How to choose a payment processor
April 16, 2015

Selecting the right payment processor is an important consideration for small-business owners. Companies need to evaluate their current needs and how much they expect to grow in the near future. There is more that goes into choosing a great credit card processing partner than just comparing prices.

How credit card processing is priced and what merchants should consider
Different payment processors have varying capabilities, so it's important for business owners to consider the types of transactions they normally process. In some cases, retailers will need a solution that accommodates card swipes, online transactions, phone payments and mobile payments. Depending on the industry, a mobile point-of-sale system may be highly effective.

Most payment processors are relatively transparent about their fees, which allows owners to better compare costs, according to Small Business Computing. For merchants that process a small number of transactions per month, a flat fee per transaction may be the best arrangement. However, some payment processors also charge a monthly fee. This leads to more predictable operational costs. When companies start bringing in more business, it may be better to switch to a variable pricing model that depends on the brand of credit cards. Each card provider will offer a different rate, which determines how much the retailer would pay.

Other considerations for selecting a payment processor
It's important to understand how credit-card processing equipment is acquired. Is it a rental or is it purchased? Will retailers be charged for the equipment if they cancel the contract? In addition, retailers need to know the terms of their contracts in case they automatically renew.

Because data security is far more important than it was several years ago, merchants should be aware of what security features their payment processors offer. Some providers deny or flag transactions that are deemed risky, according to Small Business Trends. Retailers also need to know whether the processor stores or encrypts transactional data. Security is one of the most important elements in the selection process. Processors should be able to help merchants maintain Payment Card Industry Compliance standards.

In addition, merchants should look for a payment processor that will provide support during the implementation and assistance afterward. In case any issues occur, retailers have somewhere to turn. Small-business owners may have relatively little technical knowledge about payments, which is why the right partner is so important.

Nexus: G-WEBCD6