By Julia Olson, Fattmerchant Content Strategist
Julia Olson is the Content Strategist at Fattmerchant, a flat-rate merchant services provider. She works to educate readers about the credit card processing industry, and loves spreading the word about Fattmerchant’s amazing technology solutions and honest processing.
For a lot of business owners, credit card processing is a necessary evil. When you first started your business, you picked what you thought was the best option at the time, and never looked back.
You might not realize that over time, your payments needs change. Your original provider might not be giving you the best value anymore — or, unfortunately, you could have been overpaying the whole time.
Here are a few things to consider as you re-evaluate your credit card processing provider to make sure you are getting the absolute best value for your dollar.
Take a Closer Look at Your Statement
Most of the time, credit card processing statements are very long and hard to understand. This is on purpose so that providers can add fees that merchants don’t notice they are paying. These fees can be for anything, and are usually not necessary in order to accept cards.
The true cost of accepting credit cards is known as interchange. This is the rate set by the credit card companies themselves, and all business owners are required to pay. Merchant services companies differ on how they make a profit on top of interchange, so take a closer look at your statement or have a conversation with your current provider to figure out what that is.
Additional fees are a killer for small businesses that accept credit cards, so be on the lookout for line items like statement fee, gateway fee, batch fee, or PCI compliance fee. None of these are required, and you could be paying hundreds in these fees a month without even realizing it!
Re-Evaluate Your Technology
Is your current payment technology working for your business, or is it time for an upgrade? If your technology does not meet PCI or EMV compliance standards, you could be paying fees that are easily avoidable.
Make sure you are using the right solution for your business. For example, if you take payments entirely in person, it is ultimately cheaper and more efficient to have a swiper versus typing in the card information into an online solution.
Having the right technology solution not only helps with savings, but your business will ultimately run more efficiently and encounter fewer issues in the long run. If your staff is comfortable using your payment technology and can complete transactions quickly and easily, your customers will ultimately have a better experience.
Calculate Your Effective Rate
Figuring out whether or not you’re getting the best value on credit card processing can be overwhelming. There are a lot of factors that go into what you pay every month, and these factors are intentionally difficult to find on your statements. A good place to start is something called “effective rate”. In order to calculate this number, simply take your total fees for the month and divide it by your total volume transacted. This number should be under 3%, 2.5% if you’re accepting your credit cards in person.
If you find that your effective rate is higher than 3%, that means you are paying more than you should be. If that’s the case, have a conversation with your provider or start to explore alternative options for your business.
This might all seem like a lot to absorb, but going through a re-evaluation of your current provider could mean thousands in savings for your business in the long run. If you need help getting started or would like more information, Fattmerchant can help. We’ve saved businesses thousands on their credit card processing and continue to provide industry leading technology to all business types. Regardless of what direction you decide to move, however, taking the time to do your research is well worth the effort for your business.