Questions to ask:

1. What are your rates going to be, on swiped cards, over the phone, and etc.
A. Ask about gateway fee’s, service fee’s, equipment fee’s and etc.
Merchant providers like to charge people for tons of little fee’s that can add up to hundreds per month.

2. Ask them how and when your batch will be settled. For instance will they pay you every 2-3 days, will it be at the end of the week/month? And will they have a rolling reserve (Hold 10-30% of your profits in reserve for chargebacks/refunds and etc.)

3. What are your processing terms, and how do you handle chargebacks and refunds?
Chargebacks can be a huge risk for any business, if people are disputing credit card charges it really cuts into your profits. Most providers handle them differently, and it’s good to know exactly what your going to be paying per-chargeback, and how you can fight the chargeback if the transaction was valid or if someone used a stolen credit card.

PS. In retail chargebacks usually aren’t such a big deal, however when accepting payments via phone and internet it’s much more common.

Well hopefully I didn’t overwhelm you with information, as a business owner myself I find it extremely important to educate others and make sure others don’t have the same problems I did initially. Accepting credit cards is exciting for your business, however it can also be very dangerous.

If your looking for other solutions I would definitely check around before committing to your local bank.

I can personally recommend Prosper Merchant Services ( http://www.prosperms.com ) and if you want a big time processor Merchant Express (http://www.merchantexpress.com/) are great but won’t provide very good service and won’t get to know you on a first name basis.

Best of luck to you, I hope everything works out and my advice was useful.
References :
Business Owner.

Specifically you want:
–Interchange pricing (restaurant sales less than $15 qualify for an incentive pricing) not tiered pricing with non-qualified surcharges;
–Read the fine print paying close attention to the term and termination (I highly recommend a month-to-month agreement);
–Avoid miscellaneous junk fees like batch closing, annual fees, PCI fees, etc. etc.
–Do NOT lease any card equipment. Be very cautious if offered "free" equipment (get an attorney to read the contract fine print).
References :
http://myrealrate.com/lower-my-real-rate.aspx