Most small business owners find credit card processing to be an overwhelming and expensive process. As per the latest study, it was revealed that around 50 per cent of small business owners tend to fail within the first four years of operation. By 2024, it is estimated that credit card payment volumes will increase by around 33 per cent, while the volume of cash payments will decrease by around 27 per cent.
Without accepting credit cards, the future of small business enterprises could be shady. Therefore, it is imperative to know about the ways to reduce the credit card processing rates for small businesses.
Opting for the Cheapest Credit Card Processing Service for Business
While a business might be searching for the cheapest credit card processing company, it is important to remember that the service provider offering the cheapest services might not always be the best option. Moreover, it might not even be the cheapest. There are several hidden fees and variable processing rates that could end up costing a business much more than anticipated.
The cheapest processor will not always be the best option either. While a business may want to pay the least amount of money for processing credit card payments, companies offering the lowest processing rates might cut corners in other areas of the business.
Ways to Get the Cheapest Credit Card Processing Rates
#Using a Merchant Service Rather Than a Bank
A merchant service provider will help by offering a business a dedicated merchant account for securely processing credit cards.
Banks do not always offer merchant services and instead will often contract out to a third party for processing credit card transactions for them. This means that banks can also charge additional processing fees for handing the business to someone else.
With the help of a merchant service provider, a business can ensure online processing of credit card payments without redirecting customers to a third-party website. Additionally, businesses will also gain ample fraud protection for guaranteeing safer credit card transactions and highly secure merchant-specific services.
As per a study report, it is estimated that around 82 per cent of businesses fail due to problems related to the cash flow.
Merchant services help in increasing cash flow of any business enterprise while managing finances more efficiently. It is done by encouraging the instant collection of accounts receivable. A reliable merchant service provider should also help in automatically marking the invoices as paid and updating the accounts receivable.
#Integrating the Payments
Instead of processing transactions outside the domains of the accounting software and manually marking the invoices as paid, businesses should look for a credit card payment processing provider offering access to several ways of processing transactions within the accounting or ERP software. This helps in eliminating any chance of human error and double date entry.
Integration of payments can ensure automation of the process while providing businesses more time to focus on existing customers and bringing in new clients.
#Selecting a PCI-Compliant Payment Gateway
A payment gateway is defined as the cloud-based credit card processing software. A payment gateway facilitates the process of credit card transactions while linking transaction-specific information between the card-issuing bank and the credit card network to ensure payment authorization. Once approval is received, the payment gateway is responsible for passing the funds from the customers credit card to the merchant account.
As the process involves sensitive information related to the credit card, it is important to make sure that data is handled by a PCI-compliant payment gateway. The PCI-compliant payment gateway should be making use of both encryption and tokenization technologies and meeting all PCI specifications. This way, sensitive credit card information remains secure through different stages of credit card processing.
#Accessing Personalized Services
There is no denying the value of time for any business owner out there, so businesses should search for a provider to do it all for them. Small business owners can receive access to cheap credit card processing with service providers offering personalized services. With the help of personalized services, the cheapest credit card processing is possible for small businesses.
It is recommended to avoid any middleman and head straight to the source with some in-house customer support team. Businesses can also head to the relationship manager and reach out to them directly with any queries related to the account.
It is also advised to choose a service provider offering an all-in-one solution. They should be capable of developing their own payment gateway and integration while providing payment processing for the business. This helps in avoiding third-party complications and allowing for prompt, in-house customer support.
#Selecting Interchange or Flat Rate Pricing, Avoiding Tiered Pricing
Before deciding to go ahead with a merchant service provider, it is important to ensure that they offer either interchange plus pricing or flat rate pricing.
With flat rate pricing, it is guaranteed that a similar low monthly rate is followed for all types of credit cards. This simplifies being able to observe how much a business can expect to pay every month in processing fees. The pricing comes with a fixed percentage depending on the card brand, the issuing bank charges, and the credit card processor.
Comparatively, interchange plus pricing comes with improved transparency for lowering the overall costs. The pricing model is categorized into different charges on the basis of assessments and interchange while including the additional markup cost. All these fees are visible and categorized separately on the monthly processing statement which means there are no surprises involved.
Credit card processing does not have to be intimidating. It is recommended to select a reliable merchant service provider offering access to the PCI compliant payment gateway along with integrated payment services for optimizing processing solutions. Businesses should also make sure that the processor is capable of offering interchange plus pricing or flat rate pricing and relevant customer support services.