A payment processor allows businesses to accept credit cards, debit cards, and ACH payments from customers. These transactions are managed by payment processing companies, which manage them from the initial verification of card details through to approval and the transfer of funds.
The payment processor you choose will determine whether card transactions go smoothly or become a hassle for you and your customer. There is no one payment processor that is perfect. Your business’s unique requirements, priorities, and budget will determine the right payment processor for you. These key factors will help you choose and evaluate a payment processor.
How to Choose the Best Payment Processor for Your Business
Types of transactions
Transaction type is the first thing to think about. Transaction type is the method payment information is entered into the payment system. It can be in-person, online, and key. Invoiced transactions are also possible. Take a look at the various ways that payment information can be entered and confirm that the payment processor is able to accommodate your needs.
If your business accepts phone orders and requires credit card information to be entered manually or keyed then you should only choose payment processors that provide this feature. A mobile payment option is required if you wish to accept payments from outside your storefront.
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It is essential to have pricing transparency in order to make it easier for customers to compare services and products. You can find products that fit your budget and offer the features you want by looking at price information on a company website. This is a time-saver.
Transparency in pricing can indicate that a company believes its fees are fair. Keep in mind, however, that pricing can be complicated and difficult to display on a website for certain circumstances, such as the processing cost of high-risk merchants.
Consider the total cost of processing services. These include transaction fees, monthly charges, feedback fees, and other less obvious costs like membership fees, setup fees, PCI compliance costs, and cancellation fees. When comparing services, it is important to consider the total monthly cost and not just one fee.
A company that uses an interchange-plus pricing model typically charges less per transaction than a flat-rate pricing company. Interchange-plus pricing models can have volume minimums and monthly fees that add to the overall cost of the service.
Card readers and apps
A card reader and the associated app are necessary if you intend to accept in-person payments. The card reader should be capable of accepting contactless payments, magnetic stripe cards, and EMV chip cards. Square is one of the payment processors that offer a free magnetic stripe reader, but charges for an EMV chip or contactless reader. The total cost of the service is increased by any fees for the app and card reader.
In most cases, you will need a reader that works with both iOS and Android smartphones. An app that allows you to manually enter your card information can allow you to accept payments anywhere, even without the need for a reader.
Many payment processors offer payment processing as well as POS systems. However, these are two different things.POS systems not only facilitate card transactions but can also record cash payments and manage inventory. They can also generate sales reports and integrate them with accounting software.
You can choose to have both payment processing and POS options. Make sure that your payment processor has both. Add any fees for POS hardware to your total cost. You can keep an existing POS system if it is compatible with the processor. While processors can help you integrate systems and others might want you to buy new hardware from them,
Integrations with accounting software
It is crucial to be able to export transaction data into accounting software, regardless of whether your POS system uses a card reader or app. The ability to import and sync sales data into QuickBooks, Xero, or any other accounting software can improve accuracy and reduce the time it takes to enter it manually.
It should take only a few hours to receive funds from a card transaction. It is best to wait until the next day. Businesses may find it important to have the option of same-day deposits. If you are charged a fee for same-day deposits, and you intend to use them, be sure to calculate the monthly cost. Some payment processors might require you to use a particular account for payment deposits. If you prefer a specific bank account, ask if it’s possible to use that.
In the event that you are unhappy with the service or something changes, it is best to not be tied into a long-term agreement. Many payment providers do not require you to sign a contract and allow you the freedom to work month-to-month. Although a company might say that you can cancel at any moment, it is important to verify that no cancellation fees or termination fees are associated with closing your account.
Although live support is the best option for most businesses, it may not be an option for all. An issue with payment processing can lead to a loss of sales and revenue if you have extended hours or key-in payments from other countries.