Accepting Credit Cards for Payment in Your Business...where to begin?

Accepting credit cards comes with a price, but for some businesses "plastic" is required for your customers to be able to pay.

- "The Price" - Card companies charge you a percentage of the transaction amount as the "price" of doing business with "plastic" and this price varies from card to card.
- The GOOD NEWS is that you can shop around AND negotiate to some small degree with the card companies depending on the path you take.
- There are LOTS of middlemen, companies that would be happy to "act" as the interface between you and the credit card company. You will pay even more for having a middleman.

With credit card companies, NOTHING is free. Well, the single exception would be the little plastic sticker for the front door advertising that you accept the card!
- Basic things you have to decide, because there are service fees:
a) Will your business allow you the privilege of accepting plastic face-to-face only (you can be rewarded by virtue of the absence of surcharges if you truthfully answer "yes"), otherwise if you accept Internet / phone / fax orders you answer "no."
b) "How computer savvy are you?" This is closely connected with, "How many credit card transactions per month?" If you have too many transactions (too many is a GREAT thing!) then you'll want to opt for "automated" credit card processing, which costs more, but hey, you've got all those transactions. In my case, I may accept five to eight credit card transactions a month, so I opted to "manually" input my Internet orders, thereby saving some extra money since I didn't "need" the automated system (but as soon as I have "too many" transactions, I'm making the leap).
c) Do you need to accept plastic in order to grow your business? An important question for the small cost. Some business models do not need this payment method. Others could benefit nicely. How do you know? If you were a customer that wanted to buy something from YOU, how would you pay?

Here's what I did for my small consulting company: I allocated 8 hours to get through 1) a quick Accepting Credit Cards 101 education, and 2) a final decision.

Education 101 steps:
"Hi, I have a small business, and I'm at the point where I'd like to start accepting credit cards. Can you spend some time with me and explore the issues you think I should be aware of as I research my options for accepting credit card payments?" This was the question I asked as I phoned these three resources:

- I phoned the local community bank where I have my business checking, spoke to the person in charge of business accounts, and obtained a referral to the person in charge of my bank's credit card services. We spoke over the phone, followed up with an in person meeting. This phone call obtained excellent information about the world of credit cards. A bank is a middleman -- in most instances.

- I went to COSTCO.com where I am a member, and under the business services tab, I input my information request into the web form...and waited. I received a fairly prompt call back. This phone call obtained excellent information about the overall process of accepting cards. An affinity marketing company is always a middleman. Even if you don't have a COSTCO near year, chances are there is some kind of warehouse shopping club that offers member services.

- On a whim, I called American Express directly, 1-800-222-3781, and I have to say I hit the "education jackpot." The representative spent as much time as I needed to comprehend to my comfort level. There is no middleman when you go directly to a card company.

- Finally, I visited PayPal.com to see what they had to say. PayPal offers a virtual, non-plastic means of accepting customer payments (though the customer can use plastic to fund their PayPal account, but not required). However, PayPal works essentially the same as a credit card company: They charge you a percentage of each transaction for the privilege.

Results:
American Express offered me a deal. They said if I worked through them, they'd help me get set up with Visa/MC/Discover, and the per transaction pricing they offered me was the best of any of the options I found. They also had a nice Internet portal, extremely easy to use, where I can input my five to eight credit card transactions each month, and save a little on the fees. PayPal was a close runner up I must admit.

In the end, I do not accept PayPal at all, not because I don't want to, but because PayPal's fees were ever so slightly higher. I am listening to my prospective customers to see if there's any demand for PayPal as an top to the Big 4. In 12 month's time, I've not had a request for Pay Pal yet. It is a viable option however, and you may need it.

One last detail: Remember, nothing is FREE with credit card companies. So, one of the important questions I obtained during my Accepting Credit Cards 101 was: How much do you surcharge me if I experience a month with zero credit transactions?" If you're a small business, you want to include the answer to this question in your research.