Running a business is a lot of work; it takes dedication, intelligence, and diligence to operate a successful business. The Finance Management of the businesses is the essential requirement for turning over profit. One of the most overlooked areas of a business turning is overpayment processing and merchant account provider relations.
It’s easy to get comfortable with your current provider, but you could save potentially thousands of dollars by shopping around for merchant providers who offer competitive rates. Even calling your current provider and negotiating better prices is an excellent way of reducing the cost of payment processing at your store.
Here are 10 must-know credit card processing tips that will benefit every business.
Shop Around for Merchant Account
Upon registering your business, chances are merchant service providers everywhere will get notified that there is a potential new client. With so many options, the decision can be overwhelming, and you might be tempted to opt for the first offer that comes your way. In this scenario, it is very much possible that you might miss a provider that might offer a better deal or set of features.
Researching payment provider options allows you to find the best deal possible, regardless of the nature and size of the business. The industry of payment processing is very competitive and finding providers that offer transparent rates, and suitable service agreements shouldn’t be too labor intensive. A favorable initial setup can save your business money in the long run by choosing the right fit from the beginning.
Be Cautious of “Too Good To Be True” Offers
Like every industry, payment processing has its share of scams. However, you should learn to spot these scams and tray evasive actions.
Remember that the adage: “You get what you pay for.” This is very true in the case of payment processing options because there are too many ways an unscrupulous provider could slip in clauses that result in heavy costs and penalties for your business.
A right way of avoiding the scams is to follow the set industry practices and do not fall for deals that sound off. If it sounds fishy, the chances are that it is a bad deal.
Avoid Leasing Credit Card Machine Equipment
The thought of outfitting the whole business with processing equipment sounds costly. However, that’s not always the case.
Despite popular belief, credit card processing equipment is relatively affordable. Purchasing the equipment at the beginning is a ‘must-have’ if you are looking to save on processing services and fees. An upfront payment usually falls between $250-$350 range for basic equipment.
Leasing hardware from a service provider company adds up quickly and provides no return on investment. By the end of a 12-month leasing cycle, in many instances, you have paid enough to buy the equipment outright.
Negotiate Better Rates and Fees
If you already have a credit card processing provider, it’s a good idea to check to see if your rates can be lowered. After having a well-established relationship with your current provider, it is essential to check if they are willing to reduce the prices or forgo certain fees. If your current provider is unwilling to discuss the rates and other options, there are other options that will match or even offer lower rates.
Never Opt for Recommendations Blindly
Businesses get recommendations all the time. In many cases, the recommendations come from trusted sources that businesses often find hard to ignore.
Remember that payment processing companies also have an affiliate program that offers commissions for successful recommendations. This is why businesses should be wary of recommendations that provide great deals or unrealistic SLA.
The best way to deal with the recommendations is to compile the list and then do your own research about the options. In many cases, it is easy to weed out suspicious entries outright. Next, weigh the pros and cons of the remaining options to discover the best fit for your financial requirements.
Steer Clear of (Most) Banks
Yes, we all need a traditional bank. But do we also need them to be the credit card processing company? With the exception of a few large banks, most banks serve as a ‘middle-man’ marking up fees and outsourcing the credit card processing to another merchant account provider. Even if you choose a bank that does handle credit card processing in-house, in many cases, the fees and equipment prices will be much higher than the industry average.
Customer service is another area that should be considered very carefully. In many cases. Banks outsource all customer service functions. In such cases, the quality of customer service is very uncertain. In my opinion, let your bank handle savings and checking accounts, while the specialists in the credit card processing industry should take care of the rest.
Retail Business – Get Signature and Pin Debit Transactions Set Up
While many offline stores have payment processing system equipped with signature and pin debit, online retail businesses often overlook this and lose much of the benefits these options offer.
Transactions that are processed with a debit card are subject to much lower processing fees. According to some studies, 50% of all plastic transactions are completed with pin or signature debit. The good news is that the cost of equipment with signature and debit pin pad are affordable and user-friendly, a winning situation for any business.
Look into Fixed Rate Processing with Interchange Plus Pricing
Before signing the contract with any merchant service provider, make sure there is no fine print detailing their ability to raise the rates. These changes should only occur when Visa or Mastercard raises the interchange fee for processing transactions. Having fixed rates alleviate the chance of any hidden costs or surprises when you get the statement from your merchant service provider.
Interchange Plus pricing is quoted as a fixed markup the payment processor will receive in addition to the Interchange fee. The Interchange rate may fluctuate, but the markup (the processor’s profit) should remain unchanged. Unless the business is new or the transaction size is minimal, the most cost-effective option is to find a company that has transparent pricing and interchange plus rates work for you.
Bundled Rates are Usually Not the Answer
Business owners often make the common mistake of accepting a bundled rate offer. In many cases, these rates are not the best option for saving on credit card processing costs. Offers with very low or zero transaction fees often have an increased processing percentage.
Avoid a bundled rate if you are a new business as bundled rates are based solely on your average transaction size. If your business has transactions of varying values, you will surely pay more. However, if you have a business that has repetitive ticket or transactions totals, a bundled rate might be something worth looking into. Although bundled rates may seem simple because of the flat fee, these plans tend to hide transaction fee details which may be necessary to merchants.
Reduce Fraud and Credit Card Chargebacks
By choosing a reputable credit card processing company to handle your transactions chances are you are potentially protecting yourself and your customers from a major security breach. To stay competitive and relevant, you should keep up with the current issues surrounding identity and credit card fraud.
Research which credit card companies offer advanced security protection for your business. By avoiding and actively monitoring all storewide activity, your business can save in the long run on credit card processing costs.
While I’m sure there is more money saving tips out there, these top 10 should help your business start saving today.
Fayyaz is a Magento Community Manager at Cloudways - A Managed Magento Hosting Platform. His objective is to learn & share about PHP & Magento Development in Community. Fayyaz is a food lover and enjoys driving. You can email him at email@example.com
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