Choosing the right merchant services provider (or credit card processor) may be a daunting task, but necessary. Differences between the right provider for your business and the wrong one can be worlds of frustration and higher payments. Quality processors provide prompt service with competitive rates.

If you’re new to accepting credit cards

Businesses that aren’t currently accepting credit cards should generally find their merchant services provider first. It’s in your best interest to secure a low cost merchant account with a credit card processor and then choose from the equipment that the processor can support.

Since processors can offer a wide range of equipment, doing it this way ensures that you get both a machine that fits your needs and the lowest cost for credit card processing.

But what if you need a specialty feature? In that case, speak with your credit card processor with your specific needs. These features may include restaurant delivery integrations, tracking, etc.

Just be aware that when you choose a system first, you may be limited in your choice of processor, which can significantly affect your competitive leverage. You will likely end up paying more for credit card processing if you choose your equipment first.

If you’re already accepting credit cards

Well, congrats on securing a merchant account!

For businesses that are already accepting credit cards, equipment may play a larger role in decisions. You’ll need to determine if keeping your existing system is a priority or if you’re open to purchasing a new machine or using a new online payment gateway.

If you don’t need to continue using the current machines or are due for an upgrade anyway, you don’t need to worry about the existing equipment compatibility and can jump down to the section on evaluating merchant service providers.

Determine Equipment Status

The reason this matters is that if you want to continue using your current machines, you’ll need to choose a processor that can reprogram your machine.

Note that some systems can’t be reprogrammed even if they do work with multiple processors. Examples of non-reprogrammable machines include the Clover Station POS system and the Vital POS system.

If your system is universal or selective, you can proceed to the steps to choosing a merchant services provider, below. However, if your system is proprietary, you won’t be able to choose a new processor and continue to use the same equipment.

How to Choose a Merchant Services Provider: Evaluating Options

When choosing a merchant services provider, it’s important to know what to look for and what to avoid.

Look for:
  • True “pass-through” pricing
  • Rate locks so that your rates won’t increase over time
  • Customer service that answers your calls and provides clear answers to questions
  • “Tiered” or “bundled” pricing identified by the terms “qualified” and “non-qualified” rates
  • Cancellation Fees

Tiered pricing (also sometimes called bundled pricing) is not a clear pricing model. What the heck are they bundling?

  • “Best Processor” lists
  • Reviews

Well, you don’t have to ignore them; but don’t make your entire decision based on credit card processor reviews or best processor lists. The reason is simple: processors set pricing so that it’s specific to each individual business. Furthermore, the way that credit card processing fees work means that some processors or pricing models are a good fit for one type of business and not for another. It’s impossible for anyone to give a general “best processor” list for that reason.

When it comes to reviews, the main thing is that you don’t know whether you’ll get the same pricing and terms as the person leaving the review. A restaurant processing $500,000 / month in credit cards might love the low pricing they got from a particular processor and leave a glowing review. But will your $10,000 / month motel get the same rates? Probably not.