Credit and debit cards are becoming a popular payment option across the globe - a trend that is making even small home-based businesses seek out credit card processing services. A payment processing service basically processes a credit card transaction. It is the bridge between the retailer and the card company - Visa, MasterCard, American Express, Discover, etc.
If you are considering starting your own business, consider starting a credit card processing service. Even though it is a competitive industry, it is still very lucrative. Let's discuss the basics of starting such a business.
1. Understanding credit card processing
As a credit card processor, you will be providing the framework that enables:
a retailer to swipe cards in POS terminals
verification of credit card credentials over a secure SSL network
software to process information; accept and reject cards
confirmation of payments by the payment gateway to retailer and customer
debiting funds from the credit card holder's account and holding them in the merchant account
releasing funds to the retailer's checking account
For every transaction, the processor collects a percentage of the amount involved. This is the main source of income, though there are other fees too.
2. Register as a company
Get information from the Chamber of Commerce or the local Small Business Bureau on how to register as a corporation or LLC. This protects you from personal liabilities.
3. Look for reseller option with banks
Banks offer reseller programs that allow a company to resell the bank's processing service under its own brand in exchange for a fee. You can act as an "authorized agent" for the bank.
4. Approach multiple banks
Banks are a mandatory part of processing credit and debit cards. Approach various banks with a strong business plan and a potential client list. Let them know that you will not entertain high risk businesses such as adult websites, and other types that see a high rate of fraud.
5. Acquire credit card processing equipment
You will need to sell or lease POS terminals - integrated and non-integrated, pin pads, receipt printers, etc. to your customers, and also implement internet payment gateways for online businesses and software to process cards. Find out which terminals will work with your bank's systems.
6. Contact leasing agencies
Leasing equipment is more profitable than selling it. Get in touch with leasing agencies that will underwrite lease terms for terminals for a cut of the profits. Banks can also offer these services.
7. Get Cardholder Information Security Program (CISP) certified
The CISP certification is important as it tells customers you have implemented the necessary measures - firewall, encrypted data transmission, updated antivirus software, and physical security of servers - for the maximum security of information. You also need certificates to prove your compliance to the norms laid out by the major card companies - Visa, MasterCard, etc.
8. Keep your eyes open for new businesses
Approach new businesses in your area, and offer them a better deal than what they currently have. Offer setting up the merchant account, provide credit card terminals for free for a duration, etc., to make your offer more attractive. Keep a catalog handy so that they can compare prices and services easily.
9. Store products properly
Have a proper place for storing the equipment you will lease or sell to your customers. Pack and ship the products carefully. Ensure that you always have stock to show to potential customers. You can use a drop shipper's services to maintain inventory.
10. Offer merchant cash advance to your clients
Build relationships with merchant cash advance providers. If you come across a business that has been accepting credit cards for about one year, offer to help them obtain a cash advance. If they agree, sell the lead to a merchant cash advance provider for supplemental income.
The future of card processing services is bright considering the speed with which all kinds of businesses - e-commerce and retail - are opening up to credit payment processing. You can provide tough competition by launching offers that include incentives and lower fees to customers.
If you are considering starting your own business, consider starting a credit card processing service. Even though it is a competitive industry, it is still very lucrative. Let's discuss the basics of starting such a business.
1. Understanding credit card processing
As a credit card processor, you will be providing the framework that enables:
a retailer to swipe cards in POS terminals
verification of credit card credentials over a secure SSL network
software to process information; accept and reject cards
confirmation of payments by the payment gateway to retailer and customer
debiting funds from the credit card holder's account and holding them in the merchant account
releasing funds to the retailer's checking account
For every transaction, the processor collects a percentage of the amount involved. This is the main source of income, though there are other fees too.
2. Register as a company
Get information from the Chamber of Commerce or the local Small Business Bureau on how to register as a corporation or LLC. This protects you from personal liabilities.
3. Look for reseller option with banks
Banks offer reseller programs that allow a company to resell the bank's processing service under its own brand in exchange for a fee. You can act as an "authorized agent" for the bank.
4. Approach multiple banks
Banks are a mandatory part of processing credit and debit cards. Approach various banks with a strong business plan and a potential client list. Let them know that you will not entertain high risk businesses such as adult websites, and other types that see a high rate of fraud.
5. Acquire credit card processing equipment
You will need to sell or lease POS terminals - integrated and non-integrated, pin pads, receipt printers, etc. to your customers, and also implement internet payment gateways for online businesses and software to process cards. Find out which terminals will work with your bank's systems.
6. Contact leasing agencies
Leasing equipment is more profitable than selling it. Get in touch with leasing agencies that will underwrite lease terms for terminals for a cut of the profits. Banks can also offer these services.
7. Get Cardholder Information Security Program (CISP) certified
The CISP certification is important as it tells customers you have implemented the necessary measures - firewall, encrypted data transmission, updated antivirus software, and physical security of servers - for the maximum security of information. You also need certificates to prove your compliance to the norms laid out by the major card companies - Visa, MasterCard, etc.
8. Keep your eyes open for new businesses
Approach new businesses in your area, and offer them a better deal than what they currently have. Offer setting up the merchant account, provide credit card terminals for free for a duration, etc., to make your offer more attractive. Keep a catalog handy so that they can compare prices and services easily.
9. Store products properly
Have a proper place for storing the equipment you will lease or sell to your customers. Pack and ship the products carefully. Ensure that you always have stock to show to potential customers. You can use a drop shipper's services to maintain inventory.
10. Offer merchant cash advance to your clients
Build relationships with merchant cash advance providers. If you come across a business that has been accepting credit cards for about one year, offer to help them obtain a cash advance. If they agree, sell the lead to a merchant cash advance provider for supplemental income.
The future of card processing services is bright considering the speed with which all kinds of businesses - e-commerce and retail - are opening up to credit payment processing. You can provide tough competition by launching offers that include incentives and lower fees to customers.
How To Startup A Credit Card Processing Service Business
Reviewed by ndolpit
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Published :
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