Request a Call

How To Find A Great Credit Card Processing Small Business

Search

How To Find A Great Credit Card Processing Small Business

Credit Card processing small businessWhen it comes to protecting your small business, there’s nobody more passionate about it than you. You’re the one spending sleepless nights worrying about inventory. You fret over how the bills are going to get paid. The last thing you need is to find out that your merchant services company is dreaming up ways to take more.

It’s been the standard for decades now. Credit card processing companies set you up for a percentage and then lock you into a 3 or 4 year contract. Once you’ve entered the contract, you find out that your rates have changed. What?! Why did my rates go up? Why am I paying hundreds more every month?

You find that there’s no way out unless you pay a hefty exit clause that you weren’t told about. Look, there it is buried on page 7 of your contract. Rat bastards.

What follows is a list of ways that credit card processing companies skim off the top. If you’re seeing any of these methods in your current merchant account, you’re getting hosed.

credit card processing for small business #1 – Annual Credit Card Processing Small Business Fees

This one is a bugger of a sign that you’re being messed over. The rep that recruited you probably said that there wasn’t a way to get a merchant account without an annual fee. Now you know that he was full of it. He was taking bull plop and calling it fudge. This is a completely made up fee for a standard merchant account.

Annual fees are a great way for a credit card processing company to take more from a small business. You’re pretty much already bent over the table when you first call the company. They know you need to accept credit cards. They know that you probably don’t know anything about what it costs to accept credit cards.

The unscrupulous companies will use the annual fee to take another $100-$200 per year. That’s hard earned money coming straight out of your pocket? You don’t have to give that up, so why should you?

Tell them you’re not buying any fudge today and move on to another provider.

small business credit card processing #2 – Variable Percentage Rates

Oh, this one makes my blood boil when I think of someone paying this. In the credit card processing industry, small business owners are an easy target. They’re passionate about their business, and they’re learning so many things all at once. They usually just have to trust their credit card processor to be honest for the good of their small business.

It turns out, most credit card processing reps who go from store to store don’t care at all about your business. The only way they get paid is if you switch your processing over to their company. If you switch over, they’ll usually get a one time payment for closing the account.

What you may not know is that sometimes even the reps are rather clueless when it comes to understanding the contract you’re signing. There is often a hidden clause somewhere in a long contract that says after 6 months they can change your rate.

In case you’re not aware, that’s a HUGE DEAL!!! If you’re locked into a contract with your processor for 3 or 4 years and they can change your rates… What will you be paying to accept credit cards for your small business in month 7? I’ll tell you, it’s going to be about as much as they can get away with.

Find a processor that will lock in your rate for life. They’re out there, and they can certainly do that for you. Lock in your rate and make sure it’s not going to change over time. This is a great way to protect your business.

best credit card processing for small business #3 – The Credit Card Processing Small Business Contract

Most small business owners are used to working with a contract for everything. There are contracts for office use, product use, services, and the list goes on. So, why not have a contract for your credit card processing for small business as well?

There is no reason to have a multiple year contract with any credit card processing company. The only thing that a long-term processing contract will do for you is nothing. It won’t protect you. For sure it won’t guarantee you a better rate. It also won’t do anything but help you pay more money to a company that doesn’t need it.

Credit card companies decided many years ago that a contract sounded like a good idea. Processors were trying to drum up ways to make sure that their merchants stayed with them long term.

Why Use A Credit Card Processing Contract Anyway?

See, when you consistently screw small business owners out of more and more money, they want to leave. To make you stay with them, they have to lock you into a contract so you can’t leave. Well, you can leave, but there’s a massive exit clause where you’d pay between $500-$1,000 to get out. Some companies even have an estimated damages clause. If that clause comes into effect, you could be on the hook for as much as $30,000.

Ouch! If you’re looking at a credit card processor for your small business, look out for a contract. If they’re having you sign a contract for anything longer than a month to month, run. far. away.

The really good credit card processing small business friendly companies do month to month contracts. If you’re looking at a processor who says a 4 year contract is standard, spit in their eye.

#4 – The Exit Clause/Buyout To Leave

Yet another hidden fees that really burns my biscuits. In credit card processing contracts, there may be hidden a little exit clause. The purpose of this clause is to make sure the processor makes enough money from you before you leave.

Think of the exit clause as a type of guarantee that you’re either going to pay them their money over time or all at once. It’s a lump sum payment that makes sure that your company will give them their money. One way or another, they’ll get you. Grr.

When presented with a contract to sign for a new credit card processing company for small business, READ IT ALL. Don’t just let them walk you through it and have them tell you the highlights. If you’re not reading it, you have no idea what in the world is in there. They could leave out tons of hidden fees and jargon that will cost you a lot of money. That’s your money. Keep it in your pocket.

If you’re seeing an exit clause, ask them why it’s in there. Are they afraid you’re going to leave? Are small businesses leaving their credit card processing company in droves? Why did they feel like they had to put it in there. Here are some standard responses that you can laugh at them when they say them.

“Oh, it’s an industry standard practice.” – Like fun it is. Why is it an industry standard practice? Because it makes them MORE MONEY.

“Oh, is that in there? You’d have to ask my supervisor about that.” – Pssh. They know that one is in there and they’ve been asked to kick it up to their supervisor and have you call them. Why have you call? Because most of us won’t actually make the call. They’ll have you sign and promise they won’t process the contract until you get your question answered. Yeah, they won’t wait, so beware this tactic.

 

 

#5 – Type of Processing Rate Given To Your Small Business

I’m sure you already know this, but we’ve saved the best for last. The number 1 way that credit card processing companies will take your hard earned money is rate type.

There are many different ways to pay for credit card processing. The traditional method is to charge your business a blanket percentage for all cards processed. This my friends is a terrible type of rate to have.

Did you know that each credit and debit card have a different fee associated with them? For some of you, I’m sure that’s an eye opener. In general, debit cards are cheaper to process than credit cards. Debit cards will cost the processor less.

Credit cards are all over the board regarding what type of fees come with them. There are some cards that just have a standard fee. Probably something in the area of 1.5% and there are no rewards given to the user for using that card. Other credit cards may have airline miles as a reward given to the consumer with each transaction. Who pays for those airline miles? YOUR BUSINESS! Someone is paying for the added benefit to the consumer, and it just happens to be you the small business.

Credit card processing companies will typically charge your small business a higher blanket rate to cover all types of cards. If there’s a rewards card that someone uses that gives the consumer 1.5% cash back… That card could cost 3% without any markup to the processing company. Your rate might end up being 4% just to protect them from those cards.

Transparent Pricing Models – The Good Ones

There are two types of pricing models that you want to check out before you sign with a credit card processor. Let’s take a look under the hood at what you should be looking for.

1. Totally free credit card processing – This is a credit card processing account for small business that costs you $0 in fees. It’s a completely free merchant account to the business owner. The fees for processing credit cards are assigned at the point of sale and paid for by the customer. If you’re looking to hold on to all future credit card processing payments, this is an amazing plan. You can simply add back any payments you would normally pay each month to your bottom line. You can read more about this type of account here.

2. Cost + (Interchange Plus) credit card processing small business – This is a completely transparent model of processing. It takes the actual cost of each card that comes through your point of sale and charges you that exact cost. The processing company adds on their small percentage (thus the cost +) and you end up paying only nominal processing fees.

Honesty in Small Business Credit Card Processing

Your relationship with your credit card processing small business company can be honest. With this model, you know how much the processor is making on each transaction. A really good processor will even tell you which type of Cost+ pricing is the best. (Since there are two costs associated with running every credit card.)

What are those two costs? Great question.

The first cost associated with running a credit card is the swipe fee. Every time you swipe a card for a payment, there is a cost associated with it. This is a fee that’s assigned by the big boys like Visa and Mastercard. The swipe fee isn’t something you can get around. The cost of the swipe fee can vary. A great processor will ask you what your average ticket is and help you determine how to keep your costs down.

The second cost associated with running a credit card is the credit card percentage fee. This is the cost that it takes to run the card, and that fee goes straight to the card manufacturer. This is usually represented in the percentage fee that you agree with on your contract with your provider.

Your processor should help you determine if paying a slightly higher swipe fee or higher percentage fee would save you money. If you’re running 400 credit card transactions a day at a $.25 swipe fee, you’re paying $100 a day in just swipe fees. If you’re running 5 transactions a day at $2,000 each, you’re only looking at a $1.25 swipe fee total. In this second example, your percentage fee would be the much more important number.

Conclusion

No matter which processor you want to work with, become educated on each of the items above. Go into the discussion armed with knowledge to make sure that you aren’t being taken advantage of. When it comes to your business, it’s up to you to protect your money and guard the fees you pay.

Here at Dual Payments, we pride ourselves on being the most transparent credit card processing small business out there. We are a small business. Even though we process for thousands of businesses, customer service and honesty is the only way we build our business. We would love to earn your business. Test us on our list above when you call. I know you’ll really like what you encounter.

Share the Post:
Search

Download a Zero Fee Case Study

Learn more about how Zero Fee Processing has actually put money back in the pockets of a real-life business owner.

Related Posts

Card Fees by 4%
Dual Payments Insights

Slash Credit Card Fees by 4%: The 2024 Guide to Dual Pricing Merchant Accounts (For Beginners)

1. The $15k Secret: How Credit Card Fees Drain Small Businesses The average small business loses $10k–$15k annually to credit card fees (Forbes, 2023). For

[...]
Read More
restaurante
Dual Payments Insights

Why Bars and Restaurants Are Switching to Dual Pricing and Cash Discounting

In recent years, bars and restaurants have increasingly adopted dual pricing and cash discounting models to combat rising operational costs. With inflation at a 40-year

[...]
Read More
Save $18k Annually
Dual Payments Insights

Save $18k Annually: How Dual Pricing & Cash Discounts Transform Used Car Sales (Legally)

1. The $18k Secret: How Credit Card Fees Are Killing Used Car Profits The average used car dealership processes $1.2M/year in card payments, losing $36k–$48k

[...]
Read More
ahorro
Dual Payments Insights

Zero-Fee Processing: The Dental & Chiropractic Guide to Saving $18k/year & Boosting Profitability

1. The Hidden Cost Killing Dental & Chiropractic Profit Margins The average dental or chiropractic office loses $15k–$25k annually to credit card processing fees. With

[...]
Read More

Request A Call From A Dual Payments Representative

We know you’ve got questions. You could spend the day reading every word of our website, but you might find answers more quickly by just asking someone from our team. That’s what we’re here for!

Download a Zero Fee Case Study

Learn more about how Zero Fee Processing has actually put money back in the pockets of a real-life business owner.

Don't have time to read it all right now?​

Download your free PDF of “The Complete Guide to Credit Card Processing“. Just give us your email and we’ll send it to you right away!

Example of High Risk Merchants

  • 1-900 Phone companies – If you’re the type of company that charges people to have a chat on the phone, you’ll be considered high risk.
  • Adult Bookstores – Clearly a part of the adult entertainment industry, and an easy mark for the high risk tag.
  • Adult Entertainment – Any business labeled with the “adult” descriptor will automatically be assigned a high risk status.
  • Adult Toys – As “adult” is in the name, it’s an easy target for association with the adult entertainment market.
  • Airline Industry – Due to cancellations on high ticket purchases, this will put your airline company in the high risk category
  • Amazon Stores – By having a high rate of return, Amazon stores are seen as high risk.
  • Ammo Sales – Association with the weapons industry guarantees high risk status.
  • Annual Contracts – Any time an annual contract is involved it can be considered highrisk because most consumers forget they signed up and chance of chargeback can be high.
  • Antiques – With a high average ticket per item, antiques are considered a risky merchant type.
  • Astrology – The study of the celestial bodies and the influence on human affairs can be a chargeback target if customers feel like they aren’t getting the answers they want.
  • Auctions – Because of the nature of bidding on a product and not having a set price the risk level goes up.
  • Autographed Collectables – There is almost always a question as to whether an autograph is authentic, and therefore chargebacks are much higher in this industry.
  • Automotive Brokers – Brokers of automobiles have a very high average ticket are are therefore of higher risk.
  • Bankruptcy Attorneys – Since the people who are working with bankruptcy attorneys are usually in financial trouble, the odds that a payment would be charged back is higher.
  • Betting Services – In many states betting is illegal but for the legal states betting with a credit card has huge chargeback implications.
  • Brokering – When a third party is involved with selling a product the risk level goes up ten fold.
  • Business Loans (Merchant Cash Advances) – Loaning money is always risky, but with business loans and startup lending, high risk is present by the nature of the business.
  • Casino – Just like a betting service, if a customer gambles with their credit card the chargeback rate sky rockets.
  • CBD Products – CBD itself poses high chargebacks because of the legitimacy of the product and the health benefits promised.
  • CBD E commerce – CBD E Commerce has twice the charge back of retail CBD because many consumers don’t feel like the product they receive gives them the benefits promised.
  • Check Cashing (Check Processing) – The level of fraud in check cashing and cash advances is what gives this industry a higher risk consideration.
  • Cigarettes – With higher levels of risk for theft and criminal activity, cigarette sales are deemed high risk.
  • Collection Agencies (Collection Agency) – Many banks see collections as an unsustainable business model that is many times unreliable.
  • Collectible Coins – A higher level of chargeback in this industry gives it a high risk tag.
  • Collectible Currency – Due to the level of inauthentic collectibles, the risk of chargebacks are much higher with collectibles.
  • Copyrighted eBooks – When someone sells something copyrighted without permission many legal issues can arise.
  • Coupon Programs – With many coupon programs the coupons expire and once they expire the consumer wants the money back they spend.
  • Credit Counseling – Due to their clients usually being in financial problems, this industry is fraught with non-payment and fraud.
  • Credit Protection – Most people that need credit protection are bad with money so chargebacks abound.
  • Credit Repair – If a consumer needs credit repair then chances are they are a high risk for chargebacks.
  • Currency Sales – Many businesses that exchange currency do it at incorrect rates hence more chargebacks.
  • Dating Services – Dating is a volatile industry, and is also lumped in with the adult entertainment industry, making it a high risk account.
  • Debt Collection Services – As the collection of debt isn’t always possible, this industry retains the tag of risky.
  • Debt Consolidation Services (Debt Consolidators) – Consolidating debt is a challenging business and as debt is usually the problem, it’s seen as unsecure from a payment perspective.
  • Debt Repair Services – Since the clients of debt repair services are usually having financial challenges, it makes this industry seem a higher risk.
  • Discount Health Programs – Many people don’t feel they are really getting a discount so they try to get their money back and if they don’t the chargebacks sky rocket.
  • Discount Medical Care Programs – Just like the discount health programs if they don’t save the consumer wants their money back.
  • Drug Paraphernalia – Anything that is associated with the drug trade is considered high risk. Offshore merchant accounts are commonly used for this type of business.
  • E Commerce – As the source of the payment is unverifiable at the point of sale, any transaction without the card present has a higher risk of credit card fraud.
  • Ebay Stores – Many people sell items that aren’t as described so chargebacks can be an issue.
  • Electronic cigarettes – much like traditional cigarettes, e-cigarette sales are also deemed high risk.
  • Electronics – This industry has a much higher ticket compared with many other businesses. A chargeback for a $3,000 tv or two and your account can be in jeopardy rather quickly.
  • Escort Services – This is deemed a part of the adult entertainment industry and therefore needs a high risk merchant account and payment solution.
  • Event Ticket Brokers – If a customer buys a ticket and doesn’t use it they feel like they can charge the transaction back.
  • Extended Warranty Companies – Warranties are rarely used so people try to charge back the money that has been spent paying for them.
  • Federal Firearms License Dealers – Any organization associated with guns or firearms is automatically considered in this category.
  • Fantasy Sports Websites – Just like gambling, if a person starts to lose too often they try and charge back the transaction.
  • Finance Brokers – The entire financing industry is risky. By simply extending credit to other individuals, this business is betting that a majority of them will actually pay what they say they will.
  • Financial Advising/Consulting – The high risk tag on financial advisors isn’t about the advisors or their firm. It’s about the clientele and their current circumstances.
  • Financial Loan Modification Services – Due to a clientele in financial struggles, the high risk term is applied to any payments in this industry.
  • Financial Planning – Anything that includes risk for the consumer can have consumer implications with chargebacks.
  • Financial Strategy – Another risk and reward category, if money is lost, consumers try charging back making this a high risk industry.
  • Fortune Tellers – When a person doesn’t hear what they want to hear, or what is told doesn’t happen, the fortune teller can receive huge chargebacks.
  • Furniture Sellers – High risk only when its custom furniture.
  • Gambling – If money is lost the chargebacks rise.
  • Gaming – Chargeback levels skyrocket when consumers don’t win.
  • Get Rich Quick Programs – It’s rather common in this industry for an individual to purchase the training and then chargeback their purchase saying it didn’t deliver on what was promised.
  • Google Stores – With a high rate of return on their items, Google stores are considered high risk.
  • Gun Sales (Firearm Sales) – The gun and projectile industry is automatically associated with high risk credit card processing.
  • High Average Ticket Sales – With any high average ticket, just a couple of chargebacks can mean a massive shift in how risky the account is deemed by the processor.
  • Home/Vacation Rentals – Many issues with chargebacks can take place if the consumer decides not to travel.
  • Horoscopes – Many people believe this is hocum so will chargeback transactions.
  • How To Programs – A common practice in this industry is to purchase the program and charge it back with the description that it didn’t deliver what it promised.
  • Hypnotists – Many merchants will charge back these transactions if results they hoped for were not met.
  • Import/Export Business – Another example of taking goods over country borders which automatically brings in additional risk to any processing account.
  • Indirect Financial Consulting – When using a third party to consult, the high risk status gives the processor fraud protection.
  • International Cargo – Any time you introduce a multi-country element to credit card processing, the ability for fraud to be introduced skyrockets.
  • International Merchants operating in the US – Since the merchant isn’t operating from the United States, there are many unknowns about what is happening on the other side of their business, thus increasing the risk.
  • International Shipping – Transporting goods between countries is risky and introduces all sorts of elements to the financial stability of any transaction.
  • Investment Books – consumers get upset if the investor isn’t right which can lead to chargebacks.
  • Investment Firms – As investments are never a “sure thing” this is considered a risky industry for having a merchant account.
  • Investment Strategy – Anything with future promises can lead to chargeback.
  • Knife Sales – weapons of any kind are automatically given high risk status.
  • Kratom E Commerce – Accepting payments online is high risk, and Kratom is a substance in the health and wellness industry, which is also considered high risk.
  • Life Coaching – With no tangible goods involved in the transaction, life coaching is considered high risk.
  • Lingerie Businesses – Associated with the adult entertainment industry, chargebacks abound.
  • Lotteries – In most states you can buy lottery tickets with a credit card but if you’re allowed to and the ticket is not a winner, consumers try to chargeback the transactions.
  • Magazine Sales – Many magazine sales are recurring subscriptions, which can have issues with chargebacks.
  • Magazine Subscriptions – Same as magazine sales chargebacks can be huge when a recurring subscription happens. (often referred to as recurring billing.)
  • Mail Order Companies – When something is ordered through the mail chargeback risk can go up.
  • Marijuana Dispensaries – As marijuana isn’t a legal substance in every state, this is considered high risk due to the legality of the product. Cannabis credit card processing is available through Shift Processing.
  • Matchmaking Services – Another branch of the dating tree, and often associated with the adult entertainment industry.
  • Medical Devices – If a medical device doesn’t do what’s promised the purchaser may chargeback the transaction.
  • Membership Organizations – This is another instance of where the transactions don’t have any tangible product and are easily charged back to the merchant account.
  • Merchants on the MATCH list – If you are a merchant who has been reported to the MATCH list (Member Alert to Control High Risk Merchants) or the TMF (Terminated Merchant File) you are given high risk status.
  • Merchants with Poor Credit – Merchant accounts are given based on the credit score of the business owner. It’s assumed that the business owner is going to be making the financial decisions for the business, and a poor credit score reflects on the viability of any business transactions.
  • Modeling Agencies – At many agencies models are promised the world and it doesn’t happen. The consumer then wants their money back.
  • Movie Downloads – Transference of a digital product is considered of higher risk. Also, rarely is a physical card present at time of purchase.
  • Multilevel Marketing Sales – Often associated with pyramid schemes, MLM sales are considered a risky business.
  • Music Downloads – Purchasing any digital product is considered to be of higher risk than a physical transaction. Most of the time the card is not present in a digital transaction using a shopping cart.
  • Not A US Citizen Doing Business In The US – It’s possible to get a merchant account without a US social security number, but not having a SSN will increase the risk the processor will have in issuing a merchant account for your business.
  • Online Adult Membership Sites – If you’re running a website that is adult themed and requires payment for access, this is a highly volatile account and definitely high risk.
  • Offshore Corporations (Offshore Merchants) – The international element is what gives the high risk tag when looking for domestic merchant accounts.
  • Online Gambling (Online Gaming) – Without a card being present and gambling as the activity, there are two reasons why this would be on this list. Online payment alone is risky even without the gambling element.
  • Overseas Exporting Services – The introduction of the international element is what gains access to this list.
  • Pawn Shops – There’s a general stigma that goes along with pawn shops, and it’s reflected in their assignment to the high risk processors list.
  • Penny Auction Sites – Even though the customers are usually bidding at only a penny more per bid, users will commonly charge back the transaction when they don’t win.
  • Pepper Spray – Considered a type of weapon, pepper spray vendors are considered risky.
  • Points Programs – Points programs that cost money can cause chargeback issues if points are not used.
  • Pornographic Merchants – If you’re a part of the adult entertainment industry in any way, you’re considered high risk.
  • Precious Metals – Counterfeit metals can be a problem in this industry, making it more risky to accept payments for.
  • Prepaid Calling Cards – Anything prepaid that a consumer may not use increases chargeback issues.
  • Prepaid Debit Cards – When they expire or are lost consumers want their money back.
  • Psychic Services – “Honey, did you visit a psychic? No babe, I don’t remember visiting a psychic.” I’ll just reverse that charge then.
  • Real Estate – A common target for scams and identity theft is how real estate makes this list.
  • Replica Products (Watches, Handbags, Wallets, Sunglasses, Etc…) – As the product being sold isn’t authentic to the original manufacturer, the percentage of requests for refund is much higher than a traditional merchant.
  • Rewards Programs – If rewards are not spent, the consumer wants the money back.
  • Self-Defense – Since the payment provided is for instruction and not a physical product, the self-defense industry makes this list.
  • Self-Hypnosis Services – Yet another instance where the goods being transferred are of a service and not a physical product.
  • SEO Services – With a high rate of request for refund, SEO agencies make this list.
  • Social Networking Sites – Just like a dating site, if a consumer does not get what they want from it, they always like to chargeback.
  • Software Downloads – The software industry makes their way on to this list because of the digital nature of the goods being sold.
  • Sports Forecasting – An example of paying for information and not for a product, and usually not in person where the card would be present for the transaction.
  • Startups – Every startup is considered risky, and the percentage of startups that make it is quite small compared to the number that fail.
  • Student Loans – With the cost of a college education continually on the rise, so is the percentage of loans that default and never receive payment.
  • Strip Clubs – Associated with the adult entertainment industry gains the strip club access to this list.
  • Stun Gun Sales – considered a type of weapon, which makes it a high risk merchant.
  • Supplement Sales – The request for refund in this industry is quite high due to the nature of the product.
  • Sweepstakes – “Hey, I entered a sweepstake and I didn’t win. I’d like my money back please.”
  • Talent Agencies – “I paid thousands of dollars for headshots and glamorous outfits and I haven’t gotten any paid gigs. Pay me back my money please.”
  • Telemarketing Services – Telemarketing services many times do not have the results the purchaser would like to see, so the services are charged back.
  • Telephone Order Sales – Anything ordered over the phone has a increased risk of chargeback.
  • Timeshare Companies – When timeshares aren’t used, people want their money back.
  • Travel Agencies – If trips are not taken, consumers would like their funds returned.
  • Travel Clubs – Many travel club discounts aren’t what they were promised, increasing risk for chargebacks.
  • Vacation Rental Brokers – Third party brokers on prepaid vacation can have issues when customers cancel their trips.
  • Vape Shops – The level of criminal activity and theft is higher with vape shop merchants and therefore carries a high risk label.
  • Vitamin Sales – If the vitamins don’t provide the results the merchant would like to see they chargeback the transactions.
  • Web Designer – Because this service is prone to chargebacks, it has been classified as high risk.
  • Weight Loss – Considered risky because the results aren’t really up to the company, but rather the individual has to stick to the plan to get results, often resulting in chargebacks.
  • Yahoo Stores – Since the goods sold through Yahoo can easily be returned, they are considered a risky merchant.

Turn Your Residuals into Immediate Cash Today

Selling your residuals doesn’t impact your merchants—they’ll keep processing happily. So, if you need extra funds, explore a credit card residual buyout. It’s fast, easy, and a smart move for your financial game plan.