Take a look at your most recent credit card processing bill at your business. Do you feel you’re spending more money on processing than you wish? There’s a chance you might be spending more on your work than you might expect. You could spend a few percentage points more on these fees than what you should be paying for the processing.
You will be charged an interchange rate for each transaction. You’ll also experience extra charges from your merchant service provider. Some additional fees may also go towards managing your statements, getting IRS reports, remaining PCI compliant, and covering any chargebacks your business experiences.
With many businesses spending a few percentage points of their credit card receipts on these expenses, it can be tough to find a good deal. But you can use a few tips to help you keep from paying more for credit card processing than you can afford.
Don’t Use Your Bank For Processing
Many businesses use their own banks to set up their credit card processing systems. But banks aren’t always in it for the customer. A bank will charge higher fees and rates on average. The bank does this with convenience in mind. You will likely experience lower rates when you handle the processing efforts with someone outside your bank.
Don’t Use a Flat Rate Pricing Structure
One problem many businesses follow entails using a flat rate pricing structure. A flat rate structure may simplify how you’re paying for processing services, but it could be more expensive than necessary. You could pay at least 20 percent more on processing if you use a flat rate system, as the rate will be the same for all transactions. You could pay extra on a low-cost ticket, for example.
Sticking with a percentage-based system may be a better choice. The setup will charge a specific amount of the transaction instead of sticking with something that might be more expensive than you can afford for certain deals.
Don’t Lease Terminals
You may receive the choice of leasing a terminal for your business. While leasing sounds cheap at first, the cost can be more expensive than if you outright purchased your equipment. The lease costs less per month, but the total cost will be higher in the long run. You will also be stuck with the same company for the length of the lease, as you cannot break out of the lease unless you get out of the contract. The fact that you’d have to return your equipment after the lease ends makes the situation worse.
The best idea here is to focus on a service that lets you acquire your equipment. Any business that lets you purchase equipment for sale instead of leasing it will help you save money by not worrying about extra lease payments that end up being worth more. You’ll also have more freedom with whatever equipment you’re using, as you’re not bound to tight rules.
Review Your Security Measures
You could spend more money on processing if your business is a high-risk entity. It may be at high risk due to your business bringing in more chargebacks than you can afford. You can reduce your chargeback risk by adding more screening measures for each transaction. You can use an address verification system for your transactions, for example. You could also use a firewall system for your website that blocks customers based on specific high-risk parameters. The work you plan will reduce the potential for chargebacks to happen.
Stay PCI Compliant
While some card processing companies may charge PCI compliance fees, the fees for not being compliant will be higher. You must comply with all PCI standards to ensure everyone’s data will stay secure. Review how you store data and how you provide access to that content. You can perform a PCI scan of your business to see how you handle your work and that you have a plan for managing your content the right way.
Some processors will force you into expensive contracts. You might be stuck in a deal that lasts for a few years.
You might outgrow your current provider, but you’d have to spend extra to get out of your contract with someone. The cancellation fees can be expensive, which is unfair when you’re trying to get out of a tough situation.
Your best bet is to look for a service provider that doesn’t impose contracts. You can find many providers that offer monthly services without long-term contracts. These groups will help you with your needs and will let you look for different providers if you feel a need for someone else’s work. The system provides a better approach to work you will appreciate, especially if you’re new to credit cards and you aren’t sure what you’ll require years from now.
Avoid Sticking With Parties For Name Recognition
The last tip to follow involves thinking about how familiar you are with some parties. The problem with some entities is that they might charge more because they are more familiar to people. Square and PayPal are two good examples of this, as they typically charge higher-than-average rates for processing systems.
You can find many more affordable solutions by looking around the market. It can take a while to find a good deal, but you’ll be more likely to find something you can afford if you look outside some of the more obvious choices available for your use. The options you’ll find are often more valuable than whatever you might expect, and they may even surprise you over how cost-efficient they are.
Each of these solutions can help you reduce your risk of paying more on credit card processing dues than you can afford. Be certain you look at how you’re managing your cards and that you know what you’re handling in any situation. You’ll have an easier time managing your payments when you review what you’re getting out of a system.