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6 Confusing Things About Accepting Credit Cards

6 Confusing Things About Accepting Credit Cards

Credit card processing fees and service contracts shouldn’t leave you speechless.

  • Credit card processors offer a wide range of pricing structures and contractual terms.
  • Depending on the type of business you have, some pricing structures are better than others.
  • You should review all the details of your payment processor’s terms and fees before signing a contract.
  • This article is for small business owners looking for a credit card processor.– Small print on personal credit cards can drive anyone crazy, and the conditions for accepting credit cards at your business are no different. You don’t need to be a contract attorney to understand the terms and conditions of the credit card processor, but you do need to read the contract carefully to understand how it will affect your business profits.

If you’re a small business owner trying to accept credit cards as a payment method, confusing credit card processing fees, lengthy service contracts, and complicated compliance issues can leave you stuck. To help you understand credit card acceptance, we’ll look at six of the most confusing things about credit card acceptance and ways to simplify the process.

1. Credit Card Processing Fees

The most confusing part of accepting credit cards is the price, said Deborah Winick, director and business services consultant at credit card processing firm BankCard Services. You said that most companies don’t really know what a competitive quote is and rely on the integrity of their sales representatives.

“Most entrepreneurs are very busy, so they do what seems like the best option [and] approach their bank, expecting quality service,” Winick said. However, this isn’t always what companies get. “Banks, for the most part, outsource commercial services … Funny as it may sound, they don’t know much about the industry.”

Instead, Winick advises companies to seek out sales representatives with at least two years of experience, obtain two or three quotes from suppliers, and request full disclosure of all fees and commissions in writing. Did you know that more than a third of small businesses in a Weave study said they overpay for credit card transaction fees? This could be because the processor they have chosen has a suboptimal pricing structure for their type of business. Different fare structures benefit different types of businesses.

For example, a fixed percentage with no transaction fees is best for businesses that make a lot of small sales, such as bars. A lower percentage with a transaction fee is better for businesses that make less frequent sales on higher priced items, such as furniture retailers. Look for a processor with the price model that will cost your business less overall.

While you can switch credit card processors if you’re not happy with their service and fees, the process is a hassle that can lead to downtime and the need to purchase new equipment and possibly a new POS system. Try to choose a processor that will meet your needs as you grow. You may be able to start with one pricing structure and move on to another as your volume increases.

2. Pricing models

Credit card processing pricing often confuses business owners as well because there are so many pricing models.

“There are several different pricing methods, but the two most popular are tiered pricing and swap-plus,” said Amad Ebrahimi, founder of merchant account comparison site Merchant Maverick.

In tiered pricing, merchants qualify for different vendor-determined fees, while interchange plus uses the fees set by the credit card brand, such as Visa or Mastercard.

“Interchange-plus is a much more transparent pricing model, but it also creates more confusion if the entrepreneur doesn’t understand what the price entails,” said Ebrahimi.

You should research the type of pricing that credit card processors offer and determine if you can afford those fees, given your cash flow and customer base. Ebrahimi also advises entrepreneurs to gather as much specific information as possible on processor pricing to avoid surprises later on. [See five tips for reducing credit card processing fees.]

3. Terms of the contract

Nobody likes to read long contracts, but in business it is necessary. The contract is also one of the most important and confusing aspects of signing up with a credit card processor. Failure to understand the SLA could lead to some unpleasant surprises. “These contracts can be very long, so unless the business owner takes the time to read each line, they can be caught off guard,” said Ebrahimi.

This is partly because you can’t always trust what sales reps are saying.

“There really is no regulation to be an agent for a business service provider, so there are agents who tell a small business owner what they want to hear instead of speaking with knowledge and integrity,” said Cindy Bender, owner of Bender Merchant Services. . .

If you don’t read the contracts yourself, you risk the shock and hindrance of hidden fees and service limitations. Specifically, you should ask how long the contract is and if he is renting the equipment, Ebrahimi said. Beware of fees, including payment card industry (PCI), annual, setup, monthly, monthly minimum, and prepayment compliance fees, he added.

4. PCI compliance

Credit card processing security is no joke. Failure to protect customer data will not only damage the reputation of your business, it can also result in significant costs for government and banking penalties, legal action, and more. But PCI compliance, a set of security standards for credit card processing, is another area of ​​confusion for small business owners. The problem is that business owners assume that the credit card processor will handle PCI compliance or they don’t know enough about security to check if the credit card processor is compliant. Big companies aren’t the only ones being hacked; Small businesses actually have six times more card security breach incidents than their larger counterparts, according to the Verizon Payment Security Report.

Ebrahimi urges entrepreneurs to verify PCI compliance with the processor they are considering. “Card data security is of the utmost importance to your customers, so understanding this area is essential.”

As with pricing and fees, the best way to avoid confusion is to ask questions. Ebrahimi recommends asking vendors if their terminals and software are PCI compliant.

5. Defaults

Subscriptions and recurring charges offer businesses a great way to automate repeat tasks, but a major downside comes when payments are declined.

“One of the things [I] found most confusing, and often the cause of missed profits, is dealing with credit cards that have expired or canceled for recurring charges,” said Mike Salem, co-founder and CEO of Vorex, a professional service company automation supplier. . “Many small businesses don’t have the mechanism or technology to automatically stop a service until a customer updates their credit card information.”

Declined payments essentially become free services, Salem added. “Many small businesses have to manually monitor credit card activity on a daily basis and may not notice a non-payment for several days after a charge is declined, which means providing a free service. Trying to recover unpaid daily charges retrospectively can be frustrating. ”

6. Compatibility with e-commerce

Technology allows merchants to conduct business anytime, anywhere, which is both a blessing and a curse. This flexibility creates various kinds of confusion for credit card processing because not all credit card processors support all merchant services.

“Some entrepreneurs need to know that their business account will work seamlessly across all sales channels such as retail, e-commerce and mobile,” said Ebrahimi. “It can be confusing to try to make sure all channels work well with each other.”

This is especially true with accepting credit card payments in self-hosted online stores. “Until recently, accepting credit cards for online payments was a surprisingly complicated and painful process,” said Yarin Kessler, founder of PDF Buddy online PDF conversion service. “It requires creating a merchant account with a bank, signing up with a payment gateway, and then using any number of payment software solutions to integrate with their app. That meant more apps, fees, and accounts. only to configure “.

Some credit card processing companies have made the process easier for merchants. For example, web payment company Stripe handles payments from start to finish, eliminating the need for separate merchant accounts and payment gateways, Kessler said.

“Since then, other companies like Braintree and PayPal have followed Stripe’s lead by simplifying their processes for accepting credit card payments on the web,” he said. “As a result, it is now much easier to accept credit cards for an online business than it was a few years ago.”

Top credit card processors

When looking for a credit card processor, consider these top companies.

Merchant One

  • Merchant One does not charge a separate PCI compliance fee.
  • It accepts businesses with low credit scores.
  • It costs $6.95 per month plus a flat rate of 0.29% to 1.55% for in-person transactions.

Read our Merchant One credit card processing review to learn more.


  • Square does not charge monthly fees.
  • It offers a free POS app.
  • It has flat-rate pricing of 2.6% plus 10 cents for in-person transactions.

Our Square review has more details on how this processor stacks up to the competition.


  • ProMerchant accepts high-risk businesses.
  • It’s easy to get approved.
  • You have a choice of flat or interchange-plus pricing.

Consider our review of ProMerchant if you’re looking for more information on this processor.


  • Chase has POS and e-commerce capabilities.
  • The platform is easily scalable.
  • You have a choice of flat or interchange-plus pricing.

Stax by Fattmerchant

  • Fattmerchant’s monthly fees start at $99 for high-volume businesses.
  • It has interchange-plus pricing with no percentage markup, just a per-transaction fee.
  • It does not charge a monthly fee for businesses processing less than $80,000 per year.
  • It has flat-rate pricing of 2.9% plus 8 cents per transaction for in-person transactions.

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