A credit card processor is an essential link in the process of receiving credit card payments from customers. Hence, every business that sells goods and services and receiving card payments both online or offline needs the services of a credit card company. This presents a lucrative opportunity for anyone with the means and interest in forming an independent sales organization (ISO) or credit card processor. Of course, it is a competitive industry and you need sufficient knowledge and experience to excel and compete successfully against other payment processors. Here are some of the tips for starting a credit card processing business.
Do your due research
This is a no-brainer!!! before you begin any type of business, you have to research the industry you intend to enter and see if there is a viable market for the business you intend to run. To enter into the credit card processing business you need to understand how it works, the key players you will be dealing with and the basics of running a business in that industry.
During this stage of the process, you should analyze the number of retail businesses in your area in order to determine the demand for credit card processing. Competitor research is another crucial part of market research that you should not overlook. This will help you determine how to position your credit card processing company to take advantage of gaps in the market to improve your chances of making profits.
Create a Business Plan
Once your research has been completed, you will need to draw out a business plan that will show how your business will run. Your business plan should clearly detail your mode of operation, the services you offer, cost of services, and your business organization. Your business plan should also include a financial breakdown as well as plans for marketing your business.
Franchise or Independent
You can choose to run your credit card processing company either as an independent processor or as a franchise of an already established processor. A franchise offers the advantage of having already established relationships with banks, card associations, and other key industry players. However, you will have to give up a percentage of your revenue to run a franchise. If you choose to go the independent route then you have to do all of the grounds work on your own. This include:
- Finding a bank to partner with: you will need to partner with a bank that will handle the interbank routing or transactions. You should look for a Visa/MasterCard registered bank in your area that will be willing to partner with you. Choosing a bank that serves your target market will increase your chances of securing a relationship with small businesses in your target niche.
- Find an equipment leasing company or wholesale equipment manufacturer: you will need to partner with a company that will supply POS terminals, ATMs, and other payment processing machines to small businesses that may not be able to afford one for a small fee. You can also look into securing a distributor agreement with a company that manufactures transaction systems like Diebold, Hypercom, and VeriFone.
Establish the Business
With all of these steps completed, you can now proceed to have your business registered with the appropriate authorities in your area. You can then hire a team, launch your business, and start looking for customers based on your business plan or template.