Let’s face it, unless you are completely entrenched in the world of Affiliate Marketing and only push commissioned product, your business probably accepts credit card payments in one for or another. And like with most services, this too comes with a fee. Typical merchant account companies can charge up to a 5% hefty fee on everything a company earns via their credit card sales.
Credit card processing fees might be unavoidable, but here’s the good news: You can still reduce these fees and save your business money with some careful planning and research.
1. Do your research & compare before choosing
Just as with any service that you secure for your small business, you want to get the best deal out there by first doing a little comparison shopping. For instance, some providers charge you more up front for each transaction, but less on the back for their monthly service fees. Some also charge more for online transactions then they would for a “Card In Hand” purchase completed at a traditional brick an mortar location.
Start with a simple Google search to help you find a list of merchant processors to choose from. This will often give you a good broad spectrum of the lay of the land. You can also search deeper by looking up each of the companies via the Better Business Bureau website. They will tell you if the company is accredited by the organization and if they have recieved any customer complaints.
Don’t be afraid to pick up the phone and fire away at them with all your questions. Ask them what their published fees are (even if they are posted on their site, it’s always good to confirm). Tell them your specific processing needs, and then ask how you might be able to get a lower fee. It doesn’t hurt to negotiate.
Here are some of the fees that are normally involved in online merchant accounts:
- Startup Fee: This one time cost to set up your account could be in excess of $99 depending on the provider you choose.
- Credit Card Fee: Credit card carriers charge a credit card fee directly. Visa and Mastercard have a fee lower than that of American Express and Discover. 1.5% to 4% deduction per sale is the usual rate depending on the type of card and pre-negotiated rate. Taken off the top, it gets deducted from the charge amount before deposit in your account.
- Transaction Fee: This is the merchant provider’s charge for covering costs of network, equipment, etc and may be between 10 cents to $1 per transaction. Also taken off the top, the deduction is done before depositing into your account.
- Additional Fees: Providers may differ in the additional fees they charge for your account. Monthly statement fees, minimum traffic fees, charge back fees are typically included. This is why you need to be aware of the terms before signing up with a provider.
2. Decide what type of account you are looking for
Some payment providers such as SagePay or PayPoint offer just a payment gateway (the bit of technology that sits between your website and the payment networks). They require you to have your own merchant account (the special bank account that the money passes into — different from your regular business bank account). While, other payment providers such as PayPal and Stripe offer a combined payment gateway and merchant account (effectively you’re using their merchant account.)
The main thing to consider here is, are you looking for more of a plug and go kind of services (such as PayPal and Stripe) or do you have a tech team at your disposal to help you set up the needed software?
Getting an account with one of the combined providers tends to be easier than getting a merchant account, and tends to involve fewer setup and monthly fees. The per-transaction fees tend to be higher, however. For these reasons, small merchants may want to start with a combined payment provider. Larger merchants can typically save money by having their own merchant account.
3. Popular Gateways to consider: