There are enough real reasons to fail in business without doing so for the idiotic ones.

Big box retailers like Home Depot and Target might be able to absorb the cost of their mistakes, but you can’t. You’ve got to choose high-quality, reliable partners, make strategic investments in the right hardware and software to keep yourself secure, and make decisions based on your bottom line – not just what’s easy.

Here are three ways to avoid being a colossal payments dope:

1. Don’t like paying 2% on interchange? How about paying 100%?

I know, I know, it might seem easier to put your head in the sand than face up to the reality of the coming liability shift. After October 2015, anybody who has not upgraded their payment processing equipment to be EMV chip card compliant will be paying 100% of any fraudulently presented credit card transactions. And trust me, the crooks will find the weak links. So if you haven’t upgraded, you just might become a payments dope! Now’s the time to upgrade your equipment. It’s not that expensive, and there are deals out there, so take a moment and look for them.

At the end of the day, it isn’t pleasant having to pay 2% of a transaction – and it sucks even more having to pay for more equipment. But how do you think you’ll feel handing over 100% of your hard earned cash, simply because you haven’t made the right hardware investment?

2. Don’t sign a contract for payment processing

It’s not 1992 and you no longer have to deal with besuited software salesmen armed with 400 page manuals. Nor do you need to sign the absurdly long contracts that were once the norm in payments-land. The prevailing business model of most reputable providers is now a no obligation subscription model for software, and a simple, transparent fee for processing; no sign up fees, no termination fees, and no requirement to sign a contract!

Every now and then a company will come along with a seemingly awesome headline price and bunch of merchants will rush to sign without reading the fine print. When this happens, suppress your inner dope, avoid following the crowd, and keep your business flexible. Rule of thumb: Never sign a contract for payment processing or for a POS system. Those service providers should have to earn your business month in and month out just as you have to earn the business of your customers day in and day out.

3. Don’t confuse simplicity and transparency

Here’s the thing: when it comes to payments, too many people take the easy road. They overestimate the attraction of a ‘simple’ flat rate and end up handing over unnecessary percentage points on each and every sale. All because they don’t want to ‘make things complicated’.

The reality here is that these one-size-fits-all, ‘flat rate’ products are, by their very nature, a great deal for some merchants, but suboptimal for most – that’s how the processor involved makes money. As another rule of thumb, stick with interchange-plus providers, where the emphasis is on transparency. Interchange-plus processors tell you their exact wholesale costs (i.e. the interchange price they are paying to the card providers) and their margin, (i.e. the ‘plus’), so you can perform a true apples-to-apples comparison when you’re looking at different plans.

Norm Merritt

Norm Merritt

Norm Merritt is a small business advocate and global chief executive with a long track record of scaling rapid-growth companies, he is fully committed to ensuring the success of independent businesses by empowering them with the tools they need to succeed.