Process Credit Card Payments – How Much Should It Cost?
As is required for every business decision, choosing a credit card processing service also calls for cost considerations. The cost involves the fees applied by the credit card processor and the cost of hardware needed to carry out the credit card processing. It is a good idea to be aware of all the expenses so that you can select the best card processor.
Credit card processing equipment
Businesses need credit card machines for processing payments. They are used for swiping cards at checkout. This equipment is not cheap and requires an upfront investment. However, several choices are available. The price varies from $150 to $1000 depending on its sophistication. Give a thought to your requirements and budget to choose the model that meets your business needs. Financing options can make it easier to purchase the equipment or you can initially take one on lease, give it a try and make the purchase if it is up to your satisfaction. Some machines can be leased for as little as $20 a month.
Various card processing service vendors provide terminals along with setting up the merchant account. This proves more economical than purchasing the machine separately. It is also possible to use a software solutions to process credit cards online and verify transactions with virtual terminal software. An additional mode used by sellers is to process the payment manually and authenticate the information with a call to the customer. However, this is time consuming and riskier as the fund may not necessarily be available when the transaction is processed though they may have been available at the point of verification.
Credit card processing fees
Another important expense for a business is the discount rate imposed by the credit card processor. It is the percentage charged for every transaction. This fee varies with 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 based on various other factors such as credit score, number of transactions and the total value of receipts anticipated every month. In addition, rates are different for transactions where the card is not present such as online payments or payments on the telephone, and where the card is physically verified. Most vendors charge a fee in addition to the discount fee of 2.2 % to 3% for transactions where the card is absent. Fee for transactions where the card is physically checked is lower, in the range of 1.5% to 2%.
The discount fee is not the only cost. There are various other fees that businesses have to pay to avail the credit card processing services. These include application fees, activation fees, setup fees, customer service fees and programming expenses. You may or may not be charged all these fees and a few of them could even be refunded if you stick with your provider for a fixed period.
It is important to be aware of all the related expenses and fees related to credit card processing. Do adequate research and also ask for references from associates. Do not fall only for low fees or charges. Good customer service is also necessary. If you get stuck in the middle of a transaction, you will need help quickly or you will lose the sale.
