Where credit cards are manually entered into the credit processing terminal or online, the transactions are considered "non-qualified" or "non-verified" and are assigned slighthly higher rejection risk, and therefore attract an additional charge of 0.2-1.0% per transaction depending on the service provider. This is also true for processing of premium credit cards with 'cash back', travel points, or other premium benefit programs attached to the cards. In effect, the premium packages are funded in large part by the additional merchant fees and not by the annual fees charged to the card holders.
In addition to the base and additional service fees, a merchant should also consider the after sales service and support that will be provided, as well as any switching costs that may be incurred when considering changing to another provider - are you locked in for a term contract? If so, what are the cancellation charges? Will they take back the processing terminal? If not, will the terminal be compatible with the new service provider's software and hardware? Based on the answers to these questions, you may be on the hook for additional charges upon early termination of your contract to switch to another merchant services provider.
Armed with this information from the 'small print' of the merchant services contracts, it is recommended to shop around to find the best combination of price and service for your business, given the mix of cards, volume operation of your business.
Stay tuned for additional financial tips for Small Business.
Stephen Beech, MBA, CMA
Padgett Business Services
www.padgettmississaugasouth.ca
(905)949-4388 ext. 24
(c) Stephen Beech 2010
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