Ideal Cost Reacts: Part 3 – Business 2 Community’s “25 Mistakes Businesses Make When Starting to Accept Credit Cards”
We chose to review this comprehensive article because it lays out what merchants should realize when dealing with credit card processors as well as what action steps they might individually take to optimize the payments process. The author relies on many third-party sources for its claims. Since the piece is quite comprehensive, we’re going to break it down in a 5-part series with a final verdict at the end. Let’s see if this guide helps small businesses make better decisions.
11. Not having up-to-date equipment or software.
Your customers expect to be able to pay you the easiest, fastest, and safest way possible. In fact, you’re required to have terminals that can process NFC (like Apple Pay) and EMV (smart chips).
If you haven’t done so yet, it’s time to upgrade your hardware and software so that you can keep your customers satisfied and reduce fraudulent charges.
EMV terminals are certainly required, but NFC capabilities are not. It is crucial to have the most efficient and quickest system to accept credit cards, especially in a retail environment with a line or shopping cart checkout. Ease of use will allow for more conversions, repeat business, and overall happier customers.
12. It’s easy to lose your ability to accept credit card payments.
Regardless of the size of your business — yes, even if you’re raking in millions of dollars per quarter – if you have one percent of your transactions disputed during any given month, the credit card merchant can block you from accepting credit cards.
If you rely primarily on credit card payments, then this is something that you can’t afford to ignore.
This is technically true, but in practice, we haven’t seen it applied so strictly. For example, we’ve seen merchants dropped when they exceed 1.5% consistently for at least two months, but not 1% for one month. Don’t panic after receiving one chargeback for 100 total transactions in a month, but do everything you can to prevent customer disputes, as discussed later in this article. Furthermore, if one credit card processor drops a merchant, they don’t necessarily preclude them from approval from a competing credit card processor.
13. Not taking the proper steps to avoid chargebacks.
Continuing from the last point, when there’s a dispute that results in a chargeback. Chargebacks are just bad for your business since you’ll be hit with a fee, and it raises a red flag to your payment provider that something is off. Simply put, you want to avoid chargebacks at all costs.
Start by knowing what the four reason codes are and then take the following steps:
- Have a clear return policy.
- Establish clear terms and conditions.
- Easily and quickly issue refunds.
- Provide outstanding customer service.
- For online merchants, make sure that your product descriptions are accurate.
- If you provide services, have a written agreement with your clients and customers.
- Don’t use stock photos since this could make customers feel like they’ve been misled.
- Never close a transaction without valid authorization.
Great advice. Part of having a great return policy includes clearly stating the term of the return or exchange or refusing returns and exchanges completely. We always advise that merchants have their customers sign off specifically on the return policy.
While this list is comprehensive, it is missing one critical piece. Any written agreement, especially with recurring billing, should include a payment authorization form specifying the dollar amount and time when the charge(s) will occur.
14. Failing to ask the right questions.
When searching for a payment processor, ask as many questions as possible. Again, you don’t want to sign a contract that you can’t get out of because the provider doesn’t fit your needs.
While not an extensive list, here are the questions that you should definitely be asking when looking for a payment processor:
- What fees will you be charged?
- Do you offer interchange-plus fees?
- How much will I pay in annual fees?
- When are cash payments settled?
- How long will it take to set up my account?
- How will you be able to scale with my business?
- Do you support a wide range of credit cards?
- Do you also offer mobile payment solutions?
The above list contains some important questions, but other than the account setup timeline and mobile payments question, the answers to these questions can be found on any merchant agreement. Asking and relying on salespeople in the credit card processing industry is a big mistake. Why rely on words when you can verify in writing?
15. Not following the rules to a “T.”
When you find a processor and have been approved to start processing credit card payments, you need to play by their rules. For example, what information will need to process cards that aren’t present? For security purposes, there are strict rules in place to validate the transaction.
Work with your processor to learn their exact rules in and out so that you won’t face fines or get blocked from processing credit card payments.
This mistake is a little hyperbolic The rules for accepting credit cards are self-explanatory. There are very few ways to consciously break the rules, other than outright fraud. Accepting cards in a card-not-present environment typically requires a credit card number, expiration date, and billing address. Other information may help reduce your fees, but card terminals and gateways will simply decline the transaction without enough information.
Don’t Take On The Credit Card Processors By Yourself
Since 2009, IdealCost.com has helped hundreds of companies nationwide reduce their merchant account fees through identifying and fixing hidden profit, overcharges, fake fees, and billing errors. Clients have saved $300-$20,000 per month on their credit card processing fees without going through the hassle of changing their processing vendor, bank, or equipment. Switching credit card processors should be a last resort, only reserved for funding delays, poor customer service, or technical difficulties. Before you consider switching credit card processors, see if you qualify for IdealCost.com’s monthly savings program. Upload your most recent merchant statement for a free analysis. You’ll receive an estimate within 24 business hours.
If you are opening a new credit card processing account or switching credit card processors, feel free to contact us for a free consultation. IdealCost.com can help secure the best terms and fees based on your specific needs.