6 Ways to Get the Cheapest Credit Card Processing – Lower Your Costs Today

Cheapest Credit Card Processing
Cheapest Credit Card Processing

There has been a debate in the credit card processing circles...well, really the 'business community' circle as to whether SQUARE is the cheapest credit card processing merchant. While it is true that SQUARE does offer some exceptionally competitive rates, there is more to a merchant service provider than just the fee they charge for their service.

Now, whether SQUARE is the cheapest or not is really not the issue here today. What we want to look at is how you as a small business owner can go around finding the cheapest credit card processing service that suits your particular needs. That takes more than just looking at how much you have to pay every month.

What to Look for When Trying to Find the Cheapest Credit Card Processing Company

One thing is for sure; every business is different. What your business needs to efficiently function is not the same as what your competitor or your fellow entrepreneur might need. Therefore, the research to find the cheapest credit card processing service provider for your business is highly subjective. Here are some things that you should always keep in mind when looking:

Do Not Go with a 'One Size Fits All' Mentality

There are several factors to consider when trying to find the right service providers for your business:

  • Are you a brick and mortar merchant?
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    Do you run an international corporation?
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    What is your projected sales volume?
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    Are you considered as a high-risk trader?

These are all questions that will need to be answered before you decide on a particular merchant service provider. Going with a one size fits all mentality will not only limit you, but it will also put you at a higher risk of failing as a business entity.

Now, what you need to do is study every option you have; shortlist the credit card processing companies that catch your fancy and then see if they:

  • Offer a flat rate or a percentage: This is often the best option if you already have a big business that does a lot of credit card processing per month. With a flat rate, the fees you pay will not change with your sales volume regardless of how much money you make.
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    Offer a sliding scale on the payment: Sometimes, especially when you are just starting out and still have fluctuating income levels, you cannot afford to hire a company that charges a flat rate regardless of the sales volumes or lack thereof. That is why you will need to find a merchant service provider that offers you a sliding scale on when it comes to payments. This way, when your business is not doing so well, they will not further burden you with hefty merchant fees.

The idea is to find a merchant service provider who will grow with you as your business progresses. Someone who will be open to giving you affordable options when you are just getting started and will be open to upgrading your service when you reach your entrepreneurial peak.

The merchant service processor you choose should have different plans for different businesses depending on their current stage and trajectory.

Pay Attention to the Security and Level of Service They Offer

Cheapest Credit Card Processing

As we mentioned before, the cheapest monthly fees do not necessarily mean that you have found a good, affordable merchant service provider. You need to ask yourself what else you are giving up in the process. When it comes to credit card processing, things like security and the level of service you are being accorded as a client matter the most.

While you might very well find a low-cost merchant service provider, they probably do not offer top-notch security at that price. It would be better to pay a little extra to get the kind of security that will not only keep your clientele data secure but also minimize your risk of being hacked or suffering from fraud.

Things like chargebacks due to increased fraud cases will lead to your being labeled as a high-risk merchant and with that comes higher rates and fees which will negate this entire process anyway.

Before you decide to sign a contract with a service provider you need to ensure that they comply with The Payment Card Industry Data Security Standard (PCI DSS). Having a merchant service provider that is in compliance with these strict industry standards you put yourself in a better position to have any issues that you may experience resolved quickly. Plus, it is an added advantage knowing that there is a body that governs your financial partner.

Another issue to be on the lookout for when searching for a merchant service provider is the level of customer service. When dealing with highly sensitive data such as clientele credit card details and purchases, you need a service provider who is on top of their customer service game. Someone who will sort out any issues that you or your clients might have in a timely fashion to minimize the chances of chargebacks.

Consider the Rates, the Fees, and the Terms & Conditions

There is more to the fees and charges that a merchant service provider offers than just the setup fees. While there are those service providers that may offer you an almost negligible startup fee, most of them have extremely high recurring charges that will stop making sense after a while, especially if your business doesn't do as well as you expect it to do.

Other may even offer you no setup or even monthly fees, but they will attach very high transactional fees that will drive your overheads through the roof. It is important to have a very clear understanding of all the fees and charges associated with the service before you sign any contracts.

The problem with most unscrupulous merchant service providers today is that they try as much as they can to hide some of these charges when trying to get you to sign with them. Because there is very high competition in the industry, not all of them will be upfront with all the associated charges. That is why it is up to you to be vigilant and ensure that you have all the facts.

You should be concerned about:

  • Setup fees
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    Support fees
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    Transaction fees
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    Integration fees
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    Chargeback fees

You should also ensure that you are not signing a contract that requires you to meet a minimum volume of sales or revenue every month. As a startup company, there is a very good chance that your revenue collection and thus transactional volume will be sporadic at best. You need a merchant service provider who will understand this and not attach unreasonable demands to your monthly credit card processing.

Consider the Acquiring Bank

Your acquiring bank is one of the most important components of this entire transaction. You need to find a backer that is not only reliable but one that has been in the business for long enough to know the ropes and to have a solid track record to which you can refer.

Now aside from trying to find the cheapest merchant service provider that is suitable to your business needs, there are other things that you can do to help you save money on this service while still providing your customers with the payment convenience that they need. Here are some tips on how to save money on payment processing fees.

Tips on How to Save Money on Credit Card Processing Fees

Cheapest Credit Card Processing

The thing about credit card payments is that there are so many little fees and charges that you may overlook yet they add up to a substantial amount every month. Here are some fees that you can expect to face once you decide to find a merchant service provider and accept credit card payments in your establishment:

  • Fees charged by your issuing bank: Your issuing bank will charge you something known as an interchange fee which is a percentage of every transaction that you will process. What you need to know is that are hundreds upon hundreds of interchange fees. How much you eventually pay will depend on how your credit card payments processing company handles the difference.
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    Fees charged by your credit card provider: Whether it be Visa, MasterCard, Discover or any other credit card brand, they will all charge a small fee for each transaction. This is known as an assessment fee.
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    Fees charged by your payment processor: This will either be a standard dollar amount, or it might be rated as a percentage that you pay for every transaction.

There are also other things to consider such as chargeback fees that can be very hefty depending on the number of cancellations, complaints and money back demands your business gets. If you get a lot of chargebacks, your business will be rated as a high-risk venture, and your service providers will start charging you a higher rate to use their credit card processing services.

In the most extreme of services, they may even drop you as a client entirely. This is mostly because high-risk businesses open them up to a great deal of losses and potential lawsuits.

With all these fees facing you as a small business owner, it is only logical that you would try to find ways to mitigate some of them. Since you cannot do away with all of them entirely, here are some steps you can take to minimize the total amount that you end up paying at the end of it all:

  • Choose the right fee structure from your merchant service provider: You need to consider the kind of sales that you will handle with your business. If you are going to be selling big ticket items then maybe it is a good idea to go for a fee structure that offers you interchange plus pricing. This is where you get a low percentage fee since your processor takes a separate cut which is a small dollar amount compared to a flat rate that might end up being rolled up into a percentage of every transaction anyway.
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    Try to negotiate lower rates from your processors and merchant service providers: This is something that most small business owners tend to overlook. Did you know that you could actually negotiate lower rates with your service providers? You can always renegotiate your deal with the processors, and if your logic is sound and your business promising enough, they might just be inclined to accommodate your request.
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    Incentivize your customers to use debit cards: Debit cards generally fall under the lower tiers of a payment plan. If you have the capability to accept payments from credit and debit cards, then it might be in your best interest to encourage your customers to use their debit cards as often as possible. This will reduce your overall interchange fees considerably.
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    Ask your customers to insert their cards into your terminal: This is yet another trick reduce your charges by minimizing the margin of error at the point of sale. Keying in the card numbers manually opens a whole new avenue for your sales staff to make mistakes and increase the chances of chargebacks. If, however, you ask your customers to manually insert their cards into your credit card terminal, the risk of any mistakes and possible chargebacks are reduced considerably. The best way to ensure that you reduce this risk to a bare minimum is to stay EMV compliant and use a chip reader instead of a swiping machine at your terminals.

The trick lies in trying to find as many ways to minimize your chances of getting chargebacks and therefore being labeled as a high-risk business by your merchant service provider. Any of these tips will help you save on the charges and fees that come with offering your clients a convenient way to pay when they do business with you.

Just remember, despite all these risks and associated fees, not offering credit card payment options at your establishment is really NOT an option you should ever consider.

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