What Small Business Owners Need to Know About Choosing a Payment Processor
Most freelancers transitioning into the world of small business make all sorts of mistakes when it comes to choosing a merchant service provider, or handling billing in general. A lot of them choose the old fashioned “invoice” method, where they send a word doc and wait for a check via snail mail. This isn’t efficient when you’re trying to run a business, and counting on continued income.
Payment processors are the only logical choice for the true freelancer, but there are some pitfalls you can avoid.
Cheap is not Always Best
A lot of payment processors like to advertise their merchant account as a low rate provider, but there are some stigmas to be careful of when you’re going the cheapest route. For one, your options will be substantially less than paying for a better account. You may not need something like automated invoices, but you will require timely release of money.
Another way low-rate providers stick you is with hidden fees for everything from moving your money to staying below a certain monthly balance or making too many withdrawals. High rates of disputes may earn you the label of a high risk merchant account, which would add additional fees to your contract. Avoid this by speaking with the processor’s support team and asking questions about what fees you face for which transactions. Ask if there is a minimum balance to maintain and definitely inquire about the time it takes to receive money. If you have a personal bank account outside of your merchant account or payment processor, be sure to ask about any fees you may inquire transferring to a third party.