As is true with any business decision, picking a credit card processing service also calls for cost considerations. The costs include the rates applied by the credit card processor as well as the cost of equipment that is required for card processing. It is wise to familiarize yourself with all the expenses so that you can make the right choice of a card processor.
Credit card processing equipment
Businesses need credit card machines for processing payments. They are used for swiping cards at checkout. Installing these involves substantial investment as these could be expensive. However, they can look at quite a few options in the market. The cost ranges from $150 to $1000 based on its features and functions. Give a thought to your requirements and finances to choose the model that fits your business needs. Financing options can make it easier to buy the equipment or you may choose to take one on lease, try it out and make the purchase if it addresses requirements. Some equipment can be rented for as little as $20 a month.
Often, terminals are provided as part of the package for setting up a new merchant account. This can be quite a saving as compared to buying the equipment independently. You can also use a software applications to process credit cards through the internet and verify transactions with virtual terminal software. Another mode used by businesses is to process the payment manually and verify the information with a call to the customer. This process takes more time and is also riskier as the buyer may not have enough funds available at the time of processing the charge though they may have been available at the point of verification.
Credit card processing fees
Another important cost for a business is the discount rate charged by the credit card processor. It is the percentage charged for every transaction. This fee is based on the risk the vendor believes it is taking by providing service to the business and the odds of losing money on processed payments. Fees is dependent upon numerous other factors including credit history of the business, volume of transactions and the total value of receipts likely per month. What’s more, charges are different for transactions where the card is absent such as internet payments or payments on the telephone, and where the card is present. Most vendors charge a additional fee besides the discount fee of 2.2 % to 3% for transactions where the card is not present. Fee for transactions where the card can be verified physically is lower, ranging from 1.5% to 2%. Apart from these, there are a number of other fees that a business may have to shell out to avail the credit card processing services. These include application fees, activation fees, setup fees, customer support charges and programming costs. You may or may not be charged all these fees and some of them could even be refunded if you do not switch providers for a fixed length of time.
It is important to be aware of all the applicable expenses and fees associated with credit card processing. Do adequate research and get references from associates. Be careful! Low fees may come with low quality services. Good customer service is also important. If you face problems in the middle of a transaction, you will need immediate assistance or you risk losing the sale.