Today, small business credit card processing is basically a necessity for running retail on and offline in the modern world. Customers expect to be able to swipe their cards, and we are fast becoming a society that values cash less and less. Credit is becoming even more important, and paying for items is becoming safer than carrying cash.
Still, someone has
to pay to process those transactions and the costs of a credit card terminal typically fall on the business owner. Here are some thoughts on mitigating those costs.
Typically, the terms of the payment processor contain all of the hidden fees and costs. Many merchant accounts utilize an interchange plus fee structure, which offers a variable rate depending on the type of card the customer opts to use. A good example would be an airline mileage card, which would offer customers miles they can use to fly around the country. This might cost more to process than a standard debit card, which comes with no rewards for use at all.
Your terms will also disclose any penalties you will pay, along with discounts you might be eligible for. For example, volume discounts. These sound appealing to merchants, but you need to make sure your sales goals are in line with those expectations.
Another way to pay more than the standard rates and fees is to suffer a lot of chargebacks. How do charge backs happen? Typically, they occur when your customer isn’t satisfied with the product they received and you don’t offer some kind of return policy to accommodate that. If you offer a return policy, you’ll be able to prevent these kinds of problems before they start.
Fulfillment is another area that requires you to be efficient. The faster you ship orders placed online, or provide the customer exactly what he or she wants, the less your chances of them initiating a chargeback.
Also, remember that chargebacks are bad for your account overall. Too many and you may lose your account entirely, or be re-classified as a high risk account (which ultimately costs more in fees and rates per transaction).
If you’re already in a contract, call your merchant account provider and see what changes they can make to keep your business. Maybe wait out your contract and renegotiate based on other opportunities you may have found elsewhere.