As a small business owner, there’s a good chance you’ll accept credit card payments alongside cash payments. Diversifying your ability to collect various types of payments is a great way to boost sales and increase revenue.
Selecting a credit card processing service provider is an important step in the process. There are plenty of credit card processing providers available, so it’s imperative to select the best one by conducting thorough research.
3 Credit Card Processing Questions to Ask
Here are three key questions you should ask a service provider before signing up for a credit card processing account:
1. What type of credit card processing fees could my company incur?
According to the CardFellow blog, “The rate that you pay to process a credit card transaction is a combination of base costs and markups called merchant discount. Think of merchant discount as the retail price of credit card processing, base costs as raw material expenses and the markup as production costs.”
You might come across a provider charging low fees, but don’t fall for seemingly lucrative offers before reading the fine print. Ask for details regarding the fee structure and additional fees the provider charges. It is better to select a trusted payment processing vendor, with higher fees, than to initially pay low fees and receive a shocking surprise when you open the monthly bill.
Some credit card processing companies offer free, non-obligatory quotes to merchants to give them an idea about relevant rates and fees that will be levied. Here are five types of fees, you should be aware of, that most providers charge:
- Setup fee: These are usually one-time fees providers charge for application paperwork, initial installation and setup. These may include fees for a point-of-sale terminal and any kind of training provided for businesses uninitiated in credit card processing.
- Transaction fee: Every time you swipe a credit card through the terminal, you’ll be charged a transaction fee. Fees may vary for different kinds of transactions. Even a void transaction is chargeable, in many cases.
- Settlement fee: Almost all payment providers charge a settlement fee. These charges are for carrying out the sale which transfers the money from the customer’s issuing bank to the merchant’s account.
- Statement fee: Not all payment processing providers charge this fee. Some don’t charge anything if you choose to receive your statement via email each month, but may charge for a hard copy.
- Termination fee: Most credit card processing vendors enter into an agreement which lasts for a stipulated duration. If a merchant decides to withdraw or terminate an agreement before the contracted time frame ends, the processing company may levy a termination or cancellation fee. Business owners should be aware that some processing companies charge early termination fees that can be retroactive in nature.
Other fees charged by payment processing vendors could include a gateway fee, a minimum processing fee, discount rate, added value fee, monthly maintenance fee, low achievers fee, and a chargeback fee, just to name a few.
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