Canadian Small Business Owners Need To Read This

THE WHY: Part 1- 'How does payment processing help me?'

Let start with an example of why a business owner needs payment processing of debit & credit card transactions.
It's 2008, and a customer walks into your business and decides that he/she wants to purchase your product/services. If he has cash, then 'great' you have a sale. If he has money in the bank and you take debit, then 'great' you have a sale. If he has room on his credit card and you take credit cards, then 'great' you have a sale. If you only take cash then you will lose out on 2/3's of potential customers who HAVE ALREADY DECIDED TO BUY.

Let's look at some facts surrounding the above example:
In these times people either have don't carry cash as much, or don't have any money and do not use credit cards responsibly (paying the purchase off at the end of the month- like they were intended to be used).
In these times people have an over abundance of choice in products and services, so if by chance or by your great marketing efforts they get to the point of wanting to purchase from you, then you need to make the selling process as EASY, SMOOTH, CONVENIENT & ENJOYABLE as possible for your customer.
Because if you don't, they'll go somewhere else and never come back, unless you live in a place without internet access, Wal-Mart's,McDonald's or Starbucks.

THE WHY: Part 2- 'Why do I have to pay these fees?'

1. Credit Card Processors are not looking to invest in your business. They know that you need them. It's the difference in not taking debit & credit cards can be a business that only does $2500/mth in volume compared to one that does $5000.

2. Like you, Credit Card Processors have expenses, buildings and employees and also need to make money, and make it long term. Keep that in mind and it'll help you make rational decisions when shopping around.

3. Each Credit Card Processor structures their costs to you differently. Different focus, different business philosophies.

THE WHAT: Part 1- 'What is a debit or credit transaction anyways?'

A debit transaction is essentially a money transfer from your customer's bank account to your business account. Your debit card processor deposits the funds the next business day into your business account.
That's why the cost is minimal- usually 8-12cents per transaction.

A credit transaction is essentially a short term loan. Your customer buys $100 of product from you. You credit card processor deposits $100 into your business account in 2 business days. Then, they get the $100 from your customer's card company 30-90 days later. Note: In Canada, the business owner's card processor cannot be the same company that issues the credit cards to consumers.
Typically a percentage is applied to the transaction amount plus a transaction fee.
Range 1.75%-3.5% and 8cents-25cents.

THE WHAT: Part 2- 'What makes them charge what they do?'

What determines this is:

1 The type of business model you have. Basically, the further you get from face to face/ card present situations, the more risk you are pegged as and therefore the more expensive your processing costs will be.

2 The annual volume you do. It's like anything in business, the more you do and have, the less you will pay, but that's a catch-22 for new entrepreneurs.

3 The average sale amount of your business model. Basically, the higher the average sale of your business, the riskier they peg you and the more expensive will be your processing costs. In regards to fraud, no respectable (ha ha) criminal will take a stolen credit card and get a happy meal- they are going for the big stuff!

4 Like you and your competitors, how much are they are willing to give up of their margin to get your business compared to their competitors?

THE HOW- 'How to I pick right?'

1 Deal with someone who gives you all the fees upfront during and after your initial consultation.

2 Deal with someone who will answer your all your questions without trying to evade you, confuse you or make you feel less intelligent than they are.

3 Deal with someone who gets back to you right away.

4 Deal with someone who has raving fans.

5 Deal with someone who works at your pace and is not pressuring you.

7 Deal with someone who listens more than they talk.

8 Deal with someone who will sell you a terminal as opposed to renting one to you forever.

9 Trust your instincts.

THE DON'T'S

1 Don't fall for the lower rate game. Look at the total package. If you get tunnel vision with one aspect, then you will lose on the others.

2 If the rate is lower, then 1.7%, then you need to ask why, since the 6 major card processors in Canada all get the same wholesale buyrate from Visa and Mastercard.

3 If the terminal hardware is less than $1000 dollars, then you need to ask where the service is? Is there a help desk with live people? Is it outsourced or in house? When does it close? What are the warranties? Are they partial or full? What about downtime? While you terminal is getting fixed, so you get a loaner? How fast?

I hope all of this helps. You can visit me at:

www.canadapaymentprocessing.com