doesn’t mean they don’t charge them. Ask the right questions and you can avoid having to pay these unnecessary merchant account fees.