I am in the position of opening a small foor business. We are looking at doing credit card proccessing and i have talked to 2 different people.

I talked to one man from the bank, who gave me a higher rate but claims that the small independant companies give you a low rate that gets higher because of hidden fees and whatnot. He says that the bank only has one transaction to do to get the money.

The small company i talked to says that the bank goes through them and they only do one transaction.

Can some explain how it really works, perhaps someone who is nuetral and/or owns their own business.

thanks in advance

Hi, welcome to the club! This is a difficult decision. Banks will charge multiple fees, depending on the credit card. So do the smaller merchant companies. There are just a few true processors, and you cannot generally go thru them unless you are a big wig.

There are different fees for visa/mastercard personal, corp, rewards, auth users, and prepaids. You generally cannot tell which card is which until you learn the number system, and even then it is very difficult.

Have them all provide a complete list of fees, the rental for the machine, the processing of batch fees, the breakdown for types of cards, fees for chargebacks (when a customer disputes whether you charged a valid amount) and any other fees. I would recommend getting a sample contract.

Then, look at the average amount to be charged and the average number of charges per month. Rates can be variable, depending on how long it will take to get deposited.

We went with the processor that offered a medium rate because it filled more of our needs. Do you need online access? Do you authorize and then charge cards? These will both cost you extra.

I know this answer may look confusing, if you need me to explain anything I wrote, please feel free to email me.

Best of luck.

PS I have found banks are generally the most expensive to use, but will deposit faster than 2nd party processors.