In order to start and grow a business to its full potential, accepting credit card payments is a must, but it can become complicated when determining which credit card processing service to use. Resources like time and money are often in limited supply. This is especially likely for start-ups, solo entrepreneurs, and micro businesses. This can lead to making hasty and/or ill-informed decisions on a credit card processing company. The purpose of a business is to make a profit and anything that affects the bottom line is worth consideration.
Credit card processing is a booming industry because it’s a necessity for businesses. In order to make the best decision for your business, here are some actions you can take to reduce cost and boost profit with credit card processing.
The Way Credit Card Processing Works
A customer purchases a product and/or service from your company using their credit card. The processing company will collect a fee from each transaction. The fee will typically be split between the bank that issued the customer’s card, your bank, the major credit card company owning the electronic payment network, and a third party credit card processing company, if involved.
The processing company typically presents a single fee for their service, but there are different factors that go into determining the fee. Some of the factors are the type of business that you own, the volume of transactions, the type of credit card used by customers (traditional, reward, or business), and whether the manner of credit card processing is risky or safe. Terminal swiping is viewed as less risky than internet or phone ordering.
Ways to Lower Credit Card Processing Fees
You can save major money by thoroughly reading the fine print. This gives you a chance to catch unnecessary, hidden fees. Other ways to find low processing fees include:
- Shop around. Don’t select the first company with a seemingly good deal.
- Double check. Make certain that the salesperson’s promises are in the contract before signing it.
- Check your contract. Ensure that you aren’t being charged “hidden” fees.
- Purchase, don’t lease. Credit card processing companies will often recommend leasing credit card processing equipment, but that can be more costly in the end.
- Choose a well-established company with a high dollar amount per transaction. These companies have better rates and this can be an investment for your business.
- Renegotiate when business improves. As your business picks up, you can take that as an opportunity to renegotiate for lower credit card processing fees.