Credit Card Processors

In the article, “An Overview of Taking Credit Cards“, I mentioned a “Merchant Account” and a “Credit Card Processor”. Here I will go into more details on these.

Definitions

A Merchant Account is what your client needs in order to accept credit cards from their customers.  A Merchant Account is needed to take credit cards for either an on-line store or a physical store location (known as a brick-and-mortar store). The alternative is for your client to take credit cards through a third-party supplier such as PayPal.

A Credit Card Processor is the company that sets up that merchant account for your client to take credit cards. They can also use the same credit card processor to take credit cards at their regular shop and through mail order and phone orders. The credit card processor typically also may let your client take electronic checks and other forms of credit processing. They can either manually input the information from their e-commerce store to the credit card processor or use a gateway to automate the process of accepting credit cards on-line.

Recommendations

For your client’s shopping cart, they could use PayPal, but I recommend they get a full Merchant Account of their own so they can take credit cards without the middleman. With minimal arm-twisting, my credit card processor has agreed to waive the application fees, set your client up without minimum monthly charges, and give them a great rate. If you are interested and think you will be adding more merchant accounts in the future, it may be worth your while to have me introduce you to him so you can talk about getting a reseller account set up. That way you can get a residual payment and you will be able to create a close link between your clients and their credit card processor. The better service you can offer, the more referred business you will get from your happy clients! Use my contact form to request more info on my credit card processor or if you have any questions.

Also, there are plenty of other credit card processors available if your client would rather shop around. Their banker will have a card processor they work with but be aware of the price differences. If they do shop prices, make sure they understand what they are comparing against so they don’t get tricked by some unscrupulous credit card processor. Here’s a couple of differences in processor rates:

  • Make sure your client knows what the rate (or the surcharge) would be for rewards cards. Some merchants are paying as much as 1.75% on these cards. There are a growing number of them in the market and this needs to be watched. If your client is comparing rates, make sure they ask how rewards cards are handled.
  • Also make sure they know what their rate (or the surcharge) would be for taking Business / Corporate / Purchasing cards. Some merchants discover that they are paying as much as 4%-5% on these cards when their base rate was reasonably good. This is a fee that is many times disguised so make sure they ask. Many times it is referred to as the Non Qualified Rate. There is a lot they can do to ensure that Business / Corporate / Purchasing cards come in at a better rate (than the Non Qualified rate). My credit card guy has been very willing to help in comparing rates and explaining all of these nuances.

Now you know more than you probably ever wanted to know about credit card processors 😛  . Leave any comments below or let me know if you have any questions.

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