subject: How To Start A Credit Card Processing Business? [print this page] Paying with credit and debit cards is becoming increasingly common around the globe - a development that has led businesses of all sizes to seek out credit card processing services. Such a service is needed as a go between the retailer and the credit card company - Visa, MasterCard, American Express, Discover, etc to get the payment processed.
Operating a payment processing service is competitive but very profitable. Let's talk about the basics of how to launch a credit card processing agency.
1. What does a credit card processor do?
Your function as a credit card processing service will be to set up the framework that makes it possible for:
* a retailer to swipe cards in POS terminals
* authentication of credit card credentials over a secure SSL network
* software to process transactions; accept or reject cards
* confirmation of approved transactions by the payment gateway to retailer and credit card holder
* transferring 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 charges a small part of the payment involved. This is the main source of income, though there are other fees too.
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 works as a safeguard against personal liabilities.
3. Explore reseller options with banks
Banks provide you with reseller products that authorize companies to resell the bank's processing service with its own brand in return for a fee. You thus operate as an "authorized agent" for the bank.
4. Provide the banks with a good business plan
Banks have an important place in processing credit cards. Approach various banks with a detailed business strategy and a potential client list. Let them know that you will not accept clients with high risk businesses such as adult or gaming websites, and similar categories that are susceptible to a high volumes of credit card fraud.
5. Stock up on credit card processing equipment
You can provide credit card terminals on lease or sale - integrated and non-integrated, pads to punch in PINs, payment receipt printers, etc. to your clients, and also install internet payment gateways for online businesses and software to process cards. Check to see which terminals will integrate with your bank's systems.
6. Contact equipment leasing services
Leasing gear will be more lucrative than selling it. Approach leasing companies that will be happy to underwrite lease terms for terminals in exchange for a commission. Banks may also provide such services.
7. Get Cardholder Information Security Program (CISP) certified
The CISP credential adds value to your business as it tells businesses that you have mandatory security measures in place of credit card data - firewall, encrypted data transmission, latest anti-virus software, and actual protection of servers. You also need certifications to prove your adherence to the guidelines laid out by the major credit card companies - Visa, MasterCard, etc.
8. Be on the lookout for new businesses
Approach the start ups in your area, and offer them a better bargain than your competition. Propose setting up the merchant account, deliver credit card terminals for free for a duration, etc., to make the offer more interesting. Send a brochure so they can compare costs and services without difficulty.
9. Store equipment properly
Assign a proper place for stacking the hardware and accessories that you will lease or sell to your customers. Package and ship the products carefully. Ensure that you always have stock to show to potential customers. Make use of a drop shipper's services to maintain inventory.
The outlook for credit card processing services is bright considering the speed with which businesses of all types - e-commerce and retail - are opening up to credit card payments. You can provide the competition by launching offers that incorporate incentives, cost savings and exemplary service for customers.
