Regardless of your restaurants size, there are many benefits in having the ability to process credit card transactions.
By accepting multiple forms of payment, you give your customers options and improve their experiences. You also introduce a new audience of customers to grow your business.
In addition, card processing is an efficient, convenient payment solution that helps you improve cash flow by ensuring timely, automatic deposits to your account.
Value-added services—like gift card and prepaid card programs—can provide a new channel for generating profits and increasing your revenue. Check protection services can help you limit your risk from bad checks.
While price is important, don’t let it be the driving force behind your credit card purchasing decision. First, review the service offerings of several credit card transaction service providers. Then, consider other important aspects of your buying decision.
Customer support is the most essential – problems in credit card processing can quickly impact your bottom line. The best way to learn about a provider’s level of customer service is to obtain customer referrals from current clients. Request referrals to merchants that are comparable to your restaurant in size and similarity of customer habits. Then ask these important questions: do they have to wait several minutes before reaching a customer support rep? Are their needs serviced quickly? How does the provider deal with chargebacks? Also ask the provider about their level of support – do they have phones staffed 24 x 7? Do they charge per incident?
Rates and fees
Many factors can influence the fees you pay for the privilege of accepting charge cards. Among those factors: the length of time you have been in business, the percentage of your sales that you make over the Internet, the type of restaurant you operate, the number of years you’ve been in a restaurateur, your personal credit rating, the average dollar amount of each sales transaction, the total dollar amount of sales per month. Service fees tacked on by the third party providers or by their sales people, can also add to your costs.
Some companies advertise discount fees less than 2 percent. Usually these lower fees are for swiped transactions (sales made by running the customer’s credit card through a machine).
Therefore, in comparing processors, be sure to find out what all of the fees will be. Compare not only the application fees and the discount rate, but also the initial cost of equipment, transaction fees (the fee you pay on top of the discount for each transaction you process), monthly minimums, voice verification charges, address verification (if extra) fees, monthly statement fees, and any other costs you will incur. A difference of 10 cents on the transaction fee is equivalent to a one-half a percent on the discount rate if your average sale is $20.
Pay close attention to the cost of equipment or software for processing the charges, too. Identical software and comparable hardware varies in price by as much as $600 or more depending on who you use purchase it from.
If at all possible do not lease equipment or software. Buy it at the start. By leasing it you often set yourself up for three or four years of noncancellable lease payments and wind up paying thousands of dollars more than necessary.
Be sure to read ALL applications forms and contracts mailed to you carefully. Read all of the small print. Several companies will charge you if you want to stop processing charges through them in less than two to three years. What the salesman says on the phone may NOT be what the application actually says. If there’s a dispute, what will stand up is what is on the printed contract you get, not what you say the salesman told you.
Check to see under what conditions the company can terminate your account, and, whether there are monthly minimums or maximums.
The Application Process: What to Expect
Depending on which company you are dealing with, you may have to provide any or all of the following: copy of your business license or certificate of doing business (dba); profit and loss statements; copies of previous years’ tax returns; photo of your office.
Finally, if you are not using a bank or financial company you recognize, make sure you verify that the company you are investigating is legitimate – there are con artists and scammers who set up fake processing companies just to collect setup fees then vanish. Contact the Better Business Bureau to check the company’s status if you are unsure, and if you find a credit card transaction service provider on the Web, make sure you get a physical address and phone number.
Restaurants with small tickets are usually wary of a merchant processing account due to pricing concerns. They seem to overlook the idea that paying for merchant processing is an investment to their business and they may be surprised to learn that accepting credit/debit cards is not only convenient for their customers, but will ultimately help increase their bottom line. By taking advantage of small ticket pricing offered through MasterCard and Visa, the per item cost on card present transactions under $15 has a lower per item fee.