] tend to be very stable, very reputable companies. There are also what are generally thought of as web payment providers. These are companies like Stripe and its pile of competitors where they are set up primarily for doing business on the internet, so they integrate with different websites and they are mainly targeting website owners like ourselves. There are also payment account providers who also offer credit card processing services. For example, you can process credit cards through PayPal. PayPal is normally thought of as a way to run PayPal accounts on your site, but PayPal is their own merchant credit card processor as well. You can use them to process your credit cards or you can use ... I believe you can use Amazon Payments as well. There are three different pipes of providers that you can be looking at and today I'm mainly going to be talking about the web payment providers, like Stripe, and then the payment account providers, like Amazon and PayPal, since those are generally the more popular options for small business owners who are trying to integrate a credit card system onto their website. Alright, next step let's talk about fees because credit card fees add up quickly and the first thing you want to do when you're choosing a credit card processor is figure out their fee structure. Now, there are generally three types of fees that would be involved. One is a monthly fee and this is just a flat fee that is charged for using their service. Then, there are transaction fees, so every time there's a credit card charge run through the system for your website, you'll get hit with a transaction fee. Those generally tend to be right around 30 cents. That's kind of the going rate right now. Then, there are variable fees and this is the percentage that you pay on each transaction, so you'll get hit with that, you know, say 30 cent transaction fee, and then the variable fees are a percentage. On a $10.00 order, you might pay a 29 or 30 cent transaction fee and then you would pay, let's say it's 2%, you would pay 20 cents for that variable fee. Your total would be like 49, 50 cents for your credit card fees for that order. Now, understanding the fee structure's important because this is part of how you're going to compare between different companies because each one is probably going to have a slightly different structure. Although, I'm happy to report in the last few years most of these companies have all standardized their fees, so you're going to see the same basic rate on multiple companies, which makes it so much easier. No joke, these credit card fees matter. They add up so quickly. Six years ago, I cut my credit card fees in half by switching companies to process my credit cards. I saved over $4,500 a month, I mean, that is an insane amount of money, simply by switching from one company to another. This is really something that you want to be paying attention to. Next up, you want to look at data and how the information from your credit card processor is going to integrate into your accounting system. It is really frustrating to have to enter this data by hand. It's possible, but it's really time consuming, so this is a good time to stop and ask yourself how is your payment processor going to talk to your eCommerce platform and how are both of those pieces of software going to talk to your accounting system? If you can get all of these systems reliably talking to one another, you will save yourself so many headaches and errors and just a ton of time over the years. If it turns out that it is not possible for you to fully integrate the system and you are going to be entering data by hand, make sure you take a good look at how transparent the reporting is from the credit card processor. You really need easy to read reports where your fees are properly broken out, so that you can easily enter this information or give it to your bookkeeper to enter. Another accounting issue you need to be concerned with when you're using a credit card processor is how fees are paid. Now, most of the web processors out there now take their fees off the top. For example, if you have a customer buy something for $10.00 and the fees are 49 cents, then you would have $9.51 deposited into your bank account. Okay, that makes sense, but sometimes credit card companies charge the fees in bulk at the end of the month. I used to have this with one of the processors I used is we would get to the first of the month, first or second of the month, and $8,000-$9,000 would come out of my checking account and that was all of my fees for the month for the credit card transactions. I'm only saying this because if you're going to have a bulk amount come out of your account, you need to be aware of that and if you're not looking at your reports every day, it would be really easy to miss maybe that those fees are not coming out piecemeal, but rather are going to come out in a lump sum later on. Just something to be aware of, so you don't have issues with your cashflow. Alright, next I would suggest that you take a good look at what setup looks like. Now, most credit card processors are going to require a significant amount of information in order to set up a credit card processing account for you. This is perfectly normal and nothing to be worried about. For example, they're going to need to know what your business's name is and how it's registered with the state that you're in. They're going to need to know your tax ID number. This is a federal requirement. They have to send you a 1099-K at the end of the year. I see so many small business owners on my Facebook groups and forums who freak out when they're asked for this information and it's like, okay guys, but they have to send the paperwork to the government at the end of the year and it has to be for your business. Just be aware that these are the types of things that they're going to need. They generally also need to know who you are personally. Again, this is perfectly normal and it has to do ... at least in the United States I believe it has to do with the terrorism prevention acts, so be prepared that you're going to have to part with some of your personal info as well. They'll likely run a credit check on you personally because they want to make sure that you are in a position that you're not going to be tempted to do something nefarious with your credit card account. You'll likely hear entrepreneurs claiming about their money being held by a new processor and this can happen with any type of payment processor, a credit card processor or an account like Amazon or PayPal. There are lots of reasons that a credit card processor or a payment processor of another type might hold your money, but the most common are going to be that you have not provided that important legal information, like if you're withholding your tax ID number, that could be a reason for them to hold your deposits. It can also be that they have a policy. If you aren't someone they know or if you haven't done business with them in the past, they may hold a portion of your money and sometimes a significant portion for a certain period of time to make sure that customers aren't going to be complaining and asking for their money back. This is just something that you need to be aware of. I would definitely plan that you are going to have a portion of your money held for at least several weeks by your payment processors and just plan your cashflow accordingly, but you might be able to ask some questions in advance when you're looking at processors to determine what the likelihood is of that happening and the amount that they're likely to hold, so that you can be prepared. Even beyond their policies, be aware that your behavior as a business owner is going to affect how smooth this relationship is and how quickly you're getting your money from your processor. Here's some things to think about. Processors are going to be easier to work with and generally be less likely to hold your money if they thoroughly check you out first. If you find a credit card processor that will just sign up anyone with very little information, just know there's going to be a catch somewhere and it's likely going to be down the road. They're going to hold your money until they get the information that they need. You also want to identify any best practices that are suggested by the credit card processor and this could be things like entering tracking numbers into their system and then follow those, especially for those first few months when you are establishing a good reputation with them. You'll need to stay on top of your customers and any complaints, too. You want to handle those promptly. If you have somebody who has a charge back where they're asking the credit card company to reverse the charge, you want to stay on top of that situation and be available to provide information. You're not likely going to win that dispute, but you still need to show that you are being a responsible merchant. Also, I would recommend, if at all possible, try to avoid wild swings in either your deposit or your withdrawal habits. This can be a tough one. If you are putting together a business where you are likely to have a really successful launch, first of all, congratulations, wouldn't we all like to do that, but something you need to be aware of is that if you go from collecting no money or very little money on a daily basis and you suddenly are putting through transactions totaling in the thousands or tens of thousands of dollars, that it looks like very suspicious behavior to a payment company. On the flip side, if you don't do your withdrawals regularly and then you all of a sudden start withdrawing large amounts of money, again, that can trigger their system that that looks like suspicious behavior. You are probably not doing anything wrong, but their system works on algorithms and you just want to be thoughtful about your behavior. If you're going to behave outside the norm and you cannot keep that from happening, then you need to understand that you're probably going to trigger their system and you're probably going to run into some problems. It's going to be frustrating, but be persistent and most likely you can work it out with them. I know that was a lot of information, but hopefully you are now in a better position to evaluate the credit card processors you are either using or look at new processors, so that you can save yourself money and find a situation that works best for you. Thanks so much for joining me today. I hope this information is helpful and if you have ideas or feedback for future shows, you can find me at SavvyBusinessMethod.com and on Facebook and my YouTube channel. Lots of videos up there. Be sure to head over. I will back in your feed in a few days. If you haven't subscribed yet, please be sure to do so, so that you can be notified when that new episode is available. Of course, I always appreciate fabulous ratings and reviews. We'll see you next time.   Announcer Thanks so much for listening to this episode of the Savvy Business Method with Julie Feickert. If you enjoyed today's episode, please leave a review and subscribe for more great content and to stay up to date, visit SavvyBusinessMethod.com and Savvy Business Method on Facebook. We'll catch you next time.   Episode 008: Choosing a Credit Card Processor for Your Ecommerce Website