While credit card processing seems pretty straightforward, there are actually many complexities to this aspect of the payments industry that can have you paying too much for the service that your small business needs to in order to give the best to their customers. Knowing more about the credit card processing industry can help you get the best credit card processing service without paying more than you have to, in terms of fees on merchant accounts.

Here are five truths you probably didn’t know about credit card processing that you can now leverage to your benefit:

Many companies that advertise cheap, wholesale credit card processing are often more expensive than other companies.

Costco is great for so many things and does offer extraordinary value on many products and services. Both businesses and consumers enjoy this retailer’s bargains and focus on value.

However, what happens is that it’s easy to then assume everything a value brand touts are the cheapest price when, in reality, there are times that it may pay to shop elsewhere.

Credit card processing is a good example of a service where Costco is not always cheaper. In fact, their credit card processing rates tend to be comparable to Square or PayPal and, in some cases, are even more, depending on the volume and amount of your monthly transactions, the type of credit card processing you are doing (online, offline, or both), and whether you need to buy or lease credit card terminals.

The lesson here is always shop around and compare rates and fees on credit card processing before you assume a company is the lowest just because they are cheap at just about everything else.

You can negotiate certain credit card processing fees lower or get out of paying them.

It’s easy to assume that the fees listed are written in stone — so many business owners don’t dare ask if these costs can be lowered or eliminated. For example, you may not realize that a whole host of fees are actually negotiable like transaction fee, non-qualified rate, discount rate, cancellation fee, liquidated damages fee and monthly minimum fees.

Other fees can be negotiated down or avoided, such as annual and monthly fees, online reporting fee, PCI fee, batch fee, network access fee and statement fee.

Just be aware that some fees cannot be negotiated, including card brand fees, interchange differential, chargeback fees, and international fees.

Some credit card companies will hide fees.

While it’s incredible to think that a company could be that sneaky, it is a regular occurrence to hide fees — and is not necessarily illegal. However, the lack of transparency on their part and need for you to read the small print and request a line by line explanation of costs are signs that this credit card processing brand may not be right for you. It’s critical that you know what exactly it is that you are paying for so you don’t end up having a higher overhead and smaller profit margin than you are entitled to.

Do your homework and make sure that you have selected a company that is clear down to the penny on what they are charging you for their credit card processing services.

You don’t need to sign a contract with a credit card processing company.

There are certain credit card processing companies that will insist that you need to sign a contract in order to offer this payment option in your business.

However, there is no need to be under contract to receive competitive credit card processing rates. If a company offers you great service, rates, and features, you will not be likely to leave anyways, so there’s no reason to be tied into a contract and then be vulnerable to extra fees like an early termination fee should you want to leave.

Again, take the time to research the various credit card companies to see which ones allow you to go month to month with your plan.

Of course, some may tempt you with a lower monthly rate for paying for a year in advance so you might want to weigh that option as well if you are sure you want to work with that credit card processor.

Your credit card processing choices are not limited as a small business.

While this used to be fairly true since there were fewer credit card processors who focused strictly on large companies that delivered high monthly transaction volumes.

Today’s credit card processing companies realize the benefits of catering to small business owners, startups, and even freelancers who may not necessarily have as high a volume but that incrementally add up to considerable revenue.

Because of the growing number of these various types of businesses, you are no longer stuck with a single way to process your credit cards.

In fact, numerous payment brands have emerged that cater directly to small businesses. They offer special low-cost credit card processing that fits their needs and offers a way for them to scale up and grow as they attract more customers that like the fact they accept credit cards.

These truths can serve you well as you develop a sound strategy and budget for credit card processing in your business, helping you make the most informed decision possible.

About the Author:

John Rampton is an entrepreneur, investor, online marketing guru and startup enthusiast. He is founder of the online invoicing company Due. John is best known as an entrepreneur and connector. He was recently named #2 on Top 50 Online Influencers in the World by Entrepreneur Magazine and a Blogging Expert by Time. He currently advises several companies in the San Francisco Bay area.

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