Thursday, November 09, 2006

Credit Card Processing

1. Independent Sales Organization:

An independent sales organization (ISO) is essentially a registered credit card merchant broker who represents one or more third party credit card processors. They set up and service credit card merchants, but do not do the actual card processing. ISOs are less selective than banks, but that comes at a somewhat higher price. They are also not strictly regulated the way banks are, so be particularly vigilant when evaluating potential suppliers.

2. Bank:

The bank you use for your business finances should be the first place you contact. Banks can be the easiest source to turn to for credit card services; many offer service packages for businesses that include merchant services. Most banks do not process credit card transactions themselves, though.

3. Third Party Credit Card Processors:

Third party credit card processors dedicate themselves to handling credit card processing. As such, they take care of different aspects of the transaction process such as authorization, billing, reporting, and settlement.

4. Financial Service Provider:

Master Card and Visa require you to establish a merchant account through an intermediary. However American Express and Discover give you the option of applying directly to them.


Buyer's Guide.

1. Compare variable fees:

Check on fees that tend to vary between providers and may be negotiable. Such fees include set-up, cancellation, and monthly minimum.

2. Get the complete picture:

Once you know all the fees a provider will charge you, figure out what your total cost would be based on your best and worst recent months.

3. Read the contract:

Make sure to read the contract in detail to understand all fees, minimum charges, the term of the agreement, and termination clauses. Some providers will not cover every point and leave it to you to uncover the details.