The credit card industry has been subject to much controversy regarding how their contracts are written for both consumers and merchants with credit card processing accounts. Millions of consumers have struggled to stay in control of high balance credit card accounts. At the same time, merchants and business owners try to reduce the credit card processing fees to accept cards from their customers. In some cases, it is the language of the contract that has been questioned. Some people believe the credit card processing contracts are confusing and potentially misleading. At the end of the day, whether you are a credit card user or a merchant involved in processing- what your contract says or doesn't say can end up costing you a lot of money in the long run.
Here we look at what both merchants can do to make sure they understand what their card processing contract means to their bottom line:
Merchants and Credit Card Processing
Making the wrong choice for your processing company can have a devastating impact on your business finances. Paying too much for the ability to accept plastic from your customers results in losing profits that should stay within your business. Depending on the number of credit transactions you process and the terms of your agreement, you may be paying thousands of dollars more each year than you would have to with another processor charging lower rates.
Processing fees: Whether you are looking for your first credit card processing company or are already accepting credit as payment from customers, carefully reading your contract will help you determine if this is the right processor for your business. Specifically, you want to be on the lookout for any fees and compare them to other processing companies to ensure you are not overpaying. As with any service or product with fluctuating prices, you may benefit from comparison shopping to find the lowest fees for the services you need. When comparing card processing fees, make sure you compare one pricing structure over another - is it better to pay a flat rate per transaction, or would you save money by paying a monthly fee and lower transaction percentages?
Equipment rental: Also, view your contract to determine how much you are being charged to rent equipment if you do not own it yourself. It is almost always better to invest in your credit card processing equipment, even if your contract claims the rental or lease of their equipment is free. Somewhere you will be charged an inflated fee to offset the use of equipment that is not your own.
Cancellation fees: Some processing company contracts include an early cancellation fee. If you find a company offering lower rates and decide to switch - the company can then charge you the cancellation fee. When looking at contracts to choose a processing company, if the contract includes a cancellation fee, ask to remove it. If they don't take out the early cancellation fee, consider looking for a different company to give your business.
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