Are you planning to accept credit cards for your business? You will need the services of a good merchant card processing company to start you up. With so many credit card processing companies in the market, it is hard to decide which merchant card processing solution is best for your business. A good way to start is by comparing the fees and cost of merchant card services offered by various credit card processing companies. Following are some of the costs involved in accepting credit card payments for your business.

Cost of Credit Card Machine

Credit card machines for small business can be the most expensive investment. The point-of-sale (POS) credit card terminals cost anywhere between $150 and $700. Wireless models fall in the range of $500 to $1000. Higher end credit card machines with added features cost even more. The price of the credit card terminals depends on how useful the additional features are, such as security features etc.   

Depending on your business plan, you may choose to buy, lease or get a free credit card terminal with your merchant account. Investing in credit card machines is cheaper in the long run, but if you are unsure of your long term plans it is better to lease the machines. Leasing charges are usually in the neighborhood of $20 per month.

Many credit card processing companies include installation of POS terminals in their package, along with creating merchant accounts for the business. This may be cheaper than purchasing terminals separately. However, you also need to consider the merchant card processing charges for other services such as payment gateways, compatibility with an existing shopping cart application, virtual credit card terminals, etc.

Installing POS terminals for processing credit cards is a safer option than processing the card remotely over the phone or the internet. The verification process takes longer on the phone and it does not assure the availability of funds when your company actually processes the charge. As the verification and processing are carried out at different points in time, there is a risk of chargebacks.

Merchant card processing fees

Merchant card processing companies charge various kinds of fees. The discount fee is the main fee by which credit card processors make a profit. Credit card processing companies charge additional fees for various services, and this is where it gets subjective. Businesses have to take a call on the value of the additional fees before signing onto the contract.

Merchant Discount fee

The discount fee is the percentage of money that the card processing company charges per credit card transaction. The percentage is decided by the credit ard processing company after considering your credit history, amount of credit card sales and the type of business. Broadly, there are two discount fees — one for businesses that offer signature-less services, such as payments over the internet or phone, and the other for businesses that process the credit card physically at the store location. The discount rate for the first kind of business is higher, 2%-3%, as it carries a greater risk. Otherwise, discount rates are 1.5% to 2% per credit card transaction.

Other fees

Credit card processing companies can charge a number of other fees such as merchant account fee, activation fee, statement fee, monthly minimum fee, payment gateway fee, charge back fee and termination fee. The application fees charged by some merchant card processing companies are as high as $300, and non-refundable. Some credit card processing copmanies charge a monthly statement fee of $20. Merchants need to weigh the value of a service for their business and agree only to the ones that make sense.

Do not work with merchant card processing companies that asks for an inflated fee to be paid up-front. The best credit card processing companies make sufficient business without charging additional fees. The contract should include all the fees the merchant card services will cost your business such as customer service fee, payment gateway fee, etc.

The credit card processing fee is a small cost to pay for the increased sales that your business will enjoy by accepting credit card payments. Survey the market to compare credit card processing costs  to find the best solution for your business. Also, remember that paying a higher nominal transaction fee in exchange for reliable 24/7 merchant service is not always a bad deal.

Tags: Credit Card Processing

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