A small or mid sized business that accepts credit card payments pays a small fee to the merchant card processing company for each transaction. This small fee adds up to a sizeable amount every month. Add to this the monthly statement fee, merchant account setup and other one-off charges; and you end up paying quite a bit to the credit card processing company. Though it is inevitable for merchants to pay for the convenience of credit card processing as it directly contributes to increased revenues, there are ways to reduce the merchant services fees.

Here are few tips to lower credit card processing costs and increase your profit margins:

Ensure transactions are processed within 24 hours

Credit card sales transactions should be batched out every day, within 24 hours of the sale. An older transaction will incur highercredit card processing fee. Avoid this eventuality

Reduce the monthly minimum charge

The contract with the credit card processor specifies a monthly minimum charge. In the event that your monthly sales fall short of this number, you pay the difference. If this happens too often, ask the credit card processing company to lower the monthly minimum value. Most credit card processing companies will negotiate seeing your past sale records. If they don’t, there are other agencies that will be more than willing to help you out.

Print the business contact on customer receipts

Businesses usually have customers sign a receipt for a credit card transaction. This is a proof of sale that customers keep in case of chargeback or any other issue. Ensure the credit card receipt shows your business address and contact number, and not the credit card processors contact information. In case of any query, the customer should call you. If they call the credit card processing company, you will be charged for  information retrieval.

Ask for reduced merchant services fees

Nobody is doing any favors by extending credit to customers. Each time a customer uses a credit card, the card company makes money. By accepting credit cards, you are in fact generating more business for the merchant  services credit card processing company. Ask for cheap credit card processing rates in exchange for the business you generate for them.

Avoid card less transactions at the store

If your business location has a card swipe machine, avoid card less transactions. The rate of credit card transaction fees increases with the risk involved. Manually keying in credit card information also results in higher risk. Swiping cards through the processing slots incurs the cheapest credit card processing fee. If the magnetic strip of a credit card is damaged, ask the customer for an alternative credit card. Usually, customers will carry more than one card. If not, you have no choice but keep this practice to a minimum.

Review monthly statements carefully

If you have had a long relationship with the credit card processing company, there is likelihood that they may have hiked rates at some time. You can only know this by reviewing monthly statements minutely. Ask questions about downgraded transactions and unexplained fees. If there are too many of these, consider switching to another credit card processor.

They key to reducing credit card processing rates is to be aware of  these simple tips, being knowledgable of the current merchant card processing fees in the market and negotiating with the credit card processing companies to get the best deal. Always be on the lookout for credit card processing for small business offers that suit your needs, sales volume, and type of transactions.

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.

Merchants don’t have an option when it comes to whether to accept  credit card payments any more, as more and more customers are using credit cards to make purchases. Processing credit card fees for merchants have also reached affordable levels, making it possible for businesses of all sizes to take advantage of this sales boosting tactic. Selecting the right credit card processing service for your business is a challenging task.

Here are seven processing credit card tips to help you select the right merchant processing service for your business:

1. Bank or independent merchant card processing company?

Most merchants usually have an account with a bank, and let the bank handle its credit card processing requirements too. Banks offer good rates to preferred customers who have had a long relationship with the bank. Independent credit card processing companies may offer the same services at better rates. Additionally, businesses benefit by having more than one merchant card processing account for their commercial solutions.

Banks typically take up credit card processing for large businesses only, and offer limited payment gateway access. Independent credit card processing companies, on the other hand, offer processing credit card solutions to businesses of all sizes and types. They can provide solutions for electronic, manual and automatic credit card payments.

2. Understanding processing fee structure

A merchant card processing company earns mainly through the discount fee that is a percentage (1% – 7%) of each credit card transaction. Agencies may also charge other fees such as account initiation fee,  monthly minimum fee, chargeback fees, etc. Merchants must ensure that all the fees, terms and conditions are included in their contract.

3. Specialized credit card processing companies

Some credit card processors specialize in providing solutions for specific types of businesses such as retail stores, restaurants, internet companies, etc. Each industry has unique needs and risks. Businesses with ecommerce applications need a merchant processing service that assures secure transactions to mitigate credit card fraud. Businesses with high risk profiles are charged more.

4. Settlement processes

Settlement is the process of moving funds from the merchant account to the checking account of the business. Credit card processing companies move funds daily, weekly or monthly. They either deposit credit in a batch after deducting fees or on a per transaction basis. Some merchant card processing companies retain a percentage of the settlement as a cushion against charge backs. Verify the frequency and amount of settlement so that it meets your cash flow needs.

5. Cost of Credit Card Terminals

Credit card processing needs installing credit card terminals at the business location. Businesses can purchase or lease hardware depending on their business plan and volume of credit card sales. Some credit card processors provide free credit card terminals with the merchant account while some integrate their system with the pre-installed machinery at the merchant’s end. Either choice will affect monthly fees and discount rates. Weigh your options before choosing either course.

6. Cost of electronic payment gateways

 Merchants that use ecommerce applications need their merchant accounts to be linked with electronic payment gateways. Credit card processing companies provide payment gateways as part of the package or set up and install payment gateways of the merchant’s choice. Cost of the service varies with features such as security, encryption, SSL to reduce the risk of credit card fraud in online payments.

7. Term of contract and cost of add-ons

The contract between merchants and businesses is usually for longer than a year. Terminating a contract prematurely incurs a hefty fee. If a merchant plans to expand the business to other locations, it is recommended that it select a processing credit card company that offers discounts for additional terminals and merchant accounts.

Different types of credit transactions incur different discount fees. Higher the risk, higher the fee. Card-less transactions cost more than those in which the processing of credit cards at the physical location. Keeping this in mind, sometimes it makes more sense to have separate merchant accounts for each type of credit transaction.

Good, reliable services that help your business grow profitably are as important as getting a good processing credit card rate. Get the most out of your credit card sales by following these tips to select the right credit card processing company for your business.

Credit card transactions have become a common means of payment for business transactions. Earlier, banks were the primary credit card processing companies. Improved technology and the internet have allowed third party agencies to enter this domain, and they are offering faster and cheaper services to merchants.

Credit card processing rates vary across all the vendors. They can depend on sale amount, sales volume, credit ratings of the business owner, and purchase or lease of point-of-sale (POS) machines by the merchant. Merchant processing companies can charge a percentage of the sales amount per swipe, a flat fee, a stepped fee or both a fixed fee and a percentage of the sales amount.

Businesses should verify their financial statements periodically, or at least once a year, to make sure they are not paying more than required as credit card processing fees. This review can often result in the business changing its merchant processing company to improve its bottom line.

Though a good merchant processing account is agreeable, other factors also need to be looked into incase you plan to change your merchant card processing service:

Compatibility with existing hardware and software

The merchant processing companies should have a system that works well with the existing hardware setup at the merchant’s business. Credit card processing is available on phones, computers, wired and wireless machines. Similarly, the software for sales entry may allow return charge, subscriptions, and recurring charges. The credit card processor should be equipped to process these instructions accurately.

Support for online shopping cart applications

Many businesses have web sites that allow online shopping through a shopping cart application. The credit card processing service should be able to support the application. Downtime of applications is not just a coding nightmare, but also an inconvenience to the customer and a sale killer.

Availability of funds

Credit card processing companies usually process a batch of credit transactions once every 24 hours. The funds are not available immediately after credit card processing. If immediate availability of funds is a major issue for your business, this is an important consideration.

Credit card processor is hardware specific

Some credit card processing companies offer hardware specific solutions. Merchants have to buy POS instruments from the company in order to support the credit card processing solution. The low processing fee is counterbalanced by the amount you shell out for the POS terminals. If the services and rates of the company are good, you can go ahead with the deal, as hardware is reprogrammable and can be sold off later.

Quality of customer service

POS terminals installed by the merchant processing companies should be easy to use. Merchants should not have to call customer care for every issue, and if they do, the response should be fast.

Good service and good processing fees are equally important in a credit card processing company. Cheap credit card processing  does not do the business any good if sales cannot be processed smoothly due to slow processing times, hard to use machines and unhelpful customer service. Verify the credit card processing companies on all counts before partnering with it.

Despite the financial crisis, consumers continue to gravitate towards credit card payments while moving away from cash and checks. Credit card payments not only offer consumers a safe and convenient payment option but it also enables customers to buy products and services without having readily available cash in their wallets to cover the expense. By opening up your small business to credit card payment processing, you are likely to capture this growing consumer trend, resulting in increased revenues and profit streams.

Before making a decision, you must assess your business needs and the potential increase in revenues and profits that credit card processing will bring to your business:

1. What are your current revenues?

Start by calculating the revenues earned from sales over the last quarter or year. This information can be easily obtained from your previous financial records.

2. Get Free Quotes from Credit Card Processing Companies

Request quotes from the top credit card processing companies – setup fees, transaction fees, monthly minimum fees, discount rates, chargeback fees and credit card terminals included in the overall merchant processing offers.

The fees vary based on the type of credit card processing solution required:

      a. brick-and-mortar store/multiple store locations

      b. e-commerce solutions

      c. via mail

      d. via phone

3. Estimate the Potential Increase in Revenues

How many customers did not buy a product because your business does not accept credit cards? Multiply this number, estimated over the last quarter or year, with the average cost of products and the minimum transaction fee to get an indication of the revenue you will gain with credit card payments.

4. Estimate the Impact on Your Profit Streams

Assume your business does not acquire any new customers for an entire month. How will it impact your business if all your existing customers used only credit cards as a payment option?

5. Calculate the Loss from other Payment Options

Businesses that offer customers the payment option of using checks often incur some loss due to fraudulent checks, bounced checks and or late collections etc. Compare the loss and the effort with the value and convenience of credit card payments.

6. Increase Prices to Offset the Convenience of Credit Card Payment Processing

To ensure you maintain your existing profit streams in case of worst case scenarios, bump up the prices of products and services to include the convenience of credit card payments. If you sell items that are expensive, you will most definitely increase the likelihood of additional sales with credit card payments.

Prepare your business for credit card payment processing

Your business is losing valuable dollars by not accepting credit card payments, get started today by comparing credit card processing quotes from merchant processing companies. Once you decide to accept credit card payments, advertise it in your direct mails, newsletters, emails, and banners so customers are aware that they can make a purchase without having readily available cash in their wallets resulting in increased revenues and profit streams for your business.

A business pays a credit card processing fee for each transaction when it accepts credit card payments from customers. This small transaction fee can add up to alot when you consider all the transactions processed at the end of the month. Add the monthly statement fee and any other one-off charges; and you end up feeling it in your bottom line. Though your business is paying for convenience and an incremental revenue stream, there are ways to reduce the credit card processing rates.

Here are a few tips on credit card processing rate reductions to extend your profit margins:

Ensure credit card transactions are processed within 24 hours

Credit card sales transactions should be batched out every day, within 24 hours of the sale. Avid any delays in batching out every day as older transactions incur higher credit card processing fees.

Reduce monthly minimum charge

The contract with the credit card processing companies typically specifies a monthly minimum charge. In the event that your monthly sales falls short of this number, you still pay the difference. If this happens too often, ask the credit card processing company to lower the monthly minimum. Most credit card processing companies will negotiate seeing your past sales records. If they don’t, there are other credit card processing companies that will be more than willing to help you achieve credit card processing rate reductions.

Print your business information on customer receipts

Businesses usually have customers sign the credit card receipts. This provides a proof of sale that your business can keep in case of chargebacks. Ensure the credit card receipts show your business address and contact number, and not the credit card processors. In case of any inquiries, the customer can call you to verify the purchase. If they call the credit card processing company, your business will be charged for the information retrieval.

Ask for a credit card merchant rate reduction

You aren’t doing any favors by extending credit to customers. Each time a customer uses a credit card, the credit card company makes money of you. By accepting credit card payments, you are in fact generating more business for the credit card company. Ask for credit card merchant rate reduction in exchange for the credit card sales volumes.

Avoid card less transactions at the store

If your business location has a card swipe machine, avoid card less transactions. The credit card processing fees are higher for riskier transactions. Manually keying in credit card information is considered riskier than a card swipe. Swiping credit cards through the processing slots incurs the lowest fees. If the magnetic strip of a credit card is damaged, ask the customer for an alternate credit card. Most customers carry multiple credit cards. If not, you have no choice but to type in the information but keep this practice to a minimum.

Review monthly statements carefully

If you have had a long relationship with the credit card processor, there is likelihood that they may have hiked credit card processing rates overtime. You can only know this by reviewing your monthly statements carefully. Ask questions about downgraded transactions and unexplained fees. If there are too many of these, consider shopping around for a credit card processing rate reduction.

They key to getting the most out of your credit card processing service is to stay on top of it at all times. Know the current credit card processing rates and always negotiate with your credit card processing company before you sign up for a merchant account. Monitor the major credit cards used by your customers as that can influence the credit card processing rates. And, always shop for credit card processing rates by negotiating with credit card processing companies to get the best deal for your business needs, credit card sales volumes, and type of transactions.