Small Businesses Credit Card Processing

What Small Businesses Need to Know About Credit Card Processing

In order to be competitive in the modern marketplace, every business needs to accept credit card payments. However, credit card processing isn’t as easy as it sounds for small businesses like home-based sellers, single-person operations and mom-and-pop shops.

If you are a small business owner and are struggling with credit card processing for your customers, you are not alone. Credit card transactions not only cost you money, but can expose your business to security risks that may compromise your stability and operations.

But if you know how to process credit card payments in a safe and effective manner, you will be able to establish your business as a top player in your industry. Here are five tips about credit card processing that can help you stay ahead.

Know the Language

Knowledge of the terms and jargons in credit card processing will help you understand how your money moves and by whom. Many small businesses simply focus on getting their credit card payment system set up than being concerned with industry lingos and details. Nevertheless, to save yourself and your business from trouble should problems arise in the future, it is important that you have an idea what takes place behind the scenes. Four key terms in credit card processing include:

Merchant Bank

A merchant bank is a financial institution that provides merchant account services to ensure the completion of transactions to bank accounts.


This is the middleman that manages the responsibilities of the merchant bank, sends credit card information to the right merchant account and payment networks, and ensures credit card transactions are processed seamlessly.

Card Payment Network

These include brands like MasterCard, Visa, Discover and American Express.

Issuing Bank

The financial body in charge of issuing credit cards to the end users (customers).

Find the Right Credit Card Processor

The size of your business does not limit your credit card processing options. What matters is your type of business, how and where it is managed, and how specific you want to conduct it to make managing the business easier. For instance, if you run an ecommerce store, a commerce point-of-sale (POS) system is your best option. This system integrates credit card transactions with customer relationship management software and your accounting to ensure an automatic and seamless connection between online and offline sales data.

Revenue Requirements

While there are tons of credit card processors out there, one downside of managing a small business is that meeting vendor requirements can be a challenge. Credit card processing companies may turn down your application if your business does not generate enough revenue. However, no rules are cast in stone for revenue requirements. Some credit card processors only work with businesses that generate at least $10,000 monthly in revenue, while others may go a little lower or higher.

So, there is no need to fear if you do not meet the strict revenue requirements of a processor. Some research can help you find credit card processors that are willing to work with very small businesses.

Data Security

Credit card companies hold all businesses to the same security standards, no matter the size. Whether your business is a small startup or a big corporation, it is your duty to ensure your processor has strict data compliance and security standards in place. These measures include Payment Card Industry (PCI) Data Security Standard, end-to-end encryption, secure sockets layers (SSL), and 3-digit card verification value (CVV2).

Credit Card Processing Fees

Credit card processing is not free. One way or another, you are going to have to pay, and figuring out these costs is not as easy as ABC. From percentages per transaction to actual dollar value based on the type of transaction or processor, there are loads of fees involved.

Credit card processing fees are especially important for small businesses with limited resources who are concerned that extra fees could affect their bottom line. Some of the fees small businesses should pay attention to include:

Payment Gateway Fees

These fees are charged to ecommerce merchants to process the credit card information of customers. The fees vary.

Monthly minimum fee

These fees are charged when merchants do not reach their monthly or yearly transactional total. The fees vary.

Transaction fee

A fixed amount charged to merchants for every transaction.

Statement fee

These fees cover the costs for printing and mailing credit card statements. Though the industry-wide standard for this fee is $10 per month, it could go as high as $15 or as low as $5 per month.

Address verification service (AVS) fee

This fee is charged to ecommerce merchants per transaction.

The pros of credit card processing outweigh the risks for any business, but you need to understand what you are getting into in advance. Here is more information on how credit card processing works for your small business. To keep your business safe and stay ahead, you need to key into modern payment processes, yet remain vigilant.

About The Author

Angela De Steffano

Angela De Steffano
Staff writer at High Risk Merchant Account LLC
Angela is a merchant account specialist and heads the marketing team at HRMA-LLC.

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