E-commerce has made selling online affordable and accessible for merchants and entrepreneurs alike. Banks no longer see e-commerce as high risk and third-party credit card processing allows your business to easily accept credit card payments without having to sign up for your own merchant account.
But unfortunately this convenient method is not foolproof and merchants should do proper research before selecting a processor. This article covers some common mistakes merchants want to avoid when choosing their credit card processor.
1) Cancellation Penalties
Before starting a business and considering a particular processor, be sure to ask about their cancellation penalty. Be aware of early cancellation fees or lengthy contract terms. It would be a great loss for the merchant to be stuck paying high cancellation fees for a business which is not profitable.
2) Accepting High Rates and Fees
When a merchant agrees to work with a credit card processor they agree to certain terms and conditions with the processor. Credit card processing companies charge higher rates per transaction to mitigate the risk of allowing merchants to use their merchant account. Merchants should read carefully the terms and conditions to understand what will they be charged for each transaction they make.
3) Hidden Fees
The most common problem that the merchant's face is they do not receive the pricing that was promised to them by the salesperson before signing the merchant agreement. This may be because the merchant was not aware of merchant industry pricing or because they didn't properly read the terms of the contract. Merchants should, therefore, look for anything that might be a surcharge and make sure to understand the pricing before signing the contract.
4) Ignoring Volume Requirements
Some processing agreements have volume commitments that a merchant must satisfy. The volume of the transaction and dollar amount can change the terms and rates associated with credit card processing. Be aware and make sure that there are no volume commitments in your processing agreement. Before you commit to terms ensure that there are no minimum or maximum volume commitments that might impact rates and fees.
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