Some people think that any credit card payment processing system will work for their business. Others are so daunted by the technology that they refrain from accepting credit card payments altogether. But smart businesspeople take a balanced approach; they educate themselves about the various types of merchant processing systems and examine each option closely to see which one is the best fit for their business.

Here’s a look at the various types of credit card payment processing solutions:

Real-time Internet Processing

This method is appropriate for both Internet-based companies and those that receive payments remotely. When a customer is ready to pay, the credit card number and expiration date are typed into a website (either by the customer or the proprietor, depending on the type of business). The authentication process takes only seconds, and the money appears in the business’s account a couple of days later. This option is ideal for web-based companies, as well as those that conduct a high volume of transactions on a daily basis. Cost: up to $200.

Point-of-Sale Software

This method is suitable for companies that receive payments via phone, fax, regular mail, or e-mail. This system incorporates a business’s computer, phone lines, and modem that can process credit card transactions within seconds of the information being entered. The difference between point-of-software and real-time processing is that a POS system acts as a personalized processing service, with database and accounting features that facilitate the balancing of company books. Cost: $150 to $800.

Swipe Terminal

This method is designed for a traditional retailer, where the majority of the business is conducted face-to-face with customers. Credit cards are swiped through a machine by the cashier or customer, and the cardholder is authenticated within seconds. This is the most common credit card payment solution. Cost: $200 to $1,000 for equipment.

Wireless Processing

This method is ideal for service providers who accept payment at a customer’s location rather than at the company’s base of operations (such as plumbers and electricians). Credit card information can be swiped through a virtual terminal that is attached to a wireless device, laptop, or stand-alone portable terminal. The transaction is authenticated on-site instead of recording credit card information for processing at a later time. Cost: $135 and up, depending on the specific equipment.

Interactive Voice Response Systems

This method is best suited for mobile service providers that accept payments on site, though it can be used by almost any type of business. Unlike wireless processing, IVR uses existing touch-tone technology to process credit card transactions. The customer or employee enters the credit card information into a cell phone or similar wireless device, and the transaction is authenticated shortly thereafter. Cost: $29 to $500 for account setup, plus additional monthly fees.

Third Party Processors

This method can be used with any type of business, but is often selected by those with relatively few transactions or by companies located outside the United States. Using a variety of different systems, third party processors handle all credit card-related services for a business. But instead or transaction fees and monthly statements, these firms simply take a cut of a company’s revenue. Cost: between 3 and 15 percent of revenue.

After determining which method will work best for its needs, a company must choose a vendor. Consider the following factors when selecting a merchant services provider:

• Rates and fees: Identify the basic costs of the arrangement and determine if any additional fees can be triggered depending on circumstances (such as chargebacks, not meeting monthly minimums, etc.). It is also vital to get the entire rate and fee structure in writing.

• Funds availability: Under most circumstances, the lag time between customer payment and account depositing is no more than three business days.

• Affiliations: If the merchant services provider is affiliated with Visa, Master Card, or American Express, it is one indication that the firm is stable.

• Bank names: It is wise to ask which banks the processing company is affiliated with, where they are located, and whether they are FDIC-insured.

• Support: If a problem should arise, a processor should be able to provide assistance any time of day on any day of the week — and a business owner should not hesitate to test the support hotline or website.

• Organization membership: Membership in organizations like the Better Business Bureau and the Electronic Transactions Association may speak well of the provider’s commitment to fairness and ethics. But the company may also want to check the records of these organizations to see if there are any complaints or issues that have been raised regarding the provider.

• Compatibility: Determine whether a merchant service provider’s technology and software is compatible with whatever payment processing infrastructure the company currently has in place. If there are incompatible systems, efficiency and affordability may be compromised.

• Stability: A fantastic credit card processing system will do a company little good if the merchant services provider goes out of business. Like any other vendor or supplier, a company must perform due diligence on the firm that will be handling its credit card transactions.

The process may be somewhat time consuming, but finding the right merchant service provider may be one of the most critical decisions that a company can make. A stable relationship between a business and its credit card processor will result in added convenience for a company’s customers, efficient recordkeeping for the business’s accounting staff and a healthier bottom line for the company itself.