Choosing a credit card processor is part of running an ecommerce business. You need a processor to accept payments for your online store. Although this is probably one of the most boring aspects of setting up an online store, it’s also one of the most important. Failing to do your homework prior to setting up a processor will lead to extra fees and lots of headaches.
It’s important to evaluate the processor so you can avoid making one of these common mistakes.
Discuss the Early Cancellation Fee
If you’re a startup or entrepreneur, you are likely still growing your business. You don’t know what next month will bring, and you don’t want to get in over your head when it comes to expenses.
That’s why it’s so important that you look at your contract terms. When you sign up with a credit card processor, you are entering into a contract. Almost all credit card processors charge early termination fees to those who leave the contract clearly. Companies typically charge the customer however much is left on the contract. For instance, if you spend $25 a month and you have two months left when you cancel, you’ll owe $50.
It’s a good idea to call the company and talk about the fee. Many will work with startups in order to get their business. The company might waive the fee or reduce the length of the contract. Express your desire to work with the company but explain that you are still growing your business and don’t want to pay high fees if it doesn’t work out. That’s a reasonable request, and many companies will be willing to negotiate the terms with you.
Watch Out for Volume Commitments
Volume commitments are one of the most dangerous aspects of a contract. Some credit card companies require that people take in so much in payments every month. Failure to do so leads to high fees or the loss of discounts. If you don’t have a ton of revenue to fall back on, volume commitments can harm your business.
Read the fine print, and if there is a volume commitment, move onto another company. You will be glad you did. You don’t want to have to scramble around or lose money just because sales are slow one month.
Check for Hidden Fees
While most companies are upfront about their fees, some hide them in the terms and conditions. Read through the document to make sure there aren’t extra fees. If you find something that doesn’t make sense, talk it over with the salesperson. If it still doesn’t make sense or if the salesperson brushes you off, go with a different company.
Your credit card processor is the foundation for your ecommerce business. It brings money into your company, so choose wisely. Take your time to research processors before signing a contract. You will likely stick with the same processor for at least a year, so you want to choose one that gets the job done without charging excessive fees.