Okay, if you're reading this article, you probably already freely acknowledge that accepting credit cards is critically important to your business. According to the American Bankers Association, credit and debit cards became the primary method of payment accepted for in-store purchases in 2003 over cash and checks. In 2008, debit card and credit card transactions dominate the share of in store payment methods, and of course account for the vast majority of online transactions.
But, for the average small business, the cost to accept credit cards is a big burden on the bottom line. Some business like coffee shops have started passing the cost of credit card transactions onto the consumer- which can be a turn-off, especially when larger businesses with corporate merchant rates don¹t have to charge the same fees to their customers. Merchant processing fees have risen in recent years due to the high cost of identity theft being passed onto small businesses. Even though the cost is high, for many types of businesses, not accepting credit cards means no sale. However, by taking some simple steps to optimize your merchant account, small business owners can save big on their merchant account bills:
Debit card processing fees can be much cheaper than accepting credit cards, especially for big ticket items. The cost to process a debit card is typically a flat fee around $.50, whereas credit cards typically cost ~3% of the total transaction plus a ~$.30 fee for each swipe. Any transaction over $8-$10 will save the business on processing fees, and also is less likely to be fraudulent due to PIN verification. For example, a $400 purchase may cost the merchant up to $12.30 to process a credit card, where a debit card would only run $.50!
As hard as Discover and American Express work to make sure their cards are accepted everywhere, it simply doesn¹t pencil out for many merchants to take those cards. Fees to process American Express in particular can be up to 100% higher than Visa and Mastercard! Only about 11% of consumers use American Express (Cardweb)- the company claims those consumers are a much more wealthy demographic with more money to spend at your business. That may be true, but nearly every AmEx card holder also carries a Visa/Mastercard. Encourage them use it at your business and you¹ll save money.
You may be surprised to find that processing credit cards through major banks actually costs more than you think. While they offer the convenience of having multiple services like checking accounts, savings, payroll processing, and merchant processing on one statement, their fees tend to be substantially higher than a direct merchant processor. Ironically, many major financial institutions end up opting to outsource their merchant processing accounts to independent merchant processors, then mark up the service. If you currently are processing through a bank, try comparing rates with an independent merchant processor like Northwest Processing Solution- you¹ll probably be surprised with the savings.
Okay, this one doesn't save you money on merchant processing, but it can definitely increase your bottom line which is that goal after all, right? Try looking into new technologies like wireless credit card processing. New remote handheld terminals allow merchants to accept credit cards at trade shows, craft fairs, and farmers markets, opening up new venues for your business to make sales. Now it is also much easier to sell merchandise online with easier ecommerce solutions and online merchant gateways like GlobalPayNet and Authorize.net. By accepting payment online you can open up entirely new ways to do business. Non-Profit groups like churches, schools, and charity organizations can even use an online gateway to accept donations right from their website.
Independent merchant processors tend to offer local service and be very competitive on rates and fees. Any business that is looking to save money on merchant processing should regularly compare their processing statements to current market rates to get the best deals. Because rates are complex (there are over 50 different types of credit card transactions, each with their own rate), it is best to just send over your current statements to a merchant processing company and let them analyze your current costs, and help you determine if they can offer a savings. Make sure not to pay for that service, most good companies should offer to do that for free.
By taking these simple steps, most businesses stand to save hundreds on credit card processing every month without ceasing to accept credit cards or passing fees onto customers. Best of luck this year and enjoy the savings!!
For further information you can also reach us at info@NWPSolution.com or 877.652.7227.
An experienced Sales Representative will contact you personally within one business day.