Choosing A Credit Card Processor – Top 5 Considerations

Credit card processors are a dime a dozen.  You probably received a phone call from a processor soliciting your business within the past thirty days. Before you consider jumping ship for what sounds like a great offer, research the Top Five matters before selecting a new processor.

Credit card processing is a utility for your business, much like your electricity, telephone and internet, credit card processing is a must-have in today’s cashless society.  Just as you expect the lights to come on in a room when you flick the switch, you have expectations of your credit card transactions going through just as smoothly.  Because processing is a little more complex than throwing a light switch, you want to know that great support is offered during your business hours.  You want to know that the fees won’t fluctuate all over the place.  You also want to know that any switch to a new company will be smooth and there will be no disruption to your cash pipeline during the transition.

You also want to make sure that you can accept debit cards, credit cards and technology such as Apple Pay.  People need to be able to pay you in person, on the phone and through your website.  Here is a quick guide of the five most important areas to ask a credit card processor:

  1. How much is this going to cost?

There are many fees associated with credit card processing.  Here is a breakdown of some of those costs and what the expectations should be:

 Interchange fees: This refers to a fee charged for every credit card transaction.  Your processor pays this 2% to 3.5% fee to the card-issuing bank. It fluctuates based on several factors, including the type of card accepted (credit, debit or a rewards card), the type of transaction (if it’s done in store, by phone or online), and the size of each transaction.  In-store transactions will cost you less in interchange fees, since the card is physically present, meaning there’s less risk of fraud.

Monthly statement fees: The credit card processing company might charge you monthly statement fees to cover the expense of mailing you a statement. It costs about $10 per month on average but some offer it for free and some charge as high as $25 a month.


Application and/or setup/equipment fees: You pay and applications fee just to get started. Setting up the equipment needed may cost you too.  Expect to pay event more if you have to buy a terminal. These fees can vary widely, depending on the company.  Some companies might give you a terminal free.  If they do, you can bet they are going to make up for it somewhere else in another fee that will be ongoing for the life of your business relationship.

Monthly minimum fee: This refers to a minimum amount in fees the processing company must collect in any one month. If you don’t meet or exceed this minimum amount, the company may charge you to meet the minimum. Say for example, the company’s monthly minimum fee may be $25. If your total credit card transaction fees one month are $20, the company will charge you $5 to make up the difference.

Monthly gateway access fee: Some processors may charge you this monthly fee for providing a payment gateway, which transmits transaction data from your processing system to the credit card companies. Monthly fees cost approximately $10 to $30.

Early termination fee: Some processors may charge you for an cancellation of your contract. The fee can cost anywhere from a few hundred dollars to thousands.  Make sure you ask what happens if you close your business or decide to use another processor.

There may be other fees charged by your credit card processor.  Ask about all the recurring monthly charges you can expect and what they are for.  If you have any concerns, ask the sales rep to explain them to you in plain English.  Speaking of English, if you speak another language as your primary language, ask if they speak your native language.


  1. How long will it take to set up?

  • It should be easy for you and your employees to set up the processing technology.
  • Find out how long the payment processor will take to set up your account and install the equipment so you can plan accordingly.
  • Find out how long the payment processor will take to set up your account and install the equipment so you can plan accordingly. If it seems like it might be a complicated task, make sure the processor can provide some support, whether you need help over the phone or in person.


  1. What are the accepted payment types?

In a cashless society, make sure your processor sets you up to take all major credit and debit cards so you don’t have to turn away a customer simply because they only have a Discover card or they only like to pay using Apple Pay.  Ask about other types of payments you might be able to process such as prepaid cards, gift cards or an electronic benefit transfer (EBT) depending on your business.


  1. Does it accept new payment technologies?

If your business serves a tech-savvy crowd or a lot of millennial clients, they may have embraced near-field communication (NFC) technology that includes digital wallets such as Apple Pay, Samsung Pay or Android Pay. This technology allows customers to make purchases with a simple touch on their smartphone or tablets.  The number of people using mobile payment systems exceeded 150 million at the end of 2017.  Will you be able to process sales on a Smartphone or tablet?


  1. How helpful is customer support?

What happens if you run into technical problems at night or on the weekend with your credit card machine? Is someone going to be there to help?  Chosen Payments recently assisted a merchant on Thanksgiving Day who needed to add an additional Point-of-Sale location to handle the Black Friday crowds.  If you have questions about your monthly statement such as a specific fee, how easy is it to get the question answered?  If you operate a 24/7 business, you need a processor that provides 24/7 customer support.  If you typically work on your books on the weekends when your business is closed, is there someone to call to ask questions about your statement on the weekends?  The fees might be a little higher from a processor that offers 24/7 service but in the long run, the cost of convenience is almost always worth paying a little more.

So, with all these processors seeking your business, how do you decide which is the best fit for your business?  To start with, if you are part of an industry association, ask your association who they endorse.  This is a good indicator the processor has a working knowledge and relationship with your industry and is more likely to understand your unique needs.  You can also check with The Better Business Bureau.  Avoid using banks.  Very few of them actually do their own processing.  They sub-contract processing out to………a credit card processing company!  They mark up the fees so they make a little money too and you end up paying more.