How Credit Card Processing Can Help You Grow Your Business

Credit card processing fees and monthly service charges can add up. But if you’re trying to grow your business, accepting credit cards makes good sense.

The more payment options you offer your customers, the better your chances are of making a sale, often with an increase in ticket size. Reports show that shoppers may spend as much as 20% more when they have the option to pay by credit card. What’s the underlying reason for this increase in sales? It can definitely be linked to the psychological and emotional dynamics of “impulse buying”.

Impulse Buying

Studies record several reasons shoppers are tempted to spend their hard-earned money impulsively. Among the top are:

1. SALES: Merchants have long understood the importance of tempting their customers with the notion that they’re saving money. Buyers are often swayed to purchase an item because it’s on sale NOW, whether or not the item was on their “shopping list.”  Another “sale” strategy is “BOGO” ads. Why pay for two items when you can pay for one and get the other one free! Since we are bombarded daily with ads for sales, you’d think that as consumers we’d become inured to their effects. But that’s not the case. Impulse buying is based on emotions and often the need for instant gratification, and not always on sound economic judgment.

2. VANITY: Think about it…how many times have you been tempted to buy an item because it’s in style, it’s purported to be good for you, it’ll help you get in shape, or even because your neighbor just bought “one”?

It’s human nature to want to look good or feel good. Merchants have learned to play on that emotion.

But all these psychological studies leave out another – and maybe the most important – reason shoppers make impulse purchases: BECAUSE THEY CAN. Not because they can afford the tempting item, but because they can have it now and won’t have to pay for it until later if they charge it on their credit cards.

While consumers are reacting to pretty shop displays and big sales signs, they are also being swayed by the access to easy credit and the lure of rewards for making purchases. For years, credit card companies have been competing with each other to get their share of the user’s market with all sorts of different promotions: offers of free interest, sometimes for as long as a year; rewards points that can be redeemed for merchandise or free travel; or even cash back on purchases. These incentives have fueled the rising use of credit cards. Admit it… at some time or another you’ve said to yourself: “I can’t really afford this new (fill in the blank), but I can get a good deal on it now while it’s on sale and I can pay for it over the next six months, interest free.” Or can you picture yourself in this scenario: The check comes for dinner and you tell your friends you’ll take their cash and put it on your card because you want the points! We’ve all done it. Merchants have come to rely on this behavior to boost sales, and view the cost of credit card processing as a necessary cost of doing business.

So let’s get back to the question of “Can I Afford To Accept Credit Card Payment?”

Some of your credit card processing costs will be offset by the benefits of accepting credit cards. An increase in sales tickets is just one benefit. Accepting credit cards also improves your cash flow. Electronic transactions are cleared for payment in as little as 48 hours. In some cases that means you have your money before an item even ships. And while your customer is taking advantage of “paying later” for that impulse purchase, you have your money upfront. Your transaction is settled and the money is deposited into your account on a timely basis so you can meet your business’s financial demands. Yes, you give up a percentage of your sale, but the offset is no cost for billing, no waiting 30, 60 or 90 days or more for payment, and no collections!

And you get to take advantage of the phenomenon of impulse buying. That person who was  “just looking” when she came into your store may walk out with a shopping bag full of merchandise if you can reply YES when she asks “Do you take credit cards?”

Why Do I Need to Qualify to Get a Merchant Account?

You did your homework, you picked out a credit card processing company that seems to fit your needs, and you submitted an application. You gave them your:

– Company name; address; and phone, fax and website information
– Name, social security number, and contact information of the officer(s)
– Business bank account information
– TIN (Tax Identification Number)
– Type of Business

Now what happens? It really doesn’t seem like a lot of information, but on the company’s website it says you could be approved in 48 hours or less. Although it may not seem like a lot of information to you, the credit card processing company can learn almost all they need to know to approve you – or not – with the basic information they get by using your social security number to do a personal credit check. Your credit history is very important. You see, when you sign a contract with a credit card processing company, you’re actually agreeing to their terms for borrowing money.

As money from a sale moves from the buyer’s payment transaction (swiping their card at your terminal or inputting the number into your payment page on your website) to the seller’s account, it passes through several approval processes. First, on behalf of the merchant, the credit card processing company submits the sale to the bank that issued the buyer’s card. The issuing bank accepts or declines the transaction and sends this information back to the processing company, along with the funds from sales that have been approved. Then the processing company credits this amount to the seller’s account – less their fees, of course.

Simple, right? Well, most of the time, the process runs smoothly. However, once the proceeds of the sale are deposited into the seller’s account, the issuing bank and the processing company assume the risk that the merchandise is acceptable to the buyer and won’t be returned. In other words, they loan you the money risking they won’t have to ask for it back in the event there is any problem with the sale. That’s why the credit processing company does a personal credit check. They want to know that you’re good for at least a percentage of the money your business generates in credit card transactions each month.

Does that mean if you have low or bad credit you’ll be turned down by the credit card processing companies? Not always. Provide the information requested on their application along with a short message about why your credit rating will show up as low. Perhaps you’ve recently gone through a divorce. Or maybe you lost your job due to the downturn in the economy and have decided to start your own business. Whatever the case, give the person reviewing your application some facts to help to better understand your credit score number. This may help you get approved, though you may be subject to higher processing fees to justify the risks, or you may be asked to set up a reserve account as insurance against the possibility of charge backs due to returns or other purchase disputes.

However, with the right credit card processing company, your bad credit may not even affect your rates. The key to finding the deal that is right for you is to find the credit card processing company that will look at you as an individual and not just a credit score number.

How to Avoid Overpaying for Credit Card Processing

You’ve done all your research and finally picked a credit card processor for your company. The start-up fees are paid, you’ve budgeted for the monthly fees, and the transaction fees are reasonable. Your job is to make the sale. The credit card processor does all the rest, and before you know it, the money is in your account. Like the saying goes: “Set it and forget it.”


There are two key reasons why business owners regularly overpay for credit card processing. Both stem from the “set it and forget it” mentality that plagues busy merchants: 1) Failure to read your credit card statement, and 2) Failure to regularly compare credit card processing rates.

How do you read your credit card processor’s statement?

That’s not an easy question to answer, especially since credit card processors have different pricing structures and present them in their own statement format. There are lots of articles available on the net — and a host of YouTube videos — that cover the subject of how to read a credit card processing statement. The authors all seem to agree that in order to keep your processing costs down, you need to know where to find your base costs and how much you pay in markups each month. And you need to monitor that information on every monthly statement.

Your base cost shouldn’t change month-to-month. This combination of interchange rates (the percentage of the volume for each credit card transaction set by the issuing bank) and assessment fees (the flat transaction fee for each transaction set by Visa/MasterCard) are the same for all processors.

But here’s where things get complicated. Your monthly processor cost — the fees your processing company charges for their services — fluctuates every month for a variety of reasons. Obviously, sales volume makes the most difference in your costs. But the type of credit card transaction plays a part as well. For example, when your customer uses a rewards card, you may be charged a higher interchange fee. Secure on-line transactions and debit card charges may actually have a lower fee schedule. And each month, depending on a number of issues, your transactions are categorized as qualified, mid-qualified and non-qualified, all with a different rate. All these tiered rates can be very confusing at first, but once you learn how to interpret your statement, you can get a clearer picture of how your unique sales affect your credit card processing costs.

Armed with this detailed information, you should make a habit of getting quotes from other credit card processing companies. If your current rates don’t compare with the new quotes, it may be time to switch credit card processors. Or call your present company and ask a representative to check and see if fee schedules have changed since you signed your contract. Even a small down tick in a percentage rate could make a big difference to your monthly processing costs.

Of course, you could also switch to Transparent credit card processing and avoid the hidden and changing fees entirely.

However, if you insist on sticking with your current payment processor — or, more likely, if your current payment processor has you under contract and you don’t want to pay the cancelation fee — regular reviews of your credit card payment processing statement can help you identify fees that could be lowered or even eliminated all together. Combine this information with regular comparison-shopping among credit card processing companies to determine if the time is right to make a money-saving switch.

How to Protect Against Credit Card Fraud

How Can I Protect My Business Against Fraudulent Credit Card Use?

That question can be answered in two words: STAY ALERT!

Credit card fraud is theft. When you take a fraudulent credit card payment, you lose merchandise and profit, just the same as you do when someone steals something from your business. You place security cameras around your store to spot shoplifters. Why not be prepared to spot identity theft?

Although you may not be able to completely prevent credit card fraud from damaging your business, you can minimize the problem by putting some simple measures in place.

How To Detect In-Store Credit Card Fraud

If you operate your business at a physical location, train your staff to check to see if the credit card presented for payment is signed, and be sure they ask to see another form of identification. And if the credit card won’t swipe, be sure your employees know how to contact the issuing bank’s authentication line. Do these procedures take extra time when ringing up a sale? Certainly. But they don’t take half as much time as it’s going to take to get through the paperwork involved in dealing with a fraudulent payment.

Unfortunately, credit card fraud isn’t limited to your customers. As much as you might think you can trust them, you should run regular audits on your charge transactions. This can help to identify and/or discourage employee credit card fraud.

How To Detect On-Line Credit Card Fraud

Your chances for credit card fraud increase if you operate a business on-line. But just because you’re not standing face-to-face with your customer doesn’t mean you can’t spot the signs of possible fraud.

Stay alert for large transactions, especially if they are scheduled for next day delivery.

Credit card ID thieves want their merchandise delivered before you have a chance to discover the fraud.

Stay alert for orders that use different “bill to” and “ship to” addresses. Granted, many on-line businesses sell gift items shipped directly to the recipient’s address. But an unusually large order or a bulk order for an item usually sold individually should raise some doubt.

Stay alert for the customer who is not able to answer all your billing questions. Many fraudulent transactions are actually perpetrated using a stolen credit card number. Ask for information that only appears on the card itself. If your buyer can’t supply this information, you can refuse the order.

Stay alert for transactions where payment is made by using multiple credit card numbers. This could be a sign that the identity thief doesn’t want to raise a red flag by having a credit card charge denied because the amount charged exceeds the credit card limit.

In other words, trust your gut feeling. If something doesn’t feel right about a purchase, do everything possible to verify that purchase before your customer leaves the store or you ship any merchandise. Because no matter how or where you operate your business, spending time preventing credit card fraud will save you time and money in the long run.

Credit card fraud is theft. You’ll spend time reporting the incident to the authorities and filling out paperwork for the credit card issuer. You’ll lose the transaction amount and possibly be liable for charge back fees. And in the end the ID thief is long gone… and so is your merchandise!

Why Should Your Business Accept Credit Card Payments?

What’s the most compelling reason for any business to accept credit card payments?

Because everyone else is doing it!

Yes… you probably can hear the echo of your Mother saying, “Just because everyone else is jumping off the bridge, should you do it too?” Well, in this case Mom, the answer is YES!

Accepting credit cards certainly has some negatives. When your customer pays in cash, you take in 100% of the sale. For your business to be able to accept credit cards, you’ll have to establish a merchant account with a credit card processing company and pay their processing fees. Most business owners consider these fees as a part of the cost of doing business. These fees vary widely, and depending on which credit card processor you choose, your fees could run anywhere from 1% to 4% per transaction, plus monthly fees, batch fees, terminal rental fees, and more. Businesses with medium- to high-ticket sales are better able to absorb these costs and continue to make a profit. But what if you own a high volume business selling a small ticket item? Each transaction fee eats into your profits. Will the benefits of accepting credit cards outweigh the cost?

But consider the pros of accepting credit cards.

Research shows that as many as 80% of Americans own at least one credit card and prefer to use it for some of their monthly purchases. The benefits of using a credit card to make a purchase are simple:

  1. Convenience. There’s no need to carry cash when you’re out shopping, and it’s just about the only way to make on-line purchases.
  2. Flexibility. You can take advantage of a great sale going on now and make payments over time.
  3. Security. As a benefit of paying by credit card, you now get a number of different consumer protections. For example, if you drop that package with your new crystal vase while putting it into the car, your credit card company may pay to replace it.
  4. Rewards. Why pay cash for a purchase when you can pay for it with your credit card and get points towards your next vacation?

As a merchant, you need to leverage these advantages for your business. When you accept credit cards in addition to cash and checks, you’re offering your customers the option to choose their preferred payment method. Why is that so important? Because the shoe store, or the grocery store, or the clothing store, or the furniture store, or the restaurant down the street that carries the same items or offers the same services as you is accepting credit card payments. In the final analysis, if you want to stay competitive, that’s the real reason why you should too.

What is PCI Compliance?

What is PCI Compliance?

Many businesses who accept credit card payments have asked What is PCI Compliance?  “PCI” stands for Payment Card Industry. The PCI security standards council is comprised of representatives from the major international credit card associations including AMEX, Discover, JCB, MasterCard and Visa. In 2006, this council established the DSS, Data Security Standard, to facilitate uniformity in the credit card industry and enhance security standards to better protect card issuers, merchant processors and cardholders as well as businesses that accept cards.

PCI compliance is when a merchant complies with the standards set forth in an effort to provide improved security for the cardholder. There are various requirements that must be met in order for a merchant to be compliant. By taking the steps involved in making your business PCI Compliant, you reduce the risk of fraudulent transactions happening at your business. Regardless of what type of payment processing service you use you want to assure that your business is up to the highest security standards of processing payments. Not only will this help protect you from fraud and thievery, but it’s also a requirement by the credit card associations in most regions around the world.

Am I Compliant or Non-Compliant?

Prior to 2006, it was not a requirement for your business to be PCI compliant. However, with increases in online fraud and credit card fraud overall, the tables have turned to better fight fraud. While PCI today is not, in itself, a law, this standard was created by all the major card associations. Merchants that do not comply with PCI DSS may be subject to non-compliance fines, card replacement costs, forensic damage and other problems in the event of a data breach.
There are plenty of benefits that come with being PCI Compliant. With the continuing rise in identity theft and credit card fraud, the system used by merchants must be up to the task to protecting the number one asset, the customer. With these standards in place, it can be deterred and outright prevented, saving businesses and card issuers billions of dollars per year. By following the standards, you establish credibility with your customers while maintaining a positive reputation to help bring repeat business and new clientele.

The difficulty, especially with smaller business, is the consistency needed to maintain compliance. Much like anti-virus software, the standards are always being checked, double-checked, and changed as the need arises.

The Different Levels of PCI Compliance

The PCI/DSS has a set of levels to address different business types. Each level is dependent on how many transactions occur within a 12 month period of time. For each level, different security practices are implemented. Why the differences? If a local book store without an online presence is going to be compliant, why make a requirement for them to establish a particular level of security encryption on their online payment gateway? This multi-level system produces the best results for the different business types.

• Level 1 is associated with businesses and processors that produce more than 6 million card transactions annually.
• Level 2 is associated with businesses that produce 1-6 million card transactions annually.
• Level 3 is associated with E-commerce businesses that transact between 20k and 1 million card transactions annually.
• Level 4 is associated with E-commerce businesses that transact less than 20k card transactions annually.

A Few Examples of the DSS

• Changing the Password for equipment used in processing card payments. This reduces the risk of having vendor passwords compromised.
• Maintaining a strict and easy to understand company policy regarding customer privacy and card data security.
• Maintaining and update anti-virus software regularly.
• Assigning individual logins for each employee accessing the computer or register.

(Source – Better Business Bureau)

Why Pay for PCI compliance?

You are going to pay for PCI Compliance for the same reason you pay for the ability to process card payments. You make the effort and become PCI compliant for the same reason you pay for advertising. You have invested time and money in building your business. Paying for PCI Compliance is like paying for insurance.

PCI performs annual compliance checks on businesses. For larger volume businesses, they may have an externally-qualified security advisor conduct a Validation of Compliance. In smaller volume businesses, they may request a self-assessment questionnaire be performed. No federal law has been passed that requires these practices to be followed. Some state laws, however, have been passed to ensure practices similar to the PCI/DSS.

Cardholder information theft is a pathway to all things bad for businesses. It starts with a card number and a name. From there, a criminal can do anything from making fraudulent charges with the card to all-out identity theft. Security practices in place with merchants that accept card payments go a long way to help credit card fraud prevention. The PCI/DSS is an industry standard set up by a governing body of representatives from several card companies to help you provide secure payments for your customers.

Credit Card Processing: A Small Price to Pay for Piece of Mind

Credit card processing sucks. That’s probably a strange statement to make on the website of a credit card processing company, but we know it’s true because we talk to business owners every day. And every day, we see the same eye rolls and hear the same frustrated sighs that follow just about anything related to merchant processing.

Don’t worry… no offense taken. Credit card processing is frustrating. If feelings of rage and anger overwhelm you every time you think about it, you’re not alone. But before you hit the back button to avoid thinking about credit card processing, give us a chance to at least help you appreciate its benefits. Yes, the credit card processing industry is broken, and yes, some great companies (shameless plug alert: like Transparent!) are trying to fix it, but credit card processing itself is actually kind of amazing.

If “amazing” seems like too strong a word to describe something as seemingly mundane as credit card processing, maybe you need to look at your wallet again and consider, from a business perspective, your other options. In your wallet, wedged next to your credit cards and an old library card you haven’t used since two wallets ago, you probably have some pictures of famous dead people. You have to admit, compared to paper money, credit cards are… well… amazing. They’re slim rectangles of plastic that give consumers instant access to thousands of dollars in spending power without the kinds of problems that would come from carrying the same amount of dead presidents currency.

At first glance, business owners would prefer to accept paper because it doesn’t have any direct fees. No fees equals bigger profits, right? However, on closer examination, you can how spending money to accept credit cards ultimately dwarfs the money you’re at risk of losing when using an insecure payment mechanism like cash.

The savings from taking credit cards is rooted in costs of securing cash. If you own a public-facing storefront that accepts cash, chances are you have employees. Every one of them – even if it’s your favorite niece you hired for the summer – has had a thought that went something like this: “I wonder if anyone would notice a few missing dollars?” Sure, the vast majority of your employees would never act on that thought, but only one employee needs to act on it in order for you to lose more than credit card processing actually costs. Credit cards, whether you’ve given it much thought or not, are helping your business minimize the temptation of cash.

Before you start accusing all your employees of embezzlement, don’t forget the other employee-based cause of missing cash: human error. We’ve all made counting mistakes, and we’ve all put things in places we can’t remember. It happens from time to time, but when it happens with cash, there’s no 800-number to call to help you find the missing money. In comparison, not only is it harder to misplace an electronic deposit, we bet your credit card processor has an 800-number you can call if a deposit does happen to go missing. You can be sure Transparent does.

So the next time you see someone reach for a pile of paper presidents instead of a plastic rectangle, remember this: that cash might not come with any obvious fees, but it definitely doesn’t come with any guarantee to end up in your bank account.

What to Consider When Choosing a Credit Card Processor

When you’re assembling a desk for your new business, the directions tell you exactly where to start: ‘Step 1: Place tab A into slot B and tighten fastener.’ But setting up a new merchant account for credit card processing doesn’t come with simple instructions, which is probably how you got to this article.  In addition to being confusing, choosing a credit card processing company can become very costly if you don’t look at all your options and choose wisely. Once you get that new desk assembled, sit down and make a list of your company’s credit card processing needs by asking yourself some important questions.

Will customers be swiping their cards at your terminal? Having access to the actual credit card is the quickest way to process your sale, and the easiest way to handle receipts. If you’ll be swiping credit cards, you then have to decide whether you’re going to rent or purchase a credit card processing terminal. Will you have more than one physical location, or sales associate, that requires a terminal? What costs will that incur?

If you’re an on-line merchant you have a whole other set of credit card processing needs. For example, will you have auto-recurring billings? Yes… well then, you’ll need specific security measures in place to store credit card numbers.

Your volume of business affects your merchant account costs. Do you run a high volume business, say a medium priced restaurant with an average bill of $10.00 to $15.00? Or do you sell high-priced items with less frequency? These numbers impact your transaction fees.

Do you run a seasonal business? If so, you may think you’ll save money by terminating your processing service during your down months. But contract and cancellation fees can negate any savings you might gain by not having to pay recurring service fees.

Whatever your business, if you want to accept credit cards, you have to establish a merchant account with a processing company. Because there aren’t any easy-to-read instructions for setting up your merchant account, why not take a cue from the directions for that desk you were putting together for your new office? Even before construction step number 1: Put Tab A into Slot B and tighten fastener, the directions instruct you to account for all the pieces in the package.  Well, opening a merchant account for your company is no different. Before you dive into the murky waters of credit card processing, make sure you consider all your needs so you’ll be better prepared to put together the right merchant processing solution for your business.

Transparent: Credit Card Processing Made Clear

Despite its services being used millions of times a day, public knowledge of how the credit card processing industry is structured is… well… pretty much nonexistent. That’s not necessarily a bad thing. After all, most of us have no clue how cars are built, but that doesn’t mean we can’t drive them. However, in the case of credit card processing, usage isn’t just limited to swiping. Every business that accepts credit cards has to have some sort of merchant account, and having a merchant account requires business owners to learn more about how credit card processing works.

That’s probably why you’re reading this. Chances are you got to this article because you have to figure something out about credit card processing and a search engine told you the answer is in here. That’s unfortunate for you because this article isn’t intended to teach you anything practical about credit card processing. It won’t explain how to save money on credit card processing, and it won’t explain how to become PCI compliant. It won’t even tell you what the best credit card processing companies are (not that there’s any better than Transparent). Instead, this article is meant to teach you something about how the credit card industry is structured. And while, initially, that knowledge might not seem to have any practical value, understanding how the industry is structured should help you make more informed merchant processing decisions.

Whether you already have a merchant account and are looking for new credit card processing, or if you’re trying to get a merchant account for the first time, a simple Google search has surely shown you how many choices you have. What you probably don’t understand is why. The answer – at least in the United States – has a lot to do with federal regulations. While the regulations themselves are complex (and not necessarily worth detailing here), the result is a fractured industry with numerous different companies being responsible for different stages of each and every credit card transaction. That’s a big deal for you – the merchant who needs credit card processing – because, whether you realize it or not, it means every time you take a credit card you’re engaging with multiple “middlemen.” Each one of those middlemen are businesses that need to make money, which means they all have to charge for their services.

Are you starting to understand why credit card processing gets expensive? The process itself is supporting multiple industries on each and every swipe, which means the processing fees have to keep the proverbial lights on for multiple companies with multiple employees who all want paychecks and dental insurance and 401Ks, and you – the merchant accepting credit cards – have to foot that bill.

While having so many middlemen involved in every credit card transaction certainly isn’t ideal, it does have the benefit of competition, and, as hundreds of years of laissez-faire economics have taught us, competition is a good thing. Because each of the competitors are ultimately competing for your business, more competition means better services at better prices.

That’s where Transparent comes in. A company like Transparent is what happens when of a group of people who had been in the credit card processing industry for years recognize inefficiencies and see an opportunity to make a better product and offer it at a better price. Although we can’t get rid of all the middlemen (sorry – talk to your congressman), we can create a more efficient company that can offer more streamlined services at better prices. So that’s what we’ve done, and that’s what you get if you choose to process payments using Transparent. We won’t be another middleman who nickel-and-dimes you with fees you didn’t know about unless you read page 42 of an 86-page contract typed in a size eight font. We’re clear and open about our pricing, our product, and our services, and, as a result, our pricing, our product, and our services are clearly the best.