Default HubSpot Blog

7 items to consider when looking for affordable credit card processing

The term affordable credit card processing is thrown around a lot and can mean different things to different businesses. For the purposes of this article we will discuss the affordability of credit card processing in terms of the rates and fees that are charged for the service.

I have broken out the major rates and fees charged for credit card processing. Please keep in mind that there will always be other miscellaneous fees, so be sure to read your merchant contract carefully to understand all that apply and when.

 

Discount/Percentage Rate (interchange): This is the largest total expense for the account and is typically negotiable with your processor. There are typically three discount rates associated to the account (this example is for a retail location). The three discounts rates are referred to as the qualified, mid-qualified and non-qualified rates. The qualified rate is reserved for card present / person present transactions. The mid-qualified rate is reserved for keyed in transactions and certain rewards cards. The non-qualified rate is reserved for corporate and international cards. Some rewards cards will also downgrade to the non-qualified rate. When looking for affordable credit card processing you want to achieve the following for each discount rate:

• Qualified Rate: Between 1.59% and 1.69%
• Mid-Qualified Rate: Between 2.29% and 2.39%
• Non-Qualified Rate: Between 2.99% and 3.09%

Per-Transaction Rate: In addition to the discount rate you will also be charged a per-transaction rate. The per-transaction rate is charged for each transaction that is run through the account. It is important to note that some processors will set up the account to authorize and capture as separate processes, effectively doubling the transaction costs per month. Make sure your processor is authorizing and capturing as one transaction. When looking for affordable credit card processing as a function of the per-transaction rate you want to be between $0.10 and $0.20 per-transaction.

Monthly Service Fee: This is the amount you are charged per month for customer service, account access, statement preparation etc. For an affordable credit card processing account you need to be between $9.95 and $14.95.

Batch Fee: The batch process is responsible for converting the credit card authorizations (promise to pay) into deposit of funds into your business account. The batch process is typically run on all days where authorizations are processed.  For an affordable credit card processing account you want establish a rate between $0.15 and $0.25 per batch process.

Monthly Minimum: The monthly minimum is the amount that is charged if the account is not used or used minimally. An affordable credit card processing account will typically have a monthly minimum of $0.00 to $9.99.

Annual Fee: The annual fee is a fee that your business is charged once a year for maintenance of your merchant account. You are best served to negotiate this rate to $0.00.

Termination Fee: This is the fee you are charged if you would like to end your contract early. This fee varies greatly form one processor to the next. Make sure you understand the contract term and termination fee.

If you are looking to set up an affordable credit card processing account we can certainly help. Please contact us directly for a no obligation quote. (800)917-8026. Mention prom code affordable for additional discounts.

Do you need and inexpensive merchant account? Do you need and inexpensive merchant account for your business? What defines an inexpensive merchant account? Is the account an inexpensive merchant account if the rates and fees associated with the account are as the lowest they can be? I certainly believe that is one factor. What about customer service and reliability? How does the reliability of the account and available support factor into the “cost” of the merchant account? When growing your business it’s important to analyze the costs and benefits associated with any strategy intended to increase your bottom line. The addition of an inexpensive merchant account or the substitution of your current account with an inexpensive merchant account can be a very effective way to increase sales while keeping overhead low. Some of the benefits of an inexpensive merchant account include:

1. Convenience and immediacy – Taking your products and services to the internet allows your customers to acquire your offerings at all hours of the day or night.
2. Options and value - All things equal if you are selling the same products as a competitor and provide more options for payment your store is perceived to offer more value.
3. Higher average ticket – According to Dun and Bradstreet it is estimated that customers spend 12% to 18% more when using a credit card for payment.
4. Minimize bad debt – Reduce the instance of bad debt through offering credit card processing. You know the customer has the funds to complete the sale as the authorization tells you before the customer leaves the store.
5. Increased sales – Dun and Bradstreet estimate that the average business can increase sales anywhere between 12% and 35% thought offering credit to patrons.

Now that we have established some of the benefits to establishing an inexpensive merchant account let’s discuss the costs. With a typical merchant account there will be rates and fees associated with the various functions of the account.  Some of these rates and fees include:

The discount rate The transaction fee The batch fee (settlement fee) AVS fee (address verification)

Customer service fee Monthly minimum fee Termination fee Online account access fee Etc

The costs associated with running or establishing a merchant account should be thought of in terms of recurring costs verses prospective (future) costs. The recurring cost of the account can be boiled down to a percentage of total volume processed and is known as the effective rate (ER). The effective rate of an inexpensive merchant account are the fixed monthly costs incurred to attain the benefit of offering credit. These costs are usually the main focus of a business when selecting a merchant services provider. I believe it is important to point out the potential larger prospective (future) costs that can result from selecting the wrong provider. For most businesses, the revenue from credit card sales represents a significant cash flow source. If this revenue source is interrupted it can put substantial strain on the business operations and can represent significant costs to the business.  Possible interruptions can result from any number of network issues very common in the processing industry. Interruptions are inevitable and the true costs associated with the interruption are determined by how long it takes to correct the problem. It is very important to select a processor that has a support staff that is available and knowledgeable in order to ensure merchant processing down-time is kept to a minimum. At Maxx Merchants our dedicated in‐house approach to the entire merchant service process is our mission. Our commitment to merchant customer support is of the utmost importance, leading to our industry high merchant retention rate. We are one of very few payment processors offering dedicated 24/7 technical support staff that are employees and not subcontractors. At Maxx Merchants we are able to offer you the ultimate inexpensive merchant account as your recurring costs (ER) will be very low and your prospective (future) costs are minimized with the best support in the industry. What does that translate for you? Increased profits!!

Please call us directly to get started (800)917-8026.