January 26,2009
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Small Businesses Accepting Credit Cards, Pt.1
– Getting started.Every small business owner knows that the ability to accept credit cards opens up a whole vista of opportunities. Of course, they're also concerned about the added overhead and the many other implications that could be involved. So, it's very important when getting into it, knowing what kinds of cards to accept and understanding the different credit card contracts which will impose certain conditions and other important considerations. Each ‘credit card processing merchant' comes with it's own conditions, so it's important to consider all the options and threats from the many choices you have before entering into a contract.
Many of the parties that new businesses (and existing clients of ‘the competition') will work with are not the direct credit card lenders, themselves. They will be ‘third-party processors (marketing front-end people) who scout out future prospects like yourselves. They negotiate and write the contracts and then hook you up with the actual credit card lenders. For those who have not yet been burned, here are some of the more important points to ponder at the negotiating table before signing any contracts with ‘third-party processors':
- What kinds of cards do they offer? Possibilities are, of course, conventional credit cards (like VISA and MasterCharge) but also debit cards, gift cards and check-clearing, etc.
- What are the different costs involved? Each of these different types of accounts carry unique charges (like check-clearing, inter-exchange rates, penalties and merchant protections). These can usually be put into package deals, so it's good to focus on the ‘big picture' while pecking away at troublesome components.
- One-time Fees: Of course there will be fees but, creative marketing people have a way of glossing some of these over until the contract is signed. Generically, the opening fees are things like ‘origination fees', ‘application fees', ‘setup fees' and ‘membership fees'.
- Annual Fees: ‘Annual fees' are akin to ‘membership fees' but may be a lesser amount, depending on the length of contract signed and the level of plan (services, cost breaks, etc.) Continued.