Businesses immensely benefit by accepting cashless transactions. Since many customers prefer not to carry cash when shopping, many businesses have started accepting credit card payments for in-store and online transactions. If you haven’t yet adopted credit card acceptance for your business, you may be losing a lot of revenue.
Allowing credit card payments offer the following benefits to businesses:
- Increases Your Profits – Credit card payments make it easier for customers to purchase something from you, boosting your revenue in the process.
- Grows Your Client Base – Cashless payments eliminate the need for cash during the purchase thus expanding your client base.
- Boosts Your Company’s Image – Customers appreciate businesses that offer a variety of payment options, especially credit card payments.
To stay on top, businesses should always keep up with the trends especially where payment transactions are concerned. Modern payment methods allow you to expand your client base, enhance the image of your business, and improve your bottom line.
Saving Money on Card Transactions in Business
Every business should make it a goal to manage operating expenses effectively to help improve the bottom line of the organization. But is it possible to save money on business card transactions?
Businesses and entrepreneurs should utilize the following tips to minimize the fees and other charges associated with processing credit card transactions:
- Choose The Right Credit Card Processor
Sometimes it all boils down to choosing the right credit card processor. Be wary of low-cost service providers that may be more expensive in the long run. Look for a reputable merchant service provider, such as CardSwitcher, that can give you the best value and service.
- Avoid Chargebacks
It may sound simple, but aside from the fees charged by credit card companies, disputes and chargebacks can result in merchant fees of $25 or more. A common dispute in credit card transactions occur when the client’s signature is different than the signature found on the credit card which is why it’s crucial to double-check. Sometimes it takes a judgment call, but to protect your business from chargebacks, you can also ask for a valid ID to verify the customer’s signature.
- Go For The Interchange-Plus Model
Many merchants still utilize the tiered-pricing system, which is an expensive model, to begin with. The good news is that the interchange-plus model is now available and carries lower fees in comparison to the traditional pricing model.
If you want to be certain on what pricing model you’re using to process credit card transactions, take a look at your monthly statements. If you see labels like “non-qualified”, you’re utilizing the tiered-pricing model. You’ll also see transactions with “qualified” or “mid-qualified” if your business is using this model.
Also ask your payment processor if you’re qualified for the interchange plus model, which can minimize credit card processing costs by up to 25% each month.
- Request To Waive Annual, Monthly, and Other Junk Fees
As a business owner, it’s important to be aware of the different yearly and monthly fees charged by your service provider. Some don’t realize that they’re paying for an annual fee since the cost won’t come up in each month’s statement.
Merchant service providers also charge their customers with monthly fees if they don’t reach the minimum processing volume required each month. And then there are also the “junk fees” – charges such as customer service fees, statement fees, network fees, and many more.
Reach out to the merchant service provider to verify what the fees in the statement are for. You can then request, negotiate, or insist to have some of the fees lowered or removed.
Fees Associated With Credit Card Business Transactions
Although credit card transactions offer plenty of benefits for both customers and businesses, as a business owner you’ll have to deal with these fees associated with processing credit card sales:
- Interchange fee: The interchange fee holds the biggest percentage when it comes to processing credit card transactions. It’s normally a percentage of the sale plus a fixed fee. Interchange fees will vary depending on the company issuing the card, the type of credit card (for example, the customer may be using a rewards card or a business card), the category of your business, and how the credit card transaction is processed.
- Service fee: Also known as the assessment fee, the service fee is collected by the network behind the credit card, such as Visa, MasterCard, Discover, etc. The service fee may also include foreign transaction fees, if applicable.
- Payment processor fee: This is the markup of the credit card processor, which is often based on tier-pricing. The payment processor fee is a variable cost for processing credit card transactions for your business.
Keeping tabs on your credit card transaction processing fees is a must to help minimize your business’s operational expenditures. By saving money on business card transactions, you can use the extra funds to improve other aspects of your business operations.