Six Credit Card Myths Every Merchant Should Know

Every merchant has come across the customer that makes you want to tear out your hair. You know the one. He or She wants to charge for an item that costs less than a dollar and doesn’t understand why they can’t do it. Credit cards are convenient both for the merchant and the customer, but they also can cause headaches as well. There are six credit card myths that have made the rounds and have gone viral. Some are common sense truths that are ignored, while others are not as clearly defined.

Myth #1-Minimum credit and debit card purchases can be set by the merchant
Although since 2010, it is true that small “Mom & Pop” merchants can set a $10 minimum purchase limit for credit card purchases, debit cards can’t be rejected. It is important for the merchant to establish whether the person is using a debit or credit card for their transaction.

Myth #2-Merchants can’t negotiate their interchange fees
According to the electronics payment coalition, merchants can negotiate their interchange fees through a variety of incentive arrangements with their network. For example, a grocery store might look in their network to find competitive processing rates and card acceptance costs.

Myth #3-Your business loses money with cash payments
Credit cards are convenient and safe but there are fees involved with every transaction. A business, however, that accepts both cash and credit payments stands to gain and not lose money. The fact is that merchants profit with cash payments because they get the money immediately for the item instead of having to share it with the bank through interchange fees.

Myth #4-A small business doesn’t need to be PCI compliant
PCI is shorthand for the Payment Card Industry. Even if you run a small business that only accepts a small percentage of credit card purchases, it is in your best interest to be PCI compliant when handling sensitive customer information. Being PCI compliant will help your business remain secure and profitable.

Myth #5-Merchant service agreements are fixed for the length of the contract
Unfortunately some contract terms such as merchant fees and rates can change during the contract period due to changes in the market and other external factors. Both month-to-month processing agreements and the year processing agreements have many clauses that cover unexpected fluctuations in the market.

Myth #6-Merchants are not liable for chargebacks for items purchased on-line
All merchants, big or small, face the very real risk of having to pay for fraudulent purchases even when they were purchased on-line. It is important to keep good records of all your transactions and be able to back up any claims.

There are other myths about credit cards, but these six should give you a good start on what to look for when maintaining your business.

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