Your First Business Bank Processing Tips
When I started up a punk clothing store several years ago, I was working with a small budget with very little time to spare between incorporation and opening day. In addition to refurbishing the storefront, painting and shelving inside, ordering merchandise, and buying equipment, I knew I needed to secure myself a merchant account for credit card processing. Having worked extensively in the
retail industry, I already knew that opening before I could process credit cards could be a death knell for my shop. Unfortunately, I had very limited knowledge of merchant services and bought into one of the first packages I found online.*
I was lucky to be classified as a low risk business, since I was not planning to sell my goods online or process credit cards without swiping them through a card swipe machine . As it turns out, handling a customer's card in person helps to avoid nasty chargebacks, saving the business owner and the credit card agent a great deal of money.
Though I was fortunate enough to be a low risk merchant, I was unlucky in many other regards. Because I was pressed for time and unable to research my options adequately, I signed a lease that forced me to pay for card swipe equipment for four years even though I was only locked into the merchant account itself for one year. I was also saddled with a fee if I did not process a given number of dollars each month. Worse yet, this quota had to be met separately by Visa/MasterCard and American Express transactions. It was very hard for my fledgling business to keep up, both in the early months and a year later when I was struggling to replenish my stock on a small budget.
I wish I had known how to get lower rates on credit card processing. I also wish I had been more able to negotiate a fair leasing contract for my card swipe equipment. Even though I was able to buy out my four year contract for a reduced price, I still lost more than I gained in my experience with merchant services. I also wish that I had researched my cc processing options more thoroughly. It may have been possible for me to use an online processing service while I was getting established, but instead I took the leap and went with a larger merchant services company based on name recognition alone.
I highly recommend that individuals who are looking to start up their own businesses take more time to evaluate the services that are available to them today. It is imperative to sign with a merchant services company that wants to be a partner in your success rather than a reason for your failure. A quality card processing service will be eager for new companies to succeed. It is far more prosperous for them to earn on an account over many years rather than putting a new operation out of business in the first year with high fees and transaction quotas.
Learn from my mistakes. Credit card processing is a necessity, but it does not have to be a hassle!
* I should note that I did not work with AdvantageProcessors in order to establish a merchant account. Perhaps I should add that to my list of regrets!