Credit
Card Processing Fees
Look, I know that everyone wants to save
money. So do I. The fact is, accepting credit
cards costs money. The good thing about accepting credit
cards is it gives you the benefit of allowing
people the ability to afford your products or
services. Listen, we are a nation based on credit.
Many people could not afford the quality of life
they enjoy without credit. That's why using credit
cards makes such a huge impact on a business. Companies that don't accept credit cards
lose out on potential revenue. Think of it this
way, a credit card holder can be profiled as
someone who: #1 Has a bank account #2 Very likely has a stable job or income
and a
certain disposable income #3 Very likely makes payments
on time to their credit card company #4 Very likely has a credit line of money
they will spend somewhere #5 Will make purchases based on what they
can afford based on payments. Otherwise, they may
not make a purchase.
What does this mean to you? The most important benefit the above
description should help you realize is,
understanding who your customer is. As a majority of customers who
come into your door, which would you rather
have? Customers who can only pay in cash:
People who very likely don't have a bank
account. Are unable to make large purchases without financing.
Individuals, who if applied for a credit line with
your company would be turned down. Or would you rather have a fair portion
of your customers be individuals who fit your
criteria of ideal customers? For those of you who
would consider arguing this point because you
cater to children, keep in mind that it's the
parents who pay the bill. Why did I just spend my time
explaining the importance of accepting credit
cards? Fact: You should consider that the fee
you pay, like anything else you pay for, pays for a
level of service. You're not just paying a fee because Visa
& Mastercard say so. Your paying a fee because
you receive a level of service comparable to the amount that is charged. A
credit card processing company should be paid a
fair fee in relation to the quality of service it provides
you in return. A merchant service provider's
representative
should be able to confidently explain to you how
you benefit from accepting credit cards. Plus,
they should be able to show you how accepting
credit cards results in attracting a certain
clientel to your business. A merchant services
representative should
have enough knowledge to help you get educated on
the relationship between credit card holders,
debit card holders and how it effects your
business. If your consultant can't at least do
this for you, you may be dealing with the wrong
company. As the saying goes, "You get what
you paid for." Don't be swayed into believing the
cheapest credit card fee is the best. Fact: All merchant service providers get
the same wholesale rates from the same sources
(Visa, Mastercard, etc.). All credit card
processors are basically the same when it comes to
price.
The difference is, how it is
packaged for you. For example: Today our standard rate is
1.66% + .25 cents per transaction, with no
statement fee. If you find a
company that is offering a higher or lower rate,
start to question why. If a rate is lower than this, it may very
likely mean there is another fee elsewhere.
Companies who have creatively named fees tend to
offer extremely low fees as a marketing trick to
sucker you in. Yet
overall, you'll find that cheap prices end up
being higher than normal prices overall. If a rate is higher than today's standard
rate your paying
too much. Unless the transaction fee (.25 cents)
is lowered, the offesetting benefit doesn't help
your business. How fees are packaged Fees for credit card processing are
normally presented in two parts. The first being
the discount rate or processing fee and the second
being the transaction rate. Why they are presented
this way would take a huge explanation. For now,
understand that this is the way it's required to
be presented. The .25 cents for example, is also called
a batch fee. Anytime your credit card machine or
terminal connects to the merchant service company
that is considered a transaction, even if
connecting is just to perform an inquiry. Myths & Lies Visa & Mastercard do not charge a
monthly fee for setting up or having a merchant
account. If your merchant services company makes
you pay a fee, your paying more than you should. Visa & Mastercard don't charge annual
fees. American Express does not charge an
application fee or annual fee. However, they do
charge a monthly fee (usually $5 a month) if you
have a work at home business. Plus they may charge
a $5 fee if you don't select to get your
statements from their free online account access. Smart Cards are NOT a requirement for all
credit card machines to accept. I don't know who
started this rumor in order to increase equipment
sales, but it is not true. Just like the
Metric System, smart cards will probably never
catch on here in the USA. We like our
privacy and the thought of someone stealing one
credit card that holds all our credit card
accounts is not appealing to our
public. Don't get suckered into buying a smart
card machine because of this lie. How to put more money in your pocket Is your average ticket
sale $20 or more? If so, you may be an ideal
business to save money. Yes, I said to save
money. Take out your calculator
and test the following. Take your average ticket
amount $_______ multiply it times 1.66% + .25
cents = _____ ? This is how much it may
cost you to accept a Visa or Mastercard Now take your average
ticket amount $______ and list this as a value of
one. (One being the number of transactions) Then multiply 1 times .50
cents = .50 cents per transaction This is how much (.50
cents) it would cost, as compared to your ___?
credit card transaction. Which would you prefer?
Would you rather pay a flat .50 cents per
transaction or would you instead prefer to pay the
% fee + .25 cents? Which is less? This is the benefit of
accepting debit cards as opposed to a credit card.
Remember, your average ticket amount will help you
decide if your better off converting those debit
cards with Visa & Mastercard logos into debit
sales.
Has this page of
information helped shed some light on the subject
of credit card fees? I hope so. If not, call me
and I'll be happy to explain credit card fees for
you. Otherwise, contact me or
fill in my online form to request a credit card
machine, merchant account or anything else I can
help you with. Apply
here now.
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