Not all credit cards are the same. No I don’t mean they are different colors, or have different designs on them. Different card issuers have cards types of cards. So how do people know they are picking the right credit card? There are cards that have rewards programs, cards with low interest rates, cards for people that have bad credit and cards for people with special needs.
The first thing that most look for in a credit card is the interest rate. Cards may have a low introductory rate and offer great rates on balance transfers, but these may be nothing more than teaser rates. Reading the fine print can save some from paying as high as a 30 percent APR. Look in the fine print for the variable rate or how high the rate will go after the introductory period.
Every day more businesses are going out of business and layoffs continue to plague the nation. The traditional brick-and mortar merchant may slowly become a thing of the past. Many are trying their hand at home based businesses and internet ventures. Over the past year we have seen a significant rise in companies like mortgage restructuring, debt consolidation, and various classified offerings online. Although these types of businesses are lucrative, they come with great risk to their owners and the acquirers that take on the challenge of processing credit cards for them.
Most may think that banks are not taking on these types of credit card accounts because of the financial state of our banks. There is a big difference between the acquiring side of banking and the issuing side. In fact the acquiring side that handles credit card processing in the banking industry seems to be the only piece still making money and I predict they will continue to generate revenue. There are acquirers out there that are designed to specifically cater to high risk types of online businesses and have flourished in these industries. To make sure your new venture does not turn out to be a big loss, it is important to look for more than just a card processor to partner with.
Some important items to look for when starting a high risk business online:
It is amazing to me how many different sized businesses still do not accept credit cards as a form of payment, and do not know about other value added products. Many business owners I have talked to that do not accept credit cards at their business seem to have the same two objections. The first reason is that the fees are too expensive, causing it to not be cost effective for them. The second reason is that no one has ever asked them to pay with a card. Although we may find the later objection odd in today’s world, where everyone seems to pay with a credit card, it is frequent in the landscaping, IT, delivery, home based businesses and many more.
Credit card acceptance has been said to add many different benefits to a business. Most business owners report large increases in profits when they begin accepting credit cards. Credit cards allow customers to make a purchase, despite a shortage of cash.
Services businesses, such as IT professionals, will see a large decrease in the number of past due accounts. It is also historically true that people will even spend more because they don’t have to part with cash. It is less expensive for you to accept a $50.00 payment by credit card, than the costs of labor, supplies and postage required to mail an invoice.
In 1730, the first advertisement for credit was placed allowing furniture to be purchased over time. Almost 200 years later, Western Union issued a metal plate to their employees instead of a paycheck. Of course this card was only good in company owned stores. It was not until the 1950s that Bank of America issued the first revolving credit card.
Technology in the payment card industry has grown tremendously in just the last 5 years. Merchants are able to accept payment using any java enabled cell phone, and can even turn their laptop into a credit card terminal. But the best is yet to come.
Credit card processing has been around for many years in some form or another. Back on the “Little House on the Prairie,” the Olsen general store allowed consumers to pay for items on an account. All the consumers were kept in a log book and paid when they could. We have evolved as a nation, and so has our technology.
In New York, in 1950, the first credit card was released by Franklin National Bank of Long Island. It was also in New York in 2001 that our entire outlook changed. The World Trade Center was attacked and Homeland Security was created to protect our nation from terrorism. The government put in place The Patriot Act, which affected the merchant services industry by putting stricter guidelines on account approvals. Merchants are now required to submit a copy of government issued documents identifying themselves and their business.
The following items are considered acceptable (you will need a minimum of one from each category):