What to Look for in Bank Processing for Credit Card Payments
There are definite advantages to accepting debit or credit cards at your business. Mainly, your customers will appreciate the added convenience of buying online or over the phone. The direct bank method of processing credit card payments can eliminate the need for third party involvement.
Consider the following before you decide which credit card processor you want for your business:
Service availability
When you use a bank for processing payments, you will need to set up a merchant account with a bank. If you already have an established business account with a bank, begin by discussing your options with that bank.
Each bank has requirements that must be met to begin processing credit card payments. Be sure to ask about all fees associated with accepting credit cards, and any termination fees that are applied for switching to another provider. You can also expect to have a credit report run on your business.
Costs and contracts
Be sure to choose an account that suits your business type and sales volume. This will ensure you the best rates and service available to you. Individual banks have different fees associated with processing payments. Monthly fees may or may not be required.
Typically, a 2.1% fee is assessed with each transaction. This fee is deducted from the payment amount before it is transferred to your business account. Rates are determined by a variety of factors.
Processing companies will choose between a qualified, mid-qualified, or non-qualified rate, when charging for each transaction. Your contract with the bank for processing your business payments can range from a 30-day contract - or longer. Be sure to ask about this before agreeing to any processing services.
The following are questions you should ask a potential credit card processing company.
- What are your non-qualified rates?
- What are the monthly fees?
- Is there a monthly minimum?
- Is there a fee for canceling the contract?
Security
A secure system for processing payments online is a necessity in the business of e-commerce. Most banks provide encryption for credit card payments. In addition, you need to be aware of your bank's process for handling charge-backs. When the card holder's bank denies the transaction, the funds are removed from your account. Depending on your bank and your agreement, you may be required to maintain a set balance to cover these potential transaction reversals.
Card acceptance
Debit cards are normally processed through any business banking system, either offline (signature based) or online (pin-based). A debit card needs the branding of Visa or MasterCard in order to be processed offline. These cards are often considered less risky than credit card transactions, and result in lower merchant fees. MasterCard and Discover are processed through most banks. Discover and American Express bank processing may be limited. Be sure to verify which cards are accepted by your bank, before you sign an agreement.
Additional considerations
- Citizens Bank offers solutions for small and large businesses. A small business is defined as less than $5 million in yearly revenue.
- Chase Bank offers its business customers quick fund transfers to their accounts. Next-day funding is available for payments made with Discover, MasterCard, and Visa cards, but certain conditions apply. Chase also offers free terminals for in-person credit card payments.
- US Bank processes Diners Club cards in addition to all other major cards. Remember to ask questions before you agree to any contracts.