If your current merchant service provider is charging too much, withholding funds, losing transactions or failing to meet your current business needs for any other reason, the time has come to make a change.
But as necessary as this transition may be, the prospect can also be daunting. Following some straightforward suggestions can make the switch easier.
Begin with your point of sale system
At the core of your business is your POS, the hub that not only helps you to securely process payments but also is vital in inventory and employee management, customer relationships, report generation, analytics and so much more.
If your current system is working well for you and is not closed, i.e., requiring you to work with one provider such as PayPal or Stripe, you may not need to change it.
However, times and needs evolve. If you have outgrown your current configuration, be sure that the payment services provider you choose will furnish you with the POS and accessories that can meet your new needs and continue to grow with your company over time.
Integrate with your payment processor
Now that your POS is in place, you will need to connect it with your online payment system. If you choose a POS and payment processor offering direct integration, you will find that the cost is lower and the settlement process is smoother and less prone to errors.
However, if the POS system you have does not integrate with your processor, you will need to find a payment gateway. This application is the intermediary between you and your customer that facilitates the secure payment transaction from end to end by encrypting card details and safely guiding information from the POS to the processor.
It even informs you when the transaction has been completed.
Choose your payment processing company
After taking these preparatory steps, the time has come to make the all-important merchant service provider choice. With so many options out there, start by looking at your business: the industry you are in, the sales volume you bring in, the customers you serve and your long-term goals.
Focus on your top three or five choices, concentrating on their prices and contractual obligations. With your current monthly statements in hand, see what terms each is willing to negotiate; you will probably find them eager to under-cut what you are currently paying.
Shop around until you get the rates and service configuration that best fits your needs.
Sign a merchant agreement
Before you can get a new POS, credit card terminals or other peripherals with your candidate of choice, you have to sign a merchant agreement. This is, in effect, your application for the account.
The provider will require you to provide details such as annual transaction volume, average transaction size, card-present vs. card-not-present percentage, credit history and more.
Pay careful attention to the section that discusses the rates and fees. In particular, tiered pricing can contain costly pitfalls. Don’t sign anything until you are fully informed about every cost. To that end, feel free to hire a legal professional to clarify any murky details.
Be ready to satisfy underwriting requirements
Once your application is submitted, your business will be investigated by an underwriter to ensure that you are a good candidate for the provider’s services. To that end, provide any supporting documents that are requested, including your business license, personal Social Security number and previous bank statements.
If you are in certain sectors such as pharmaceuticals or adult entertainment, there might be additional scrutiny. You may, for instance, need to provide product catalogs, a sample customer agreement, photos of your warehouse or other documents. Once the underwriters have obtained everything that they need to meet their requirements, you will be notified that your application was approved or declined.
What’s next?
As soon as you have been approved, you will be ready to take customer payments. The provider will give you specific instructions on how to connect your new merchant account to your gateway or point of sale system.
Like it or not, you will also need to officially terminate your relationship with your previous merchant service provider. In many cases, this will involve paying an early termination fee that can range between $100 and $500 as well as returning any leased equipment.
If you negotiated this in your agreement with your new processor, early termination fees may be paid by your new provider. Regardless of whether they are or not, it makes sense to hire a legal professional to review both your old and new agreements. This will ensure that you have satisfied all requirements so that your new arrangement is unencumbered and your future dealings are friction-free.
Accepting customer payments is an evolving process that sometimes requires you to make a significant change. However, when you take the time to choose the new provider that suits your business type, needs and customers, you can minimize roadblocks and maximize your long-term success.
