There are hundreds and thousands of items to choose from, when you walk into the market with an intention to buy a credit card processor for your business. Since the industry is not highly regulated, small businesses can suffer from credit card processing fees and a lot of other factors. Enlisted below are some of the most common mistakes that business owners make, when choosing a credit card processor.
Don’t Let The Fees Hinder You From Accepting Credit Card Payments
Small business owners are hesitant in including credit card payment option, as a measure to save money. However, in today’s world, it can be a potential loss to your business. Most people prefer walking out of a store, where liquid cash is the only mode of payment. Put yourself in the shoes of a customer and think how often you make cash purchases. A good number of people use credit card these days, and it has become an essential part of daily lifestyle.
On the other hand, too much cash in stock can make your store vulnerable to theft. There’s hardly anything anyone can do with digital transactions, as they are organized and secured. You can easily keep a track of your sales revenue on a weekly or monthly basis.
Don’t Opt For Bundled Pricing
Bundled pricing for businesses is a structure that groups together different rates associated with different types of cards into one consolidated rate. These credit card processors pay both the assessment and interchange fees on behalf of the business, thus shortening the process. It may sound quite simple and transparent at first glance, but there are a few drawbacks associated with it.
Markup, assessment fee and interchange fee are three components defining the credit card processing rate. Assessment fees is paid to the card brand, while the interchange fees is paid to the issuing bank. Both are fixed, with the only difference in the markup cost. Based on how risky a particular transaction is, charges can vary. Since the rate is concealed in bundled pricing, you never know how much you are being charged. You may end up paying more than what you should!
Avoid Leasing Of Terminals
The credit card processing company may try to persuade you to pay a monthly fee on leasing their hardware. The deal is that you don’t have to pay for the hardware upfront, and the terminal will be replaced, if broken. However good it may sound, leasing an item will always turn out to be more costly than buying one, especially if you are in a long-term business. At the end of the day, nothing comes free. They might lease it to you on insurance, but you have to return it back eventually. The money that you will spend on leasing is sufficient to buy a terminal for yourself.
There may be volume commitments associated with some processing agreements. Say, you have to process certain amount of money per month, failing which you will be penalized financially or your discount rate can be increased.