Third party credit card processing allows your business to accept credit card payments without having to sign up for your own merchant account. This works because a third party processor essentially accepts credit cards on your behalf and lets your business use their merchant account.
This is a convenient way to process credit card payments, especially for new and small businesses. But just because it’s convenient doesn’t mean it’s foolproof. As with any financial commitment, there are some pitfalls you’ll want to avoid. This article covers some common mistakes you’ll want to avoid when utilizing third party credit card processing.
1. Accepting High Fees and Rates
When you agree to work with a credit card processor, you agree to a service contract between you, the merchant, and the processor. This contract includes set rates and fees associated with every transaction. Many merchants assume that because third party processors don’t typically charge software, gateway, or monthly fees that they are receiving the best rates possible, though that’s not always the case.
Third party credit card processing companies typically charge higher rates per transaction to mitigate the risk of allowing you to use their merchant account. Pricing tables can appear misleading, so you need to carefully read the agreement to understand what you will be charged for every kind of transaction.
2. Ignoring Volume Requirements
One of the benefits of third party processing is that businesses with small volume can take advantage of credit card processing without having to pay outrageous set up and recurring fees to acquire a merchant account. Volume of transactions and dollar amounts can change the terms and rates associated with third party credit card processing. Before you commit to terms ensure that there are no minimum or maximum volume commitments that might impact rates and fees.
3. Accepting Cancellation Policy Penalties
Another benefit of third party credit card processing is the lack of cancellation penalties. With a traditional merchant account, there is typically an early cancellation penalty associated with early termination. However, just because some third party processors don’t include cancellation penalties doesn’t mean all of them don’t. Be aware of early cancellation fees or lengthy contract terms. You don’t want to be stuck paying higher third party rates when your business outgrows your current processing needs.
4. Settling for Easy
The final mistake merchants make when using third party processing is assuming that because it’s easiest, it’s the best. Third party credit card processing typically limits the amount of customisation and control you have over your account and its management. Sometimes this is vital for their success, but lacking customisation can sometimes hinder your business. A merchant account with many management and tracking tools let you understand the trends and emphasize what’s working best in your business.
Credit card processing is an important and sometimes confusing aspect of every business. You want to ensure you’re getting the best service for your business at the best price. At Allied Wallet, we understand the complexities of credit card processing. Our wide range of affordable services will help your business avoid mistakes and procure the best processing service for your unique needs.
Contact Allied Wallet today to learn about your business and your credit card processing needs.