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Credit Card Processing: Beyond the Bank

Banks once assumed that holding merchant moneys in bank accounts meant that they could sell merchants every other financial service without much competition. That assumption has been proved wrong by feisty third-party credit card processing companies.

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Banks have been having a rough go of it lately. One area where banks are facing particularly stiff competition is credit card processing.

Traditionally, because banks are where merchants normally have accounts, banks have enjoyed an easy sell for credit card processing. Merchant point-of-sale machines could be easily linked to merchant bank accounts, and the bank would take a percentage for moving that money.

But in recent years, third-party credit card processing outfits have made significant inroads into this market, taking business away from mainstream banks. Not by accident has this happened. Compelling pricing and solid technology make third-party credit card processing companies worth a look.

Processing Credit Cards--Correctly and Inexpensively
Banks incorrectly assumed, once upon a time, that because they held merchant funds, they could sell every other service associated with merchant funds. This faulty assumption was one of the underlying reasons for the recent failures at Citibank, the so-called andquot;financial supermarket.andquot;

As it turns out, people--especially businesspeople--do not necessarily want to receive every single financial product from the same provider. Quite the opposite, actually. However, the desire of the businessperson to buy financial services from multiple partners would have been irrelevant if not for the rise of credit card processing companies that do the job correctly and inexpensively.

Today, there are many such companies, and their selling proposition is powerful: well do what the bank does, but better and less expensively.

Processing Credit Cards on the Internet
As usual, the Internet deserves mention for changing the business world. After all, a large part of the reason why credit card processing firms are able to process credit cards correctly and inexpensively is because the Internet allows cheap, quality connectivity.

With a properly installed Internet credit card processing gateway, processing credit cards is possible and cost-effective for any size merchant. Where once only the banks could offer this service, now there are numerous technically savvy outfits that give equal value.

Nothing Wrong With Choosing the Bank, But Shop Around
There is nothing wrong with wanting to keep things as simple as possible. For businesspeople, concentrating on core tasks and blocking out the noise is a very important ability.

One way to keep things simple is to purchase multiple services from one provider, such as a bank. Thats fine, but banks should be prepared to fight for merchant business. Many merchants have been with their banks for many years, and would be loath to outsource credit card processing.. Nevertheless, obtaining a price quote from a third-party credit card processing company may be worth the five minutes.

Of course its necessary to identify key service options--Internet processing, no signature needed processing--that are crucial to business, but merchants are often surprised by how much cost they can cut by going with a credit card processing firm. At the very least, that price quote enables a merchant to walk into a bank and ask why hes paying so much more than the guy down the street for the same service.

Source
Bank of America


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