If your business is growing, it’s time to process credit cards. This could cost more than you think. Why? Because the majority of businesses setup their merchant account and then do not review the monthly costs. Why do they do this? They believe that paying a little extra is the cost of doing business.
NOT ALL Merchant Providers are the same.
Most businesses get their merchant account with the local bank: Chase, Bank of America, Wells Fargo, etc. They do this because they set everything up with their bank and figure it would be easier. However, most banks fee out their processing to a third party, so you are likely paying a higher margin. But, you have options that can save you money.
Maybe you’ve had your business for a really long time and you are still using an older machine. A decade ago, the equipment was a big cash cow for servicing companies and many pushed businesses into an expensive lease. The cost of equipment these days is very cheap and that old machine is probably not PCI compliant, costing you an additional monthly or annual fee. In addition, that machine doesn’t read the card very well. So, you end up striking through the machine multiple times to get the transaction to process, which costs money. This may cost you an average of $.10-$.50 extra per transaction. In the long run, you are driving up your costs. It’s time to look closer at the machine.
Some companies are famous for selling you their terminal that looks and feels just like other terminals. The only difference is that they’ve already coded it so if you leave their company you can’t use the machine. Get a machine that will work with any provider. The cost is the same.
NOT ALL rate plans are the same
There are so many options from the basic structure of Interchange Plus vs. Tiered Pricing. Do your customers use lots of debit cards? Maybe business rewards cards? All of these affect your pricing. The best plan for you depends on the type of transactions you are processing. Every business is unique. You owe it to yourself to have your statement reviewed to determine where you might see the best savings.
Finally, consider eCheck. ACH or eCheck processing is ideal for telephone payments or recurring service contracts. If you are using credit cards to process these types of transactions, you should consider a transition into this technology. The cost on eCheck processing is roughly 50% LOWER.
SWITCHING is painless
If you’ve come to the bottom of this article you probably are ready for a FREE MERCHANT REVIEW. When you get approved with a new bank, they issue an account number or MID. That number simply gets punched into your current terminal or gateway. Within minutes, you are processing with the new provider. If you still are nervous about cancelling your current company you can have two providers. Just purchase a refurbished machine (less than $500) and start processing with that while you are closing out business with your current provider. Having a backup is always a good thing. As things get rolling, you can terminate the account that is costing you the most.
WHAT’S YOUR RATE
When a bank talks to a business about credit card processing, the first question they ask is, “What’s your rate?” This question shows that they are simply concerned about the bottom line cost. This is an important factor to understand about the nature of any business.
Typically, most businesses only look to switch credit card merchant companies when one of two things happen. First, they are upset because their current provider is holding back too much money in reserves; or second, they are upset because they’ve had a bunch of charge backs and their current provider might soon be terminating their contract.
SO WHAT’S YOUR RATE?
Rates are based upon the type of business, how the transaction occurs, the level of security on the transaction, and the type of card your customer presents. There is no single uniform rate for your business.
Actually, there is a single uniform rate. It’s the interchange rate and it’s established by the credit card providers: MasterCard, Visa, etc. They set a rate and all banks and processors base their charges on this. If you accept cards at your retail store this will be the lowest possible rate. A base rate for this type of transaction might be around 1.69%. But, maybe your machine is old and not PCI compliant. Maybe when you swipe it doesn’t get a clean read. These can cause that base rate to downgrade to a different tier. Maybe you are keying entering the transactions? Maybe it’s a telephone order or on the internet. These also process at a higher cost structure. Typically these transactions are called Mid-level.
Mileage or store bonus cards may process at a higher level; corporate rewards get priced at the highest tier. All of these will change your rate. It’s not just the percentage of the transaction but the transaction fee, the security fee, batch fee, or AVS fee. Different processors have other types of fee charges that might occur on each transaction or on a daily run of charges.
A processor might offer and set you up with a low base rate, but when you get your statement, it’s possible that more than half of your transactions don’t fall into that rate category. The only way to know for sure is to understand the types of transactions you are processing now and then compare rates. Get a Free Merchant Review and find out now.
eCheck can save money
eCheck is another way to say ACH (Automated Clearing House). eCheck payments are deducted directly from your clients’ checking or savings account and deposited into your business account. It’s a faster way to deliver funds than waiting for a check.
As a business, you can setup a secure gateway to originate transfers from your clients’ accounts. This can be done over the telephone or by written agreement. eCheck can be used on a single transaction or on a recurring transaction.
If you have a client that bills monthly, you should consider setting up an eCheck agreement. This way you can initiate the request for funds on the agreed date and draft them from your client’s account. A typical eCheck transaction will cost less than $2.00. PayPal will take more than that from your fee. The cost of a credit card charge on a $300.00 transaction is roughly $9.00. You are saving more than 70%.
If you sell product and have a billing department’ you should consider eCheck. Instead of Net30 on outstanding deliveries you can setup a direct transaction on the 30th day to deliver funds to your account. No more collection calls wondering where the payment is. Maybe you are a landlord and want to collect rent from your tenant. Offer them a small discount to setup an auto debit of their monthly rent. They’ll appreciate the reduction and you’ll appreciate getting funds on time, every month, directly into your account.
eCheck is easier to get setup for than credit card processing. If you are a new business or a business that has a high number of returns, you might want to establish a viable cash flow setup with eCheck processing.
If we haven’t convinced you yet, please contact us directly for a confidential discussion about how eCheck can service your business needs.
