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Credit card processing represents a confounding choice for many business owners. Here are some tips I’ve learned over the years to help you evaluate providers and options.

• Get a quote in writing for all fees

All credit card processors have many different fees associated with their merchant accounts. Although similar, the descriptions of these fees can vary from processor to processor. Make sure that all fees are identified and explained, clearly, in writing.

• Weigh price vs. service

Competition is fierce in the credit card processing business. While getting the best discount rate is important, it shouldn’t be the only criterion when selecting a processor. The difference between a couple of basis points in your discount rate and getting paid consistently on time is critical for any business. Also, timely resolution of transaction issues depends on good customer service groups. Be sure to investigate these points and the background of a company before selecting a credit card processor. Beware of the lowest rates!

• Make sure your merchant account fits your business

There are two types of credit card merchant accounts: One is for retail transactions (a card is present and physically swiped) and requires a credit card processing terminal, usually costing $300 to $1000; the other is for non-retail transactions (mail/telephone/Internet) and requires either a Web-based virtual terminal (where the business enters card information) or a direct interface from a Web site (where the customer enters card information). Retail merchant accounts always apply a much higher discount rate for non-retail transactions. Many businesses are unaware they are paying more (per transaction and for unnecessary equipment) by not having the correct type of merchant account.

• Review contract term and cancellation fees

It is extremely important to read and understand the entire merchant contract. Knowing the length of term and cancellation fees in advance can prevent costly headaches when changes are necessary.

• Is there a yearly renewal fee?

Some processors charge yearly renewal fees.

• Review your monthly statements

Credit card monthly statements can be complicated. Be sure to review the first couple of statements in detail to ensure that fees match the quoted terms. After performing an analysis of their statements, many business owners are surprised by the additional fees that contribute to higher transaction costs.

Hope this helps!