When ecommerce was first introduced, it was a common belief that it was expensive and difficult to implement. In reality, when ecommerce first started out, it was often expensive and difficult to set up. Fast forward to today and ecommerce is common in today’s marketplace. Companies exist to make ecommerce affordable and accessible to businesses, including startups.
Unfortunately, some business owners tend to be so eager to enter into a merchant processing agreement that they don’t fully understand what they’re getting into. This is a detrimental mistake, especially to new businesses. It’s the responsibility of the business owner to do research prior to selecting their processor. Here are four of the most common mistakes that business owners make with their credit card processor:
Not reading the terms and conditions
The biggest mistake that business owners make with their credit card processing company is not reading the terms and conditions of their contract. We’re all guilty of glancing over contracts and signing on the dotted line, but doing so in this case, could be detrimental in the future. When looking over your contract, be on the lookout for any red flags. Check for upfront fees, penalties and hidden fees. If you don’t understand part of the terms and conditions, contact a representative to walk you through it. If you’re still unsure, contact a third party professional.
Making volume commitments
Some credit card processing agreements have volume commitments that a merchant must satisfy. This means that a merchant must process a certain amount of dollars per month. If the merchant doesn’t satisfy this volume commitment, then the discount rate may be increased or other penalties may be applied. Having volume commitments can be difficult for smaller businesses, and it can be nearly impossible for a startup to satisfy. Look for a credit card processing company that doesn’t require any volume commitments. When reading over your processing agreement, check to see if there’s a section regarding volume commitments.
Not assessing additional fees
Be observant when assessing additional fees or penalties coming from the credit card processing company. If you’re accruing additional fees that weren’t stated in the terms and conditions, find out what’s going on quickly. This shouldn’t be an issue with a reputable company, but accidents happen. Keep an eye out on your account and take action if you’re getting hit with unexpected fees.
Not paying attention to rate fluctuations
Most companies won’t spring a new rate on you overnight. This is another reason why it’s important to read the terms and conditions carefully. The terms and conditions contract will specifically state your rates and whether there are any fluctuations. There’s nothing worse than paying 1.5% a swipe one day and 2.5% the next day. This may not seem like a large difference, but over time it adds up. If you notice an increase in your rate that wasn’t stated in your contract, contact the credit card processing company immediately.