When ecommerce was first introduced, it was a common belief that it was expensive and difficult to implement. In reality, it was often expensive and difficult for small business owners to set up. Fast forward to today and ecommerce is common in today’s marketplace. Group purchasing companies exist to make credit card processing savings accessible to businesses, including startups.
Top 4 Credit Card Processing Mistakes Business Owners Should Avoid
Unfortunately, some business owners tend to be so eager to enter into a merchant processing agreement that they don’t fully understand what they’re getting into. This is a detrimental mistake, especially for new businesses. It’s the responsibility of the small business owner to do research prior to selecting their credit card processor. Here are four of the most common mistakes that business owners make with their credit card processor:
1. Not Reading the Terms and Conditions
The biggest mistake that business owners make with their credit card processing company is not reading the terms and conditions of their contract. We’re all guilty of glancing over contracts and signing on the dotted line, but doing so in this case could be detrimental in the future. When looking over your credit card processor contract, be on the lookout for any red flags. Check for upfront fees, penalties and hidden fees. If you don’t understand part of the terms and conditions, contact a representative to walk you through it. If you’re still unsure, consult with a third-party professional.
2. Making Volume Commitments
Some credit card processing agreements have volume commitments that a merchant must satisfy. Volume commitments are minimum transaction amounts a merchant must process each month. This means that a merchant must process a certain amount of dollars per month. If the merchant doesn’t satisfy this volume commitment, then the discount rate may be increased, or other penalties may be applied. Having volume commitments can be difficult for smaller businesses, and it can be nearly impossible for a startup to satisfy. To avoid these complications, look for a credit card processing company that doesn’t require any volume commitments. When reading over your processing agreement, check to see if there’s a section regarding volume commitments.
3. Not Assessing Additional Fees
Be observant when assessing additional fees or penalties coming from the credit card processing company. If you’re accruing additional fees that weren’t stated in the terms and conditions, find out what’s going on quickly. This shouldn’t be an issue with a reputable company, but accidents happen. Keep an eye out on your account and take action if you’re getting hit with unexpected credit card processing fees.
4. Not Paying Attention to Rate Fluctuations
Most companies won’t spring a new rate on you overnight. This is another reason why it’s important to read the terms and conditions carefully. The terms and conditions of the credit card processing contract will specifically state your rates and whether there are any rate fluctuations. There’s nothing worse than paying 1.5% a swipe one day and 2.5% the next day. This may not seem like a large difference, but over time it adds up. If you notice an increase in your rate that wasn’t stated in your contract, contact the credit card processing company immediately.
Avoid Credit Card Processing Mistakes with Windfall
At Windfall, we understand the challenges small businesses face with credit card processing, from unexpected fees to confusing statements. By providing efficient, transparent solutions, we allow business owners to focus on growing their business rather than worrying about avoidable processing errors.
