In the technological age in which we live, credit card andcheck services are essential tools to collect money fromcustomers. Efficiency at the point of service and conveniencefor your customers mandated a movement away from paperchecks which was the staple of payments 10 years ago. Sincecredit card and debit card utilization continue to increase withthe growth of online banking, every business owner now needsto find the lowest processing cost available.
When was the last time you got competitive processingbids from more than one credit card company? If your answerto this question is ‘more than 12 months,’ action is required!
Credit Card fees change on a weekly basis as more companiesenter and leave the processing market. Some of theseprocessing costs reduce over time but rarely will your processorcome to you and say “I want to keep your business, so I havelowered your fees and I make less money”. The responsibilityfor finding those deals lies with thebusiness and should be a regularprocess in your annual BusinessCheck Up.
D o you really know whatrate you are paying? It is rarelythe advertised number that gotyou to sign that contract. Youcan validate that rate by dividingyour total processing cost (fees)by the total dollar value of yourtransactions. This is the startingpoint for any negotiationwhether it be with your currentcompany or in a competitive bidfrom another company.
Fees that are charged bycredit card companies come inso many varieties that it is easy for a vendor to promise a goodrate, but not deliver. Fees are assigned as a percentage of thetransaction plus an additional fee to process that transaction.Some of these fees can be added on the back end the followingmonth in surcharges and interchange fees.
O n top of the fees related to the transaction, you could bepaying a statement fee, a convenience fee, a lease on equipment,a security fee, and many other monthly fees that increaseprofit to the vendor.
Equipment can be an even more difficult issue to understand.One company may offer free equipment, but higherprocessing rates and another company will want you to leaseequipment so you can have an “if there is a problem we willship you another machine the same day” warranty agreement.These leases are rarely cost effective. A new credit card machinecosts $250 to $450 depending on the features. A leaseagreement for 3 years that has a business paying $89–$150 permonth is just not cost effective. If your machine breaks, youcan replace it quickly with a refurbished machine and be backin business, without that lease. If you have multiple sites, thenpurchase an extra machine from the beginning for a back upand save all that money on the leases.
If you have a computer at the point of service, why not considerinternet based processing versus using credit card equipment.You can add a magnetic strip reader to any computerthrough a USB port and be processing swiped transactionsover the internet. You can free up that dedicated line and moveit into your phone queue, or eliminate that cost all together.You will pay a gateway set up fee that could be from $50 to $99;however, you can then have access to payment processing at asmany computers as is necessary in your office. No more competingfor the machine.
If you have a website, then companies such as IgniteTRXhave developed technology to add a payment portal to your existingwebsite. IgniteTRX’s technology allows your customersto go online and pay their bill rather than mailing a check, orreturning the statement with authorization to process a creditcard transaction in the office. Thisconvenience for your customerscan dramatically improve paymentof balances and improvecustomer satisfaction.
Every business shouldbe completing a yearly BusinessCheck Up to review all yourbusiness practices. This BusinessCheck–Up should include reviewsof supply cost, efficiency at thepoint of service, uncollected ARand review of the pricing for yourproducts or services. Evaluationshould also include all the businessservices such as equipmentleases, banking fees, janitorialservices, paging, credit card processing,office supplies and benefits paid to staff. Make surethat you are getting your money’s worth from these essentialcomponents of your business so you can flourish.
A rmed with your current processing costs, you are nowprepared to request a rate review from your current processor.If you do not get a positive reaction, then start looking for anew one. Expect a vendor to request copies of two statementsto help identify the transaction types in your business. Ask thevendor to do a comparison on a spread sheet so you can easilycompare vendor to vendor.
