How Do I Establish A Credit Card Processing Service?
Paying with credit and debit cards is becoming increasingly common around the globe – a shift that has led to small, home-based, and big businesses alike seek out credit card processing services. Such a service connects the retail merchant and the credit card company – Visa, MasterCard, American Express, Discover, etc to get the payment processed.
Operating a payment processing service is competitive but financially rewarding. Let’s discuss the basics of how to launch a credit card processing company.
1. Understanding credit card processing
As a credit card processor, you will be providing the framework that enables:
- a store owner to swipe cards in credit card terminals
- authentication of credit card credentials over a secure SSL network
- software to process information; accept or reject cards
- confirmation of approved transactions by the payment gateway to retailer and customer
- transferring funds from the customer’s account and holding them in the merchant account
- releasing funds to the retailer’s checking account
For every transaction, the service provider charges a small part of the amount involved. This is the main source of income, though there are also some monthly and yearly fees.
2. Register your company as an LLC or get incorporated
Get information and facts from the Chamber of Commerce or the local Small Business Bureau on how to incorporate or to register as an LLC. This defends against personal liabilities.
3. Look for reseller options with banks
Banks offer reseller programs that allow a company to resell the bank’s processing service with its own brand name in exchange for a fee. You thus operate as an “authorized agent” for the bank.
4. Provide the banks with a good business plan
Banks are a mandatory part of processing credit cards. Contact various banks with a well worked out business plan and a list of the businesses you will target. Let them know that you will not entertain high risk businesses such as adult or gaming portals, and similar such businesses that are susceptible to a high volumes of credit card scams.
5. Acquire credit card processing equipment
You will have to provide credit card terminals on lease or sale – integrated and non-integrated, pin pads, receipt printers, etc. to your clientele, and also put into place internet payment gateways for online businesses and software package to process cards. Find out which terminals will operate well with your bank’s systems.
6. Get in touch with equipment leasing services
Leasing gear will be more lucrative than selling it. Get in touch with leasing services that are willing to underwrite lease contracts for terminals for a cut of the profits. Banks can also render these services.
7. Become Cardholder Information Security Program (CISP) certified
The CISP certification is important as it tells customers that you have taken all necessary steps to ensure security of credit card data – firewall, encrypted data transmission, latest anti-virus solution, and physical security of servers. You will also have to get certifications to demonstrate your adherence to the regulations defined by the leading credit card companies – Visa, MasterCard, etc.
8. Be on the lookout for new businesses
Get in touch with new businesses in your area, and lure them with a better package than your competition. Suggest setting up the merchant account, supply credit card terminals for free for some time, etc., to make the package more interesting. Give them a brochure so they can compare costs and services with ease.
9. Store equipment properly
Assign a proper place for storing the apparatus that you will lease or sell as part of your services. Package and ship out the products carefully. Always replenish stock on time so you have samples to show to prospects. You can use a drop shipper’s services to store inventory.
10. Hook up your customers with Merchant Cash Advance (MCA) providers
Network and build symbiotic relations with merchant cash advance providers. When you are approached by a business that has been accepting credit cards for about one year, you can suggest good MCA providers and help them procure a cash advance. Once you have their go-ahead, sell the lead to the MCA provider for supplemental income.
The future for credit card processing services is bright considering the pace at which businesses of all types – e-commerce and brick-and-mortar establishments – are opening up to credit card payments. You can beat the competition by advertising packages that comprise of incentives, cost savings and exemplary service for customers.
