Processing credit cards is convenient for the customer as well as the towing company — as long as the system is set up correctly. If you’re just beginning to accept credit cards, you’ll need to choose how best to process transactions: By swiper in the shop? By handheld processing device? Or maybe your drivers can use their smart phones while they’re on the road?

If you don’t already accept credit cards, should you start? The towing company owners we queried had a common answer: “Do it,” said Susan Totman of Totman Enterprises, Inc., in Belmont, Maine. “The ability to accept credit cards gives you access to many, many more customers than you can begin to realize.”

Whether you’re just beginning to offer credit card processing or have been at it for a long time, it pays to take a closer look at practical ways to make sure you’re getting the most bang for your buck.

Shop around

First and foremost, do your homework when hunting for a credit card processing service. “I like to keep it simple!” said Amanda Adolf, owner of Preferred Towing in Castaic, CA. Having your bank process your credit cards is convenient, noted Adolf, but convenience can come at a price. “There are literally hundreds of credit card-processing companies so shop the market. I received quotes from third-party processors, and then returned to my bank to see if they could match the rate — or lose a customer! Needless to say, my bank was willing to match the rates.”

“For the best transaction rates and fees,” said Michelle Jones of Simple Merchant Services, “the motto is, ‘Shop often and avoid long contracts.’”

While you’re shopping around, see if you can find discounts, said Susan Totman. If you tow for auto clubs such as AAA, she explained, ask them if they have any programs that offer discounts with merchant services, which can make a big difference at the end of the month.

Staying local

Although many online vendors are interested in doing business with towers, Nick Schade of Tony’s Wrecker Service in Louisville, KY., likes to stay local for his credit card processing. “I would say go to your bank and set it up with the local branch,” said Schade. “Deal with a well-known local bank. They tend to give better rates because they have a lot more clients in the merchant services area already.”

Schade feels that staying local gives your hometown bank more “hometown business.” By working with your local bank on credit cards, you may find yourself with stronger “buying power” during those times when you need to apply for a bank loan.

Keeping costs down

Totman noted that many towing companies are wary of transaction fees and therefore still don’t accept credit cards from their customers. But “paper checks are on the way out and there are a great many people nowadays who carry limited or no cash at all,” explained Totman. “They [use] cards for almost every expense, large or small.”

“With all the demands of running a business,” said Adolf, “shopping for competitive rates and understanding processing fees might seem trivial; however, a healthy dose of due diligence can go a long way.”

According to Adolf, understanding processing fees can save or cost hundreds or even thousands of dollars. “For example,” said Adolf, “with most processors, actually swiping the card (rather than punching in the number) results in a lower processing fee.” Talk to your processor, added Adolf, and make sure you fully understand the fees and process.

Volume, types of transactions, and types of credit cards all dictate your costs, said Schade. “Certain types of credit cards charge an additional service fee to the merchant to take their cards,” Schade added. “We do not accept these types of cards for that reason.”

Covering charges

At Alpha Towing, Patellis charges an extra six dollars to the customer to process any card under $100, and charges an extra $12 for transactions over $100. Patellis reminds everyone that American Express charges a transaction fee of three percent, which can add quite a lot on top of an expensive towing invoice.

What about towing company owners who aren’t happy about paying fees? Factor those fees into the towing charges as appropriate to cover your administrative expenses, said Totman.

The biggest goal of the credit card industry, said Jones, is lowering risk. “A majority of the increased costs in the industry are risk related,” she explained. If the towing company owner takes consistent steps to lower the risk of theft and chargeback, he or she will see cost savings on the company’s credit card statements.

As a tower, Bill Johnson — owner of Hampshire Towing in Granby, Mass. — appreciates the protection that credit cards provide. “The bottom line with credit cards is a swiped transaction with a signature is almost impossible for customer to dispute and win. I have five mobile credit machines and charge a two-dollar airtime fee per transaction to offset the monthly charge.”

Choosing a provider

For towing company owners who haven’t begun to offer credit card processing, Susan Totman recommended that they look at things from the customers’ point of view. “Do not penalize customers because they are using a credit card,” offered Totman. “Many companies add a percentage if customers pay via credit card. This is not only inappropriate and anti-productive in our opinion, but is generally against your agreement with your credit card processing company/bank, and you could face penalties or suspension/cancellation of your account.”

When considering a processor, said Adolf, service and speed are important items to consider. “Most times, terms are also negotiable,” explained Adolf, “so knowledge is your best weapon.” Finally, she said, be cautious when committing to an agreement. Commonly, agreements run at least three years and carry hefty termination fees.

To keep a good relationship with your credit card processor, keep your financial data up to date, said Mike Patellis, owner of Alpha Towing in Marietta, Ga. “This will almost always prevent questions from the credit company about an unusually high or rarely-charged amount when a high charge is processed,” said Patellis. The credit card processor, he added, likes to know that the towing company can cover a chargeback if it happens.

Schade’s towing company, Tony’s Wrecker Service, makes it a point to contact its merchant services provider each year to ensure that Tony’s continues to receive the best rate possible. Although Tony’s talks to other providers, the company has stayed loyal to its credit card provider for 12 years and counting.

Patellis agreed: “Stay with your credit card company,” he said. “Don’t switch often for the better rate. Your credit card company will give you loyalty discounts over time.”

“Merchant services are just like the towing business,” explained Schade. “Someone will always do it cheaper, but remember: you get what you pay for.”

Here to stay

Credit cards are here to stay, said Schade. “Cash is out there but not as widely used as before. I believe that a towing service that doesn’t accept credit cards is passing up the opportunity for expanded business. More and more commercial accounts are paying with credit cards, which boosts volume and gives you a better rate.”

“The bottom line,” said Adolf, “is that yes, accepting credit cards costs a little bit, but the rewards in the increased sales volume are well worth the trouble and expense.”