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Do's and Don'ts of Credit Card Processing

When you are getting setup:
  1. Do research credit card processing so you have a basic understanding of how merchant services work.
  2. Do research processing for your specific business type (Retail, Ecommerce, B2B, Mobile, etc.)
  3. Do get quotes from several good merchant service providers.
  4. Do your initial research 1 - 2 months before you need to be setup.
  5. Do get completely setup at least two weeks before you need to process your first card.
  6. Do understand what downgrade fees are and why they will probably account for 50% of your bill.
  7. Do get setup with PIN debit and a PINpad if you are a retail store.
  8. Do get setup with a B2B merchant account if you sell mainly to corporations or government agencies.
  9. Do get setup with a large ticket merchant account if you have very high transaction amounts (≈ $6,000 and up.)
  10. Do read this article about processing fees.
  11. Do accept all cards. In most cases Discover and Amex settle with Visa and MasterCard now, so it's not a hassle to accept them anymore.
  12. Do unquestionably accept Amex if you sell to other businesses or your store is in a business friendly area. Amex can make up more than 50% of your transactions.
  13. Do become PCI compliant no matter how small or large your business is.
  14. Do use an ethernet terminal if your business has broadband internet. It's faster and you don't need to deal with phone companies.
  15. Do get setup with the right merchant account type (Retail, Ecommerce, B2B, etc.) Although another one may look cheaper, it won't be if you don't accept cards the correct way for the account.
  16. Do get setup as a seasonal account if you are only open for select months out of the year.
  17. Do use a wireless terminal if you are an established mobile business, or you expect a steady or increasing amount of sales.
  18. Do be very cautious of creative rates and pass-through rates if you do not thoroughly understand them.
  19. Do find a company that will answer all of your questions, and one that asks you questions. Every business is different, and a one size fits all merchant account is a bad fit for everyone.
  20. Don't inherently think your local bank has the best service and lowest price just because you are already a customer.
  21. Don't take any offer you receive without looking at other companies first.
  22. Don't take the lowest offer you find just because it is the cheapest. Go with the business you trust. Usually the cost difference is negligible, and processing through a bad company can hurt your business.
  23. Don't trust your accountant's recommendation without first looking at that company and others yourself.
  24. Don't get a bundled, pass-through, ERR or EBB rate unless you understand exactly what you are getting.
  25. Don't confuse a debit rate with a credit rate. (If it's below 1.6%, it's either a debit rate, or you're going to get charged somewhere else.)
  26. Don't sign a lease unless you are 100% sure you want to, and you know how much more it costs than purchasing.
  27. Don't go with a free terminal program just because you don't have to pay for the equipment. (Processors make up for the lost revenue in other areas.)
  28. Don't buy a proprietary terminal unless you know and accept that you may not be able to switch providers and still use that terminal. The FD100, FD200, FD300, and Linkpoints are the most common proprietary terminals.
  29. Don't buy into new technology like Smart Cards or Contactless payments unless you know your customers want to use them. Very few consumers have cards with these features, and spending extra money on them is a waste right now.
  30. Don't be surprised later on by something you missed in your contract. Make sure you understand the fees and provisions of your contact before you send it in. If the company you're thinking about using won't explain them to your satisfaction, find another one that will.
After you're setup:
  1. Do check your bank account religiously for the first few months to make sure you're getting your money.
  2. Do read the messages on your statement every month. Processors use these to inform about upcomming fees or important announcements.
  3. Do check your statements each month to make sure you being charged what you were expecting. Again, understand what downgrade fees and surcharges are before you complain about your bill.
  4. Do keep your credit card terminal is a safe place away from liquid and heat (As best as possible.)
  5. Do check your customer's IDs and make sure the card is theirs. You're liable if you accept a stolen card.
  6. Do control and monitor returns vigilantly. A lot of fraud is committed by employees issuing credits to their own cards.
  7. Do keep receipts locked up, allowing access only to privileged individuals if you need to keep them at all.
  8. Do contact your processor if you need to process an abnormally large transaction. (IE: $5,000 when your normal ticket is $50).
  9. Do contact your provider immediately if full credit card numbers are being printed on your customer's receipt copy.
  10. Do respond to chargebacks or retrieval requests immediately.
  11. Don't process your own credit card through your own merchant account.
  12. Don't process a payment for another company or individual no matter how well you know them. This can be considered fraud and money laundering and is specifically prohibited by card companies.
  13. Don't require a minimum purchase amount for credit card payments.
  14. Don't charge a service fee for credit card payments. You can discount for cash purchases, but you cannot charge extra for credit cards.
  15. Don't ever refund a credit card payment as cash or check. Only return to the card that was used to make the purchase. Otherwise, the customer can take the cash and still make a chargeback, so you lose twice.
  16. Don't spill drinks on your credit card terminal. Have employees keep their food and drink away from the terminal.
  17. Don't drop your credit card terminal. They are fairly sturdy but tile floors will make short work of their continued operation.
  18. Don't let anyone reprogram your credit card terminal unless you are absolutely sure they work for your processor.

For ecommerce web sites:

  1. Do check AVS and CVV on every transaction. (Choosing whether to accept or decline transactions based on the AVS or CVV response is up to you.)
  2. Do use an API integration method and SSL for accepting payments on your website. Your website will convert better, and you will look more professional.
  3. Do take steps to prevent card testing on your website.
  4. Do use a Customer Information Manager if you need to store credit card data and it works with your business model.
  5. Do use advanced fraud scrubbing if you start to experience a lot of fraud through your website.
  6. Do offer additional payment methods for your customers.
  7. Don't store credit card information unless it's absolutely necessary. If you have to, make sure that it is stored encrypted, and is secure per PCI regulations.
  8. Don't program / integrate a payment gateway into your website yourself unless you know what you are doing.
  9. Don't ever email credit card numbers, this is completely insecure.
  10. Don't implement a complicated checkout process into your website. The fewer steps the better.

After you've been processing for a while:

  1. Do look at your statements each month and make sure there is nothing unexpected on them.
  2. Do note and contact your processor if your monthly bill goes up un-proportionally to any increase in sales.
  3. Do allow for at least 30 days for everything to clear if you need to change bank accounts.
  4. Do ask for a rate review if your sales have increased dramatically since you first started processing.
  5. Do keep up with PCI compliance requirements for your business. It's a pain, but we all have to do it and the cost of a data breach for a non-compliant business is huge.
  6. Do refer colleagues to your processor if you are satisfied with your service. You can save your friend the trouble of finding a decent company to process with and you may be entitled to a referral fee.
  7. Don't close your bank account until your merchant account is connected to a new one.
  8. Don't wait to contact your provider if something is wrong or you are unhappy with your processing service. They work for you, not the other way around.

If you need to close your merchant account:

  1. Do give more than one month notice if you know you will be shutting down. It can save you a month worth of fees.
  2. Do fax in a letter of termination, and call to confirm that it was received and the date is correct.
  3. Do make sure you know if there is a termination fee or not.
  4. Don't neglect to pay your final bill with your processor. This can cause major problems down the road and can lead to collections and potentially being put on banned merchant lists.

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