Editor’s Note: A version of this post was originally published in February 2012, it has been updated for accurateness and completeness.

Choosing the right online credit card processing service will save you time, diversify your ability to collect payments and ultimately increase your ability to generate revenue.

Choosing the wrong processor will leave you paying higher fees, confuse your customers and put you on hold for hours waiting for a customer service rep.

When you’re a small business, it’s difficult to find the right online credit card processor with so many options available.  One Google search will pull up such an endless list of companies – unless you know what to look for.

The next time you’re looking at a potential online credit card processor, ask yourself these questions before signing the contract.

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1 – What are the fees?

The transaction fee is usually the first aspect a business will look at when evaluating online credit card processing options.  But don’t be sold too soon on a low rate without asking more questions about additional fees. Many processors also institute processing minimums, where if you don’t meet a certain volume of transactions per month, the provider will charge a penalty fee. Ask for a complete breakdown of all transaction and incidental fees so you have an accurate picture of your monthly costs.

2 – How high is its approval rating?

The approval rating indicates what percentage of applications the credit card processor approves. A higher approval rating usually means a higher percentage of approved applicants, a higher processing speed and a lower fee to apply. A lower approval rating usually means the opposite.

3 – What features does it offer?

Most companies offer a variety of terminal options, including swipers, virtual terminals, or online payment forms.  However, many businesses will need more functionality than a simple gateway to process a payment. Do you plan on storing customer information (or even payment information) for repeat purchases? Would you like to set up recurring billing to bill credit cards on a regular schedule? What type of reporting do you need to track your cash flow? Does the provider offer a mobile app to process credit cards on-the-go?

These types of features are often NOT included with your merchant account and can lead to expensive or complicated integrations by separate software providers. Be sure your merchant account is compatible, or better yet, already integrated with the features you desire. Use this free evaluation guide to help you find the right the solution for your business.

4 – How much is its start-up (or cancellation) cost?

Online credit card processing services usually charge you a fee to get set up, and many can charge you a fee if you cancel.  Be sure to check on the setup cost (as this can often be negotiated) and whether you’re going to be locked into a contract with a hefty cancellation fee.

5 – How do customers rate its service?

The Internet makes it easy to detect an inaccessible, unresponsive customer service department. Before you sign up with a processor, enter the name into Google followed by “reviews,” and read what customers have to say. You can also go directly to review websites and find objective write-ups from reviewers who have done a lot of in-depth research for you. A few notable  examples include CNet.com, PCMag.com and CardPaymentOptions.com.

6 – How long does it take to set up?

Some companies can have you set up within a day, and some can take weeks. The nature of your business can sometimes factor into how long it takes to set up your merchant account, but the provider and their systems can shorten or lengthen this process, as well.  Be sure to ask this question up front so you are not left hanging when a customer needs to pay you.

7 – How long is funding time?

Be somewhat wary of services boasting “instant” or “guaranteed” setup, as it can mean a holding time for your funds. Be sure that for whatever online credit card processing service you’re looking into that you know the average funding time for Visa, MasterCard, Discover and American Express transactions (as these can often be different). Any longer than a few days can mean your funds are being placed in a holding account to offset the processor’s risk of an “application-free” or “instant” setup.

Choosing the best online credit card processing service ultimately comes down to how well it will fit with your business in the long-run.  Will its service and features make your life easier or more difficult? Research all your options, send them through this checklist and you’ll be processing credit cards, headache-free, in no time.

Sarah Jordan

Sarah Jordan

Sarah Jordan is the VP of Marketing for PaySimple, the leading provider of service commerce solutions for SMBs. At PaySimple, Sarah leads the company's brand, acquisition, lifecycle, and product marketing strategies, and has been an integral player in growing the company from a fledgling startup to a leading SaaS platform, serving over 15,000 businesses across the country. She loves live music, being outside, great food, and hanging out with her husband, little boy, and dog.

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