For businesses in the construction industry, it is not an easy task to narrow down to the right credit card processor due to the project-based model of the industry which often requires business owners to take large irregular payments. And for company owners who care about convenience, the challenge is to provide a range of options for accepting these card payments. For instance, on top of receiving payments in your office, you may want to be able to take plastic payments in the field with a card reader linked to your phone.
So how do you get the best contract?
1. Obtain a merchant account
You will need to find a high risk merchant account. There are two types of payment processors to pick from— ISO/MSPs and Merchant aggregators.
Most account providers are ISO/MSPs, and they help firm owners obtain merchant accounts. These vendors are best for businesses that process over $3,000 per month, and those with irregular transaction amounts, which makes it the perfect fit for construction companies.
Merchant aggregator, also known as payment facilitators sponsor several firms under their large merchant accounts. Companies earning less than $3,000 per month may cut costs working with such processors because they have flat rates, and zero monthly/annual fees. But aggregators are riskier than ISOs as the irregular transaction may trigger a fraud alert and leave you with a frozen account.
2. Mention your transaction amounts and volume upfront
Give as accurate as possible info when a sales rep asks you to quote your average ticket (invoice) size, amount you process per month. Remember, these are the numbers they use to determine the costs linked to your account. It also helps to inform your service provider of future irregular large transactions ahead of time.
3. Go for processing partners that offer month-to-month service
Avoid lengthy contracts to give you room for shifting to a more compatible partner (without penalties) if you suddenly realize your payment processor is not a good fit for your construction business.
Payment Processing agreements characteristically have 3-year terms and press high termination fees if a merchant terminates the deal before the duration runs out. For that reason, you should read carefully the contract to confirm the term length, cancellation procedures, and any relevant fees before signing an agreement.
4. Apply for interchange-plus pricing
Experts recommend that retailers go for the Interchange-plus pricing model, though the majority of sales reps quote the starting rate for the tiered pricing model (known as the qualified rate, and only applies to the regular cards you take in person).
Be wary of sales representatives that encourage you to go for the tiered pricing plan— this model only benefits the processor at your expense. Some payment processor may want you to meet certain basics before they approve you for an interchange-plus model, e.g., a set monthly transaction cap which you must match to qualify.
5. Consider a processor that initiates Level 2 and 3 processing
The payment vendor processes the credit card payments you take from a client as a Level 1 transaction. They often require minimal info to process. Nevertheless, you risk paying a higher fee if your customers are other businesses and they make payments with corporate cards unless you submit additional details about the transactions.