Sure, there’s an unavoidable cost involved when you choose to accept credit and debit card payments. Why should your business have to pay to get paid? …It’s simple.
The benefits and revenue that will accumulate by doing-so will exceed the fees; there’s trend going around called, convenience and most consumers are jumping on. Welcoming the use of credit and debit cards allow your goods and services to be available for purchase to target customers who may not utilize cash… ever.
…Just give the consumers what they want and get paid.
First things first: Make sure you understand what you’re signing up to pay for along with that service.
The Key Players
The Customer/Consumer: The person who wants to give you their money in exchange for goods or services you have to offer.
The Merchant: You – with the goods and services you’re attempting to flip for a profit.
Credit and Debit Cards: A convenient way customers want to pay for their goods and services.
The Payment Processing Company: An unavoidable third wheel that links customers, merchants and the money.
Who Else is Involved?
- Credit Card Associations: MasterCard, Visa, Discover, Etc…
- Merchant Account Providers: A specific type of bank account that allows a business owner [or corporation] to accept the use of credit and debit cards.
- Issuing Banks: The ones who cover the funds for the credit card associations.
- Acquiring Banks: The ones who get the payment from the payment terminal to the issuing bank.
Generally speaking, transaction fees will stretch anywhere from 2.25% – 3.70% or higher.. A few different variables would ultimately determine what would be charged – per transaction.
For instance, when a customer physically hands you their credit or debit card and it’s ran through a payment terminal of some sort, this is called a Swipe Transaction. The fee for a swipe transaction will differ from a card that’s unable to be swiped.
Sometimes you’ll need to manually key in the customer’s card information; if your customer’s magnetic strip on the back of their credit or debit card is damaged or can’t be ran using a payment terminal for any reason, this is called a Keyed Transaction and the transaction fee associated with it is often inflated.
More variables that may be specific to the kind of product or service your selling include, what item is being bought, what kind of card is being used [i.e.: Mastercard, Visa] even who issued the card can alter the amount of the fees.
Along with the transaction fees just mentioned, there are sometimes additional fees that can be based on a percentage of each transaction or a flat fee that is usually determined by the average of monthly revenue created by card processing.
These fees will often show up on your monthly invoice. If you want to continue to have your credit and debit card payments processed, they need to get paid – but the price is often up for discussion. If you’re unsure what one or all of the fees entail, it’s absolutely within your right to call your payment processing company and ask questions.
Here is a quick rundown to help get you mildly familiar.
- Terminal Fees: In order to accept debit and credit cards – you need a terminal to do so, and it’s not complimentary.
- Payment Gateway Fees: Pays for the software that’s used to communicate with your bank to transfer your funds.
- PCI Fees: Ensures the card information being used is being stored safe & sound.
- Annual Fee: Assessed yearly for using their service.
- Early Termination Fees: Should you want to cancel the use of their services before the agreed upon timeframe.
- Monthly Fees: Covers a subscription to their services for a month’s time.
- Minimum Fees: Allows the card processing company to ensure your business is worth their time. [The fee typically does not exceed $25.00]
- Online Reporting: Having the ability to monitor your card processing transactions online.
Even if you don’t have questions and feel you have a good grip on your monthly statement and the fees that are included: Remember, these fees are up for negotiation.
The more business you do, the more wiggle room you have to talk your way into a reduced price. Like you, card processing companies want to keep their highest revenue clients happy. Show them your value, the more worthy you seem to them – the more worthwhile it will be for them to consider reducing fees and overall cost.
Unlike the mark-up fees, there is absolutely, positively no way to talk down the amount of these fees. The card processing company you decide to go with, or are currently utilizing has no control over base fees, and neither do you. The base fees are the ones credit card companies themselves [Visa, MasterCard, Etc…) charge; no getting around them.
Pick Up the Phone
Call the companies you’re considering doing business with – more than once. If the company answers the phone every time – gold star. Should you need to leave a message, how promptly did they call back?
If there are complications with the processing of a payment and you need to get ahold of someone – it’s nice to know how quickly a return phone call is made.
Disclaimers & Hidden Fees
Small print is designed to be inconvenient and tricky; regardless how obnoxiously small or hidden it may be, find it and read it, on every document involved (and not involved – like at the bottom of their website).
If the terms of the proposed agreement change as months or years pass, don’t let the upfront discounts schmooze you into signing on the dotted line. If there is no monthly or flat fee involved – review the agreement & get a clear understanding for how the fees are broken down. Similar again, as a business like yours – the card processing company’s goal is to be profitable.
The Smaller Alternative
Mobile Credit Card Processing
If you don’t feel it’s necessary for a large payment processing company to handle your credit card processing needs, there are smaller fish in the card processing sea. Benefiting mostly small to mid-sized merchants, having the ability to accept payments for service or goods with your smartphone or tablet is without a doubt a less expensive option to card processing.
Not Fee-Less, But…
There’s no business license required to use mobile credit card processing. The account allows you to sign up as a sole proprietor – which simply consists of an individual who claims ownership of an unincorporated business.
A payment terminal plugs into the audio jack of a device of your choosing & you’ll be accepting debit or credit cards in no time. If the customer requests a receipt, it’s easy to set it up to send via e-mail directly to them.
The verification process typically requires the entry of your social security number. Since you’re essentially asking for an unsecured line of credit, they’re simply making sure you are who you say you are. If you have done your research and you are comfortable saying you are dealing with a legit company: asking for your social security number is not out of the ordinary and shouldn’t be cause for concern.
The Big Picture
Fees will remain a constant if you plan on accepting credit and debit card to pay for what you have to offer. Whether the fees are collected through a monthly subscription, per transaction or as flat-base fees … it’s up to you to make sure you’re not drowning your business with them.
Each card processing company will be able to display their perks without hesitation, being be placed front and center to catch your eye. If it hasn’t been stressed enough – look in the back and off to the side for the kickers and make sure they are something that work for you and your business.
With the right relationship between the middleman and yourself – everyone can benefit.