When selecting a credit card processor to work with, merchants should consider things like reliability, efficiency, customer support, range of services and competitive rates. Coincidentally, these are the five key factors used by an independent research firm and authority on credit card processing to assemble a list of the top payment processors and merchant services providers in the United States.

The three highest ranking companies on the TopCreditCardProcessors.com list are Leaders Merchant Services out of Camarillo, California, Credit Card Processing Specialists in Grandville, Michigan and National Processing based in Orem, Utah.

You might be familiar with some of their biggest clients, which include Subway, Thrifty Car Rental, Hampton Inn, Ace Hardware, Discovery Network and Crime Stoppers USA.

These companies are positioned atop the rankings because of high-quality service and reliability combined with minimal inconvenience to their clients and a willingness to be flexible. This is evidenced by the fact that the lowest client retention rate of all entrants on the list is 85 percent, while 29 of the 30 companies hit 90 percent or better. These are the same attributes merchants should be looking for in their POS credit card processing software, too.

By using technology solutions that are compatible with a wide range of both hardware systems and processing vendors, business owners can be secure in the knowledge that they are able to adapt to emerging consumer trends and needs without having to scrap their entire setup and start over from scratch.

Furthermore, when strategies need to be adjusted, excellent customer service makes any transition as smooth as can be. The same characteristics merchants desire in their processing vendors should be sought in their software solutions as well. When those two align, businesses are primed for success.

When Chinese student Zhou Lingli arrived at the Vatican to sight-see at the state's museums, including the ceiling frescos painted by Michelangelo, his plan was to use a credit card to pay for tickets. He – and thousands of other tourists – were likely surprised to find out that the Vatican would be cash-only for the time being.

Given that Vatican museums raked in $119 million in 2011, any extended suspension of electronic payments could be debilitating, since some customers will simply be unable to afford certain products or services without using their credit or debit card.

"We expected to buy tickets with the credit card, but we had to use the cash which is a problem for us as we will now have less money to use for the rest of the day," Lingli told Bloomberg Businessweek.

Electronic payment suspension expected to 'brief'

The electronic payment ban has been in effect since January 1, when the Bank of Italy barred Deutsche Bank AG (DBK) from providing these services. The Vatican had been analyzing its relationship with Deutsche for more than two years, due to concerns about financial crimes related to its electronic payment processing service. Deutsche had been a partner since 1997.

Vatican officials expect services to be restored soon.

Although the Vatican's suspension of electronic payments is self-imposed, extended outages of credit card processing equipment need to be avoided by businesses at all costs. These days, it's unreasonable for business owners to expect all of their customers to have cash on-hand, which is why reliable POS payment processing systems are so valuable.

Selecting a point-of-sale system for your business is about more than what looks cool or is easy to use. Sure, both of those are desirable characteristics, and there are plenty of POS offerings out there that give you both. However, it's also important that you get versatility as well as a system that saves you money rather than costs you a bundle in hidden and excessive fees.

"Retail merchants should always make sure they are receiving the lowest possible processing cost and best terms and conditions before investing in any point-of-sale system," a recent article in Practical eCommerce said. "Many POS-system distributors sell processing services or are getting paid behind the scenes by the provider they recommend. Should you choose their POS system and then later attempt to change providers, the distributor may charge thousands of dollars – if you are able to change at all."

The article raises another very important point. Some POS vendors sell systems that are bundled with their own proprietary software and/or processing services from a partner. When businesses get locked into these options they lose the freedom to choose what best serves their needs down the road.

For these reasons, business owners are learning that credit card processing software that can be used with virtually any POS system and processor or independent service organization is their best bet. This gives them the most versatility and allows changes to be made later on in order to secure the best processing fees.

By using payment processing software that does not place restrictions on the type of POS systems companies can use, or which card processors they are able to work with, entrepreneurs will find that they are better equipped to keep their customers happy while maintaining strong profit margins.

Any retailer that accepts credit and debit cards as forms of payment must also take industry-approved measures to protect customer information. Typically, this means some form of encryption. However, the PCI Security Standards Council last year came up with guidelines for another method, known as "tokenization."

According to the council, it is "a process by which the primary account number (PAN) is replaced with a surrogate value called a token." Subsequently, "de-tokenization is the reverse process of redeeming a token for its associated PAN value."

Since the token is randomly generated, unlike standard encryption methods, there is no danger of a thief obtaining a key needed to revert the token into the original PAN. One would have to have access to the actual system where the process was initiated.

Alex Belgard, an information engineer with electronics retailer Crutchfield Corp, explained in a recent Network World interview why his company is moving toward tokenization.

"[Belgard] also notes that the latest version of the Payment Card Industry (PCI) standard, which any business processing payment cards must follow, has some changes in it related to how to store an encrypted hash of a credit card that appear to add complexity to encryption use," the article said. "Since tokenization is also an accepted PCI security practice to protect credit and debit cards, Crutchfield decided the time was right to shift away from encryption for PCI data and toward tokenization."

Whether a company chooses to encrypt customer payment information via traditional methods or go the tokenization route, they should also be using software for credit card processing that allows them to generate reports helpful in monitoring curious anomalies. This includes information about voids, edits and other data that could indicate fraudulent activity.

Earlier this month, United States law enforcement officials announced the conviction and sentencing of a Swedish credit card payment processor for his role in a cyber crime ring that bilked unsuspecting businesses to the tune of $71 million.

Mikael Patrick Sallnert was sentenced to 48 months in federal prison and fined $650,000. According to the Justice Department's Criminal Division Assistant Attorney General Lanny A. Breuer, Sallnert convinced some 960,000 victims that their computer systems had been penetrated by a virus that could be fixed with software created by his partners in crime. Neither the problem nor the fix were real.

"Payment processors like this defendant are the backbone of the [cyber crime] underworld," U.S. Attorney Jenny A. Durkan said in a press statement. "As an established businessman, this defendant put a stamp of legitimacy on cyber criminals.  He was involved in defrauding thousands of victims, and his actions contributed to insecurities in e-commerce that stifle the development of legitimate enterprises and increase the costs of e-commerce for everyone."

When business owners work with payment processors and software providers, they are putting their trust in those partners. This is an example of the worst kind of violation of that trust. Not only were these companies scammed out of their hard-earned money, but they also had to go through the arduous task of switching payment processors, and possibly POS systems as well.

Unfortunately, this is not likely to be the last incident involving a less-than-honest vendor causing headaches for business owners. That is why it is advantageous for companies to work with payment processing software that can be used with any major processor or independent service organization (ISO). This will make the transition from one provider or ISO to another as seamless as possible in the event that one wants – or needs – to make a change.

For small and midsize businesses (SMBs), credit card processing fees can seriously impact the bottom line. Consequently, many companies have tried to go the cash-only route. The problem with that is, over the years, consumers are increasingly relying on plastic over paper currency.

In a recent interview with The News-Press, Bill Davis, the proprietor of Hickory Bar-B-Que in southwest Florida, said he just started accepting credit cards a few weeks ago. From 1956 up until that point, the restaurant was a cash-only business.

While the change in policy will stop some customers from taking their money and appetites elsewhere, the establishment now faces a new challenge. Davis' son, Gary, who also has an ownership stake and runs the business, told the news source that he pays anywhere from $600 to $800 per month in credit card processing fees.

"Year over year, credit card swipe fee costs are in the top three to five fastest growing expenses for our industry," Liz Garner, who specializes in payment, tax and other financial service policy issues at the National Restaurant Association, told the news source.

Restaurant owners who pride themselves on high quality food sold at low prices have historically been reticent to embrace card payment systems since charges under $10 are typically not worth the processing fees.

As others like Davis face this conundrum, they find themselves in need of a solution that does not hit them with additional fees and surcharges that make it impossible for them to keep the lights on, let alone turn a profit.

These struggling SMBs need a reliable POS payment processing system that can work with any bank, card company or independent service organization. This means the software provider should not be complicit in kickback-based payment processing where they have revenue-sharing agreements with credit card processors. Otherwise, the only party that loses out will be the small business owner trying to make a living.

For small and midsize businesses (SMBs), credit card processing fees can seriously impact the bottom line. Consequently, many companies have tried to go the cash-only route. The problem with that is, over the years, consumers are increasingly relying on plastic over paper currency.

In a recent interview with The News-Press, Bill Davis, the proprietor of Hickory Bar-B-Que in southwest Florida, said he just started accepting credit cards a few weeks ago. From 1956 up until that point, the restaurant was a cash-only business.

While the change in policy will stop some customers from taking their money and appetites elsewhere, the establishment now faces a new challenge. Davis' son, Gary, who also has an ownership stake and runs the business, told the news source that he pays anywhere from $600 to $800 per month in credit card processing fees.

"Year over year, credit card swipe fee costs are in the top three to five fastest growing expenses for our industry," Liz Garner, who specializes in payment, tax and other financial service policy issues at the National Restaurant Association, told the news source.

Restaurant owners who pride themselves on high quality food sold at low prices have historically been reticent to embrace card payment systems since charges under $10 are typically not worth the processing fees.

As others like Davis face this conundrum, they find themselves in need of a solution that does not hit them with additional fees and surcharges that make it impossible for them to keep the lights on, let alone turn a profit.

These struggling SMBs need a reliable POS payment processing system that can work with any bank, card company or independent service organization. This means the software provider should not be complicit in kickback-based payment processing where they have revenue-sharing agreements with credit card processors. Otherwise, the only party that loses out will be the small business owner trying to make a living.