In order to start and grow a business to its full potential, accepting credit card payments is a must. Yet, this can also 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 startups, solo entrepreneurs, and micro businesses. This can lead to making hasty 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 costs and boost profits with credit card processing.
The Way Credit Card Processing Works
A customer purchases a product or service from your company using a credit card. The processing company will then collect a fee from each transaction. The fee will typically be split between the bank that issued the customer’s card, your bank as a business owner, the major credit card company owning the electronic payment network, and a third-party credit card processing company, if one is involved.
The processing company typically requires a single fee for their service, but there are different factors that go into determining the fee. Some of the factors include 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 phone-based or online transactions.
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:
- Shopping around. Don’t select the first company with a seemingly good deal.
- Double checking. Make certain that the salesperson’s promises are in the contract before signing it.
- Checking your contract. Ensure that you aren’t being charged “hidden” fees.
- Purchasing instead of leasing. Credit card processing companies will often recommend leasing processing equipment, but that can be more costly in the long term.
- Choosing a well-established company with a high amount per transaction allowance. These companies have better rates, and this can be an investment for your business.
- Renegotiating when business improves. As your business picks up, you can take that as an opportunity to renegotiate for lower credit card processing fees.