Most businesses, whether conducted online, in person, or over the phone, accept payments with a credit and debit card. These cards are convenient payment methods for both the business and its customers. They’re more practical than cash and checks. However, credit card payments are more expensive for the business, as their processor charges fees for each sale.
Businesses of any industry, for instance, loan companies, should consider credit card processing in order to experience a sales boost and an expansion of their customer base. Processors usually offer many different pricing models depending on the needs of a company. There are also several upfront and ongoing costs involved with moving from a cash-only business to one that accepts both types of cards.
Fees and Other Costs
Interchange Fees
An interchange fee refers to what is charged for each transaction that takes place. It is based on a cost-effective pricing model with a rate that depends on the processor’s markup. It normally falls between 2-3% of each transaction. The amount of interchange fees a business has to provide the processor depends on other factors like the type of card used, the type of transaction that occurs, and the size of the transaction.
Generally, in-store transactions cost less in interchange fees than online ones. As the card is physically presented, there is a much lower risk of fraud. The processor is more confident the payment will go through.
Monthly Minimum Fee
The processing company may charge a minimum amount in collection fees every month. They may expect a business to receive a minimum amount in fees. If they cannot meet this demand, the company will likely charge them for the difference.
The payment processing company may charge for other processing fees. This can include monthly statement, application and setup, and monthly gateway access fees. Additional fees should be clearly stated in the contract.
Processing Equipment
Processing equipment is affordable. It’ll ensure a business won’t have to go through the issues involved with a leasing contract. When deciding on a terminal, businesses should consider going for more advanced ones. It should accept all major credit and debit cards, prepaid cards, gift cards, and electronic benefit transfers. There are mobile card readers and terminals for contactless payments offered at low prices.
Companies should ensure their payment processor is compatible with these new technologies, as it could allow their customers to use digital wallets like Apple Pay and Android Pay. These processors should support multiple payment systems, especially if a company has or plans to have an online and a physical store.
Ultimately, a business’s decision should reflect the type of organization they’re running. What types of customers do they have, and what payment methods do they normally use? It can seem like a daunting task to handle new processing equipment and systems, but a good provider can offer support both in person and over the phone. Payment processing services with 24/7 support can ensure the business understands related fees and costs, and gets help navigating the system effectively and efficiently.
