Choosing a Small Business Payment Processor

According to, a Merchant Account contract is one of the most important documents you can sign for your business. A bad processor can literally drive you out of business with predatory fees that destroy your profit margins.

Trying to break a contract to try another processor can cost you thousands of dollars in penalties.

When it’s time to find the right payment processor for your small business, where do you turn? For most entrepreneurs, it’s easiest to work with your own bank. However, banks aren’t always the best bet. Here’s information you can use to determine the best payment processor for your small business.

Ask Yourself Questions

Before you start your search, nail down exactly what features you’ll require to process a payment smoothly. Also take a hard look at your cash flow. Expensive fees can add up and hurt the bottom line. Here are a few questions to address:

  • Are you an on site swipe merchant or an ecommerce merchant?
  • Do you process phone payments?
  • Are you more mobile-based?
  • What will be the approximate volume of payments processed?

Once you’ve answered these questions, it’s time to start researching.

Seek Out Recommendations

One of the best ways to find a processor that works for you is to simply ask around. Visit other small businesses with questions. Are they happy with their processor? Are there features missing that could be useful? Are there bugs or clunky steps that slow them down? Take some time to Google as well. Look for independent sites that review processors.

Go Beyond the Flash

Bells and whistles are fun but at the end of the day, you want a payment processor to be reasonably priced, secure, fast and easy. Don’t get distracted by flashy features.

Investigate Equipment

Some small businesses require a credit card terminal to process cards. Make sure you know how this is going to work. Some companies offer the equipment as a rental, adding onto fees you’ll be responsible for. Find out if you can purchase the equipment instead and calculate if it’s the best financial option. 

Read Before You Sign

Once you’ve found processor that has the fees and service that your business needs, look at the agreement contract. The terms and early termination fee are important. Ideally you want a month-to-month agreement with no early termination fee.

Demand Security

In this day and age, you want to make sure your online payment services have top-notch security features. Banks have started rolling out consumer cards with security chips but not all payment processors have the capability to process those cards correctly. Security will always evolve. Make sure that your system has the most recent security features.

Marco Carbajo is a business credit expert and guest blogger for the SBA. He says to consider these two main factors before making a decision:

  • Low processing fees
  • Building your company’s creditworthiness

He writes, “These two ideas are basic, yet incredibly effective for a small business owner. Don’t let “quick and easy” replace being cost effective and efficient.”


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