Small Business Credit Card Processing Tips

The merchant services industry is extremely competitive, and yet most credit card processors will charge you far more than you should be paying... unless you know what is negotiable. Here are some tips on how you can lower your monthly credit card processing bill.

1. Understand what fees and assessments are industry-wide

You receive two charges for accepting plastic that aren't negotiable. The first is the INTERCHANGE RATE. This fee is charged as a percentage of your profit. The issuing bank (the bank that issues the consumer a credit card) charges you a percentage of your profit to cover the risk that the credit card holder defaults. Part of this percentage is also paid to the credit card company for the privilege of using their network to process the transaction. These rates are determined by the credit card companies and issuing banks.

For example, as of April, 2012, Visa's most common interchange is 1.19%. That means if someone purchases $100 of product using their Visa card, you pay $1.19 on that transaction.

ASSESSMENTS charged by the major credit card companies are termed "fees and rates." They are the same for all processors. An example is Visa's Fixed Acquirer Network Fee.

2. Know which fees are flexible

The only part of your monthly processing fee that is negotiable is the markup a processor charges on interchange and assessments. For example, the processor is going to pay Visa's common interchange of 1.19% and then charge it to your account. They also charge you a markup on that percentage. This markup is negotiable.

Most merchant service providers will try to set you up on something called tiered pricing, meaning they hide their markup inside expensive mid-qualified and non-qualified tiers. Don't let a salesman talk you into this opaque system! Request you be set up on something called interchange pass through pricing. This is a far more transparent processing method. It allows for you to see exactly what's charged by the credit card companies like Visa and MasterCard and what's charged by your processor. A processor shouldn't be charging you any more than.5% over the card company's set interchange rate!

The second markup a merchant processor charges is the "cents per transaction." This can be as high as 25¢ per swipe. Don't settle for anything more than 10¢ per swipe!

3. NEVER sign an equipment lease!

The most common card reader is the Verifone Vx510. You can purchase this piece of equipment for roughly $300. If a salesperson tries to sign you into a lease on this machine, stop doing business with him/her immediately! The most common monthly lease payment is $40; therefore, in a year's time, you will have paid $180 over what the machine is worth. *Hint*: processors will often impress you with their "low rate" and then sign you into a lease. The best companies in the industry give you a machine for free. They treat it like the cable company which gives you a cable box for free as long as you pay your monthly cable bill.

4. Watch out for Annual Fees

Most companies charge an annual fee in order to process credit cards. It will range from $90.00 to as much as $150.00. However, if the salesperson is unwilling to waive this fee for you, they don't want your business badly enough.

As a future business owner myself, I wouldn't accept anything more than a $5.00 monthly statement fee,.5% markup on interchange, and.10¢ per swipe. There aren't many companies out there that will give you this, but you can find them. And if you're in a contract already, don't hesitate to call your current provider and demand the rates you deserve!

For more information, follow the conversation on my blog. To discover the lowest rates available and receive a free merchant statement analysis, call 1.877.928.0305 (8am - 6pm MST) to speak with an advisor or visit msdmerchants.com.

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How to Get Your First Business Credit Card

People who have a good credit history to back them up will have no trouble in applying for a business credit card, and getting an approval in just a matter of seconds. But for those who have less than perfect credit rating, they could encounter some difficulties along the way.

For those who are just starting up a small business, their credit rating would be based on their personal credit cards. Hence, if they happen to have an unpaid bills in their credit report, it could make it difficult for them to obtain a business credit card. Not having any credit history to back you up is also just as bad as having bad credit rating. Business credit cards are generally unsecured, and call for a good credit record as a primary requirement for their clients.

What to do if you have little or no credit

Apply for a shopping or gas card from a reputable company that reports to the credit bureaus. These cards work just like a credit card wherein you can purchase items form their stores only, and pay it back over a certain period. Approvals for these types of cards are usually easier than any of the Visa or Master card offers. Once you have your shopping card or a gas station card, use it well and be sure to pay for your credit on time. You must be able to prove that you are a good payer. You will need to wait a for at least 6 months so that future creditors can see that you have established credit and are paying on it on a timely manner.

Debit cards with the Visa or Master card Logo on them, that also report to at least one of the major credit bureaus are an excellent way to start building your credit record. Your spending is only limited to the amount of money in your bank account. If you already have had past trouble with bad credit, debit cards are good for helping you to control your spending. Keep in mind that you're goal is to pay on time. After a while, if everything has been paid well from your account your debit history can be as good as your credit record.

Then again, you may also apply for one of the specialty unsecured credit cards. These cards specialize in helping people with bad credit re-establish credit. These types of credit cards are more lenient in approving their customers, even if they have no credit record or have a bad credit history. This is a good start to re-establish a good credit record for yourself.

Most banks offering credit cards for small businesses would insist on an agreement stating that your guarantor is accountable for the debt you owe, regardless of whether your guarantor has part ownership of your business or not. If you're going to put a person as your guarantor, make sure that he is aware of duties and that in any case, he accepts his obligation.

Business credit cards are indeed advantageous for big business and small businesses alike. If it is your first time getting a business credit card, remember to do your research

Bear in mind these three major reasons and you shouldn't go wrong with using business credit cards. By using them wisely, you will be able to build up a good credit reputation for your business. This business credit will be an enormous advantage when the time comes that your business needs enhancement or expansion.

Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Visithttp://www.BusinessCreditCardSite.com

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