Credit Card Processing: How to select the right vendor

Credit cards are an essential financial option these days. Imagining life without one can become difficult. Almost everyone needs and has a credit card nowadays. It is because it is easy to buy something using a credit card. You can divide your payments as instalments easily.

Most of the businesses also prefer credit cards for their transactions, especially the ones that involve moderate to big amounts.

Processing the credit card needs a good vendor. The important question here is how to select a vendor that will cause the least hassle in processing and will pose no problems at all. If you are looking for some tips on this matter, this article might prove to be useful for you.

Analyze your business requirements

First and foremost, the necessity of the business is vital to understand for hiring a vendor. If you have formed a team that will help you in vendor selection, you need to ask them to write down or define the vendor requirements, from both technical and business points of view.

You can even ask them to create a document outlining all the points mentioned above. The whole point of analyzing the business requirements is to ascertain that you are on the right path as far as vendor selection is concerned.

Get to know the industry

Unless you are aware of where you are investing and the use of credit cards in it as well as the kind of vendor needed for a particular business, there are chances of you making a mess of the whole selection process.

Having through knowledge about the industry is mainly needed so that you can spot the vendors who do not look or sound to be too reliable.

One of the most important things to understand in credit card processing is the concept of the interchange. It is the cost that the credit card companies levy for any payment.

The rate of interchange varies from card to card. There is also a percentage that is levied on top of all interchange.

Another important aspect that needs your immediate attention is understanding who all are involved in facilitating the use of a credit card. A thorough knowledge can actually be beneficial in the long run as well.

Request for Proposal and Request for Quotation

Once you finish with understanding the business industry and analyzing the requirements of the business and then shortlisting a few of the vendors as per your needs,  the next step is to approach a vendor for Request for Proposal ( RFP) or Request for Quotation (RFQ).

The main purpose is to make the selection process even more refined. Either of the formats should contain the details of submission, the executive summary, the specifications, and the background of the business, the terms and conditions, and the constraints that may be associated with it.

The Proposal and Quotation should be adequate enough to make the selection process even simpler and easier. The market trend signal can play an influential role in facilitating it even more.

Proposal Evaluation and Vendor Selection

Once you get all the proposals from the potential vendors according to your requirements, the actual vendor selection process is initiated. The first step is to review the list of proposals or to get an expert to look into them.

After that, it is essential to match the requirements of the vendor to the requirements that you had specified. Once a match is found, tag it with a performance value for calculation later.

Once all the proposals are reviewed, you can compare the score of each of the vendors based on the performance value. You can make a simple selection for a vendor of your credit card by choosing the one with the highest marks.

Understand your technology needs

There is no denying the fact that the way every business is treated is different. Your vendor should understand the differences and provide you with services that correspond with that. Similarly, you have to understand what kind of technology is needed for your business as well.

Is it only an online portal, or is there a physical store present, or is your business a combination of both? Based on these specifications, you can choose a vendor that will give you all the transactional facilities which you need.

Ask the right questions

Although this is a step that is taken before completing the process of vendor selection, it is again an important point that has to be given a lot of importance. Once the payment industry becomes a little more clear for you, it will be easier to ask the right kind of questions when a sales call is made.

One question that should always be at the top of the list is the kind of fees that will be charged other than the interchange. Sometimes, credit cards have a lot of hidden processing fees.

You must be aware of all the fees so that you don’t get any surprises later. Similar questions related to customer services also become equally important.

Contract negotiations strategies

The vendor for a business is like a ‘partner.’ You have the right to negotiate the contract terms and review all the objectives so that both parties are satisfied.

You can change the time constraints or limitations according to your requirements and list your priorities in ranking order. Such negotiations are going to be healthy both for you and your vendor.

Verdict

All the tips mentioned above are tried and tested methods to ensure that you select the right vendor for processing the credit card for your business.