How to Choose the Right Credit Card Processor for Your Small Business

At its core, a credit card processor does pretty much what the name suggests: It processes card payments from your customers.

But the right credit card processor can be more than meets the eye.

For every transaction, your credit card processor should collect your customer’s information, communicate with the customer’s bank, then relay all that data back to your merchant account.

In order to choose the right credit card processor for you, it’s worth learning about and understanding payment gateways and how they affect processing rates.

You should also research the ways that the people behind your credit card processor respond to queries.

You wouldn’t want to be left hanging with an important question, would you? Of course not.

Look at it this way: When choosing a credit card processor, you’re not just tacking on another step in the credit card process. You’re making a decision that affects your customers, too.

You’re choosing how much each transaction will cost you, which could affect your pricing for clients down the line.

You’re also choosing a vendor that will have access to your clients’ information, so you want to pick a trustworthy one.

But before we get into choosing a credit card processor, let’s start by taking a look at what exactly credit card processing is…

What Is Credit Card Payment Processing?

Essentially, your credit card processor is part of your overall point-of-sale (POS) setup.

That setup also includes payment gateways, inventory management tools, and sales reporting tools.

To complete each card-based transaction, a credit card processor connects the payment gateways that a client uses to pay you with your client’s bank and your own bank account.

When you conduct business online, the payment gateway is the page and fields where your clients input their credit card information.

Your online card payment system works in the background, doing all of the above in a matter of seconds.

Not knowing the difference between POS systems and credit card processing could set you up for serious headaches down the road.

For example, most POS systems don’t come with integrated credit-card processing software and adding that software could cost an extra several thousand dollars.

In addition, most credit card processing systems are stand-alone solutions that don’t directly provide services to merchants. They have reselling agreements with other POS elements, like payment gateways, which means you’ll have to navigate multiple contracts to use them.

If this all sounds a little overwhelming, don’t worry. We have a solution, and it’s Vagaro's built-in payment processor.

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How To Choose A Credit Card Processor

To make your choice of credit card payment processor a little easier, we’ve compiled this list of questions you should ask about each one of the contenders on your list:

1. How easily can you integrate it into your business model?

You can avoid a lot of headaches by taking time to make sure the processor you choose integrates well into your established daily workflow.

If you aren’t sure how to choose a credit card processor that fits your workflow, ask the vendor to walk you through a typical transaction.

2. What do existing customers say about their customer service?

If a quick demo doesn’t tell you enough, you can get a better feel for a credit card processor by doing some hands-on digging. Call up customer service and ask questions to gauge the level of support offered.

Then, search for online reviews to read about experiences other businesses have had with the same processor.

3. Will the processor actually benefit your profit margins?

If a credit card processor doesn’t fit well into your workflow or if its rates turn out to be much higher than you expected, then it won’t be much of a benefit to your bottom line.

As credit card sales continue to increase year over year, you need a credit card processor that allows you to benefit from those sales, not one that costs an arm and a leg.

4. Do you need to enter a contract to use the system?

When you’re judging a credit card processor’s effects on your business, consider whether you have to enter a contract to use it.

Even if you do all the research in the world before signing up, there’s no guarantee you’ll be happy with your choice down the road.

If that’s the case and you’ve signed a contract, getting out of it could be costly.

(PS. Vagaro doesn’t have contracts. You just have to be approved for payment processing before transacting.)

5. How serious — and clear — are the system’s security standards?

In addition to the costs of processing payments, the costs of credit card fraud have risen by 26% since 2013.

Most processors have some security to guard against this, but many have confusing, unclear protocols that lead to constant fraud triggers and holds on your funds.

If a system’s security protocol isn’t transparent, you might want to look elsewhere.

6. Is there a catch to the processor’s seemingly low rates?

Don’t take a credit card processor’s advertised low rates at face value. Be sure to read the fine print (and double-check how your credit score affects this rate).

After all, a lot of processors offset those rates with hidden costs and fees or with complicated tiered structures that put low rates out of reach.

If you can’t find any additional information about low rates, then let the lack of transparency be a warning.

Benefits of Vagaro's Payment Processing for Small Businesses

Finding the answers to these questions will make choosing the right credit card processor for your business much simpler. It will also reveal just how advantageous Vagaro's payment processor is compared to other processors.

For example, the service will be integrated right into your Vagaro account and app, and it comes with customer service and support.

Also, our low rates of 2.6% + $0.10 for every transactions — and no additional fees or annual contracts — make it easier for you to improve your profit margins.

After you compare your credit card processing options, it will be even more obvious just how Vagaro's built-in payment processor outperforms other processors, especially for small businesses like yours.

When you’re ready, click here to sign up.